ACM Research Comments on Updated U.S. Export Restrictions

Rhea-AI Summary

ACM Research (NASDAQ: ACMR) addressed recent U.S. export regulation updates affecting semiconductor operations in China. On December 2, 2024, the U.S. Department of Commerce's BIS implemented additional controls on exports to China related to advanced IC products and manufacturing equipment. ACM Shanghai and its subsidiaries in China and Korea were added to the Entity List, while ACM and its direct subsidiaries outside mainland China were not affected.

The company believes the impact on their supply chain and ACM Shanghai's production capabilities will be minimal due to alternative sources. While sales outside China should remain unaffected, the impact on PRC customers will depend on their spending plans under the new regulations. ACM plans to release preliminary 2024 results and 2025 revenue outlook in January.

Positive

• Supply chain impact expected to be minimal due to alternative sources
• Sales and service to customers outside China remain unaffected
• Parent company ACM and non-Chinese subsidiaries not added to Entity List

Negative

• ACM Shanghai and its China/Korea subsidiaries added to U.S. Entity List
• Potential negative impact on sales to Chinese customers
• New export restrictions affecting semiconductor equipment sales to China

Insights

Legal Expert

This Entity List addition marks a significant regulatory challenge for ACM Research's Chinese operations. The inclusion of ACM Shanghai and its subsidiaries, while sparing the parent company and non-mainland subsidiaries, creates a complex compliance landscape. Key concerns include restricted access to U.S.-origin items and potential disruption of cross-border technology transfers. The company's assessment of minimal supply chain impact suggests preparedness through diversified sourcing, though sales to PRC customers face uncertainty. The lack of specific wrongdoing notification is notable and may indicate broader geopolitical motivations rather than compliance violations. This development follows the broader pattern of increased U.S. export controls targeting China's semiconductor industry, particularly in advanced IC manufacturing and AI-related technologies.

Market Research Analyst

The new export restrictions could significantly impact ACM Research's market position, particularly in China where it conducts substantial operations through ACM Shanghai. While the company's supply chain adaptability is promising, the real concern lies in potential revenue impact from Chinese customers, who may need to adjust their spending plans due to these regulations. The timing of this news, ahead of the company's January preliminary results and 2025 outlook, adds uncertainty to near-term performance forecasts. However, ACM's established presence in global markets and its ability to service non-PRC customers without disruption provides some stability. The broader context of 140 entities being added to the Entity List, including 120 semiconductor equipment suppliers, suggests an industry-wide shift rather than company-specific issues.

FREMONT, Calif., Dec. 11, 2024 (GLOBE NEWSWIRE) -- ACM Research, Inc. (“ACM”) (NASDAQ: ACMR), a leading supplier of wafer processing solutions for semiconductor and advanced packaging applications, today issued comments regarding recent updates to U.S. export regulations.

On December 2, 2024, the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) imposed additional controls on exports to, and transfers within, the People’s Republic of China (“PRC”) relating to advanced integrated circuit (“IC”) products, certain IC manufacturing equipment and technology, and supercomputers associated with artificial intelligence (AI) and advanced computing.

As part of the new regulations, among other updates, ACM Research (Shanghai), Inc. (“ACM Shanghai”) and its operating subsidiaries in China and Korea, were added to the Entity List published by BIS. Neither ACM, nor its direct subsidiaries outside of mainland China, were added to the Entity List. ACM is a Delaware corporation founded in California in 1998 to supply capital equipment developed for the global semiconductor industry. Since 2005, ACM has conducted its business operations principally through its subsidiary, ACM Shanghai, a limited liability corporation organized in the PRC.

Based on public reports, 140 entities with semiconductor operations related to mainland China were added to the Entity List, 120 of which were semiconductor capital equipment suppliers. We note that neither ACM Shanghai nor its subsidiary was notified of any specific wrongdoing that resulted in its addition to the Entity List.

We are assessing the potential impacts to our business and operational plans that may result from the new regulations. We believe the impact to our supply chain and the ability of ACM Shanghai to produce tools in the PRC will be minimized and manageable as a result of having alternative sources and suppliers. We do not anticipate an impact to the ability to sell, deliver and service products to customers outside of the PRC, however the potential impact on sales to our PRC customers will depend, in part, on the effect of the new regulations on their own spending plans.

Consistent with prior years, we expect to issue a press release in January with preliminary results for 2024 and our initial revenue outlook for 2025.

We will continue to focus on technology innovation for the global market and operate in compliance with all applicable laws and regulations. We are confident we can maintain our role as a key supplier of differentiated capital equipment to global customers and protect the interests of partners, employees, and investors as we navigate the ever-evolving geopolitical landscape.

Forward-Looking Statements

Certain statements contained in this press release are not historical facts and may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “plans,” “expects,” “believes,” “anticipates,” “designed,” and similar words are intended to identify forward-looking statements. Forward-looking statements are based on ACM management’s current expectations and beliefs and involve a number of risks and uncertainties that are difficult to predict and that could cause actual results to differ materially from those stated or implied by the forward-looking statements. A description of certain of these risks, uncertainties and other matters can be found in filings ACM makes with the U.S. Securities and Exchange Commission, all of which are available at www.sec.gov. Because forward-looking statements involve risks and uncertainties, actual results and events may differ materially from results and events currently expected by ACM. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. ACM undertakes no obligation to publicly update these forward-looking statements to reflect events or circumstances that occur after the date hereof or to reflect any change in its expectations with regard to these forward-looking statements or the occurrence of unanticipated events.

About ACM Research, Inc.

ACM develops, manufactures and sells semiconductor process equipment spanning cleaning, electroplating, stress-free polishing, vertical furnace processes, track, PECVD, and wafer- and panel-level packaging tools, enabling advanced and semi-critical semiconductor device manufacturing. ACM is committed to delivering customized, high-performance, cost-effective process solutions that semiconductor manufacturers can use in numerous manufacturing steps to improve productivity and product yield. For more information, visit www.acmr.com.

© ACM Research, Inc. The ACM Research logo is a trademark of ACM Research, Inc. For convenience, the trademark appears in this press release without ™ symbols, but that practice does not mean ACM will not assert, to the fullest extent under applicable law, its rights to such trademarks. All other trademarks are the property of their respective owners.

For investor and media inquiries, please contact:

In the United States:	The Blueshirt Group
	Steven C. Pelayo, CFA
	(360) 808-5154
	steven@blueshirtgroup.co
In China:	The Blueshirt Group Asia
	Gary Dvorchak, CFA
	+86 (138) 1079-1480
	gary@blueshirtgroup.co

FAQ

How will the December 2024 U.S. export restrictions affect ACMR's operations in China?

The restrictions will affect ACM Shanghai and its subsidiaries in China and Korea, but the company expects minimal impact on supply chain and production capabilities due to alternative sources.

Which ACMR subsidiaries were added to the U.S. Entity List in December 2024?

ACM Shanghai and its operating subsidiaries in China and Korea were added to the Entity List, while ACM and its direct subsidiaries outside mainland China were not affected.

Will ACMR's sales to customers outside China be impacted by the new export restrictions?

According to the company, sales, delivery, and service to customers outside of China will not be impacted by the new restrictions.

When will ACMR release its 2024 results and 2025 revenue outlook?

ACM Research plans to issue a press release in January with preliminary results for 2024 and initial revenue outlook for 2025.

How many semiconductor-related entities were added to the U.S. Entity List in December 2024?

140 entities with semiconductor operations related to mainland China were added, including 120 semiconductor capital equipment suppliers.