? Space Alternated Phase Shift, or SAPS, technology for flat and patterned (deep
via or deep trench with stronger structure) wafer surfaces. SAPS technology
employs alternating phases of megasonic waves to deliver megasonic energy in a
highly uniform manner on a microscopic level. We have shown SAPS technology to
be more effective than conventional megasonic and jet spray technologies in
removing random defects across an entire wafer, with increasing relative
effectiveness at more advanced production nodes.
? Timely Energized Bubble Oscillation, or TEBO, technology for patterned wafer
surfaces at advanced process nodes. TEBO technology has been developed to
provide effective, damage-free cleaning for 2D and 3D patterned wafers with
fine feature sizes. We have demonstrated the damage-free cleaning capabilities
of TEBO technology on patterned wafers for feature nodes as small as 1xnm (16
to 19 nanometers, or nm), and we have shown TEBO technology can be applied in
manufacturing processes for patterned chips with 3D architectures having aspect
ratios as high as 60to1.
? Tahoe technology for cost and environmental savings. Tahoe technology delivers
high cleaning performance using significantly less sulfuric acid and hydrogen
peroxide than is typically consumed by conventional high-temperature
? ECP technology for advanced metal plating. Our Ultra ECP ap, or Advanced
Packaging, technology was developed for back-end assembly processes to deliver
a more uniform metal layer at the notch area of wafers prior to packaging. Our
Ultra ECP map, or Multi-Anode Partial Plating, technology was developed for
front-end wafer fabrication processes to deliver advanced electrochemical
copper plating for copper interconnect applications. Ultra ECP map offers
improved gap-filling performance for ultra-thin seed layer applications, which
is critical for advanced nodes at 28nm, 14nm and beyond.
We have been issued more than 411 patents in the United States, the People's Republic of China or PRC, Japan, Singapore, South Korea and Taiwan.
ACM Research was incorporated in California in 1998 and redomesticated in Delaware in 2016. We perform strategic planning, marketing, and financial activities at our global corporate headquarters in Fremont, California. ACM Research is neither a PRC operating company nor do we conduct our operations in the PRC through the use of VIEs.
• In 2009 we introduced SAPS megasonic technology, which can be applied in wet
wafer cleaning at numerous steps during the chip fabrication process.
• In 2016 we introduced TEBO technology, which can be applied at numerous steps
during the fabrication of small node conventional two-dimensional and
• In August 2018 we introduced the Ultra-C Tahoe wafer cleaning tool, which
delivers high cleaning performance with significantly less sulfuric acid than
typically consumed by conventional high temperature single-wafer cleaning
• In March 2019 we introduced (a) the Ultra ECP AP or Advanced Wafer Level
Packaging tool, a back-end assembly tool used for bumping, or applying copper,
tin and nickel to wafers at the die-level prior to packaging, and (b) the Ultra
ECP MAP or Multi Anode Plating tool, a front-end process tool that utilizes our
proprietary technology to deliver world-class electrochemical copper planting
• In April 2020 we introduced the Ultra Furnace, our first system developed for
• In May 2020 we introduced the Ultra C Family of semi-critical cleaning systems,
including the Ultra C b for backside clean, the Ultra C wb automated wet bench,
• In 2011 we formed a wholly-owned subsidiary in the PRC, ACM Research (Wuxi),
Inc., which now is a wholly-owned subsidiary of ACM Shanghai, to manage sales
• In June 2017 we formed a subsidiary in Hong Kong, CleanChip Technologies
Limited, which now is a wholly-owned subsidiary of ACM Shanghai, to act on our
behalf in Asian markets outside the PRC by, for example, serving as a trading
partner between ACM Shanghai and its customers, procuring raw materials and
components, performing sales and marketing activities, and making strategic
• In December 2017 we formed a subsidiary in the Republic of Korea, ACM Research
Korea CO., LTD., which now is an indirect wholly-owned subsidiary of ACM
Shanghai, to serve our customers based in the Republic of Korea and perform
sales and marketing and R&D activities.
• In March 2019 ACM Shanghai formed a wholly-owned subsidiary in the PRC,
Shengwei Research (Shanghai), Inc., or ACM Shengwei, to manage activities
related to addition of future long-term production capacity.
• In June 2019 CleanChip Technologies Limited formed a wholly-owned subsidiary in
California, ACM Research (CA), Inc., to provide procurement services on behalf
• In August 2021 we formed a wholly-owned subsidiary in Singapore, ACM Research
(Singapore) PTE, Ltd., to perform sales, marketing, and other business
• In February 2022, ACM Shanghai formed a wholly-owned subsidiary in China, ACM
Research (Beijing), Inc., to perform sales, marketing and other business
• In March 2022, ACM formed a wholly-owned subsidiary in South Korea, Hanguk ACM
CO., LTD, to perform business development and other related activities.
We currently conduct the majority of our product development, support and services, and substantially all of our manufacturing, at ACM Shanghai. Our Shanghai operations position us to be near many of our current and potential new customers in the PRC (including Taiwan), South Korea and throughout Asia, providing convenient access and reduced shipping and manufacturing costs.
• ACM Shanghai's initial factory is located in the Pudong Region of Shanghai and
has a total of 36,000 square feet of available floor space.
• ACM Shanghai's second production facility is located in the Chuansha district
of Pudong, approximately 11 miles from our initial factory. In September 2018
we announced the opening of the first building of the second production
facility. The first building initially had a total of 50,000 square feet of
available floor space for production capacity, which was increased by 50,000
square feet in the second quarter of 2020. In February 2021 ACM Shanghai
leased a second building immediately adjacent to the second factory, which
increased the available floor space for production by another 100,000 square
feet, bringing to total available floor space for production capacity of second
production facility to 200,000 square feet.
• In July 2020 ACM Shanghai began a multi-year construction project to build a
development and production center in the Lingang region of Shanghai. The new
facility is expected to have a total of 1,000,000 square feet of available
floor space for production. capacity.
• In January 2022 ACM Shanghai completed the purchase of a housing facility in
the Lingang region of Shanghai to assist in employee retention and recruitment
in connection with its new R&D center and factory currently under construction.
The following chart depicts our corporate organization as of June 30, 2022:
Risks Associated with Corporate Structure
• If any PRC central government authority were to determine that existing PRC
laws or regulations require that ACM Shanghai obtain the authority's permission
or approval to continue the listing of ACM Research's Class A common stock in
the United States or if those existing PRC laws and regulations, or
interpretations thereof, were to change to require such permission or approval,
ACM Shanghai may be unable to obtain any such permission or approval or may
only be able to obtain such permission or approval on terms and conditions that
impose material new restrictions and limitations on the operations of ACM
Shanghai, either of which could have a material adverse effect on our business,
financial condition, results of operations, reputation and prospects and on the
trading price of ACM Research Class A common stock.
• PRC central government authorities may intervene in, or influence, ACM
Shanghai's PRC-based operations at any time, and those authorities' rules and
regulations can change quickly with little or no advance notice.
• The PRC central government may determine to exert additional control over
offerings conducted overseas or foreign investment in PRC-based issuers, which
Permissions or Approvals to Operate in the PRC
Our Independent Registered Public Accounting Firm
The following summary reflects our expectations and estimates based on information known to us as of the date of this filing:
• Operations: We conduct substantially all of our product development,
manufacturing, support and services in the PRC through ACM Shanghai, and those
activities have been directly impacted by COVID-19 and related restrictions on
• Customers: Our customers', including the customers of ACM Shanghai, business
operations have been, and are continuing to be, subject to business
interruptions arising from the COVID-19 pandemic. Historically substantially
all of our revenue has been derived from customers located in the PRC and
surrounding areas that have been impacted by COVID-19. Two customers that
accounted for 48.9% of our revenue in 2021 are based in the PRC, and three
customers that accounted for 75.8% of our revenue in 2020, and 73.8% of our
revenue in 2019 are based in the PRC and South Korea. One of those customers,
Yangtze Memory Technologies Co., Ltd. - which accounted for 20.2% of our 2021
revenue, 26.8% of our 2020 revenue, and 27.5% of our 2019 revenue - is based in
Wuhan. While Yangtze Memory Technologies Co., Ltd. and other key customers
continued to operate their fabrication facilities without interruption during
and after the first quarter of 2020, some customers have been forced to
restrict access of service personnel and deliveries to and from their
facilities. We have experienced longer and in some cases more costly shipping
expenses in the delivery of tools to certain customers.
• Suppliers: Our global supply chain includes components sourced from the PRC,
Japan, Taiwan, the United States and Europe. While, to date, we have not
experienced material issues with our supply chain beyond the logistics related
to the Shanghai facilities of ACM Shanghai, supply chain constraints have
intensified due to COVID-19, contributing to global shortages in the supply of
semiconductors and other materials, and in some cases the pricing of materials
used in the production of our own tools. As with our customers, we continue to
• Projects: Our strategy includes a number of plans to support the growth of our
core business, including ACM Shanghai's acquisition of a land use right in the
Lingang area of Shanghai where ACM Shanghai began construction of a new R&D
center and factory in July 2020. The extent to which COVID-19 impacts these
projects will depend on future developments that are highly uncertain, but to
PRC Government Research and Development Funding
? Government subsidies relating to current expenses are recorded as reductions of
those expenses in the periods in which the current expenses are recorded. For
the six months ended June 30, 2022 and 2021, related government subsidies
recognized as reductions of relevant expenses in the consolidated statements of
operations and comprehensive income were $0.1 million and $4.2 million,
? Government subsidies related to depreciable assets are credited to income over
the useful lives of the related assets for which the grant was received. For
the six months ended June 30, 2022 and 2021, related government subsidies
recognized as other income in the consolidated statements of operations and
comprehensive income were $155,000 and $80,000, respectively.
Net Income Attributable to Non-Controlling Interests
Critical Accounting Policies and Estimates
A discussion of recent accounting pronouncements is included in our Annual Report and is updated in note 2 to the condensed consolidated financial statements included in this report.
The following table sets forth our results of operations for the periods presented, as percentages of revenue.
Comparison of Three Months Ended June 30, 2022 and 2021
Total Revenue by Product Category $ 104,395 $ 53,864
Cost of Revenue and Gross Margin
Sales and marketing expense consists primarily of:
• compensation of personnel associated with pre- and after-sale services and
support and other sales and marketing activities, including stock-based
• sales commissions paid to independent sales representatives;
• fees paid to sales consultants;
• cost of trade shows;
• costs of tools built for promotional purposes for current or potential new
• travel and entertainment; and
• allocated overhead for rent and utilities.
• compensation of personnel associated with our research and development
activities, including stock based compensation;
• costs of components and other research and development supplies;
• costs of tools built for product development purposes;
• travel expense associated with the research of technical requirements for
product development purposes and testing of concepts under consideration;
• amortization of costs of software used for research and development purposes;
• allocated overhead for rent and utilities.
• compensation of executive, accounting and finance, human resources, information
technology, and other administrative personnel, including stock-based
• professional fees, including accounting and corporate legal and defense fees;
• other corporate expenses including insurance; and
• allocated overhead for rent and utilities.
Interest income (expense), net, Other Income (expense), net
Unrealized gain (loss) on trading securities $ (423 ) $ 3,783
Net Income Attributable to Non-Controlling Interests
Comparison of Six Months Ended June 30, 2022 and 2021
Single wafer cleaning, Tahoe and semi-critical cleaning equipment $ 98,616 $ 77,874
Cost of Revenue and Gross Margin
Sales and marketing expense consists primarily of:
• compensation of personnel associated with pre- and after-sale services and
support and other sales and marketing activities, including stock-based
• sales commissions paid to independent sales representatives;
• fees paid to sales consultants;
• cost of trade shows;
• costs of tools built for promotional purposes for current or potential new
• travel and entertainment; and
• allocated overhead for rent and utilities.
• compensation of personnel associated with our research and development
activities, including stock based compensation;
• costs of components and other research and development supplies;
• costs of tools built for product development purposes;
• travel expense associated with the research of technical requirements for
product development purposes and testing of concepts under consideration;
• amortization of costs of software used for research and development purposes;
• allocated overhead for rent and utilities.
General and administrative expense increased $2.6 million in the six months ended June 30, 2022 as compared to the corresponding period in 2021. General and administrative expense consists primarily of:
• compensation of executive, accounting and finance, human resources, information
technology, and other administrative personnel, including stock-based
• professional fees, including accounting and corporate legal and defense fees;
• other corporate expenses including insurance; and
• allocated overhead for rent and utilities.
Interest income (expense), net, Other Income (expense), net
Unrealized gain (loss) on trading securities $ (4,281 ) $
Equity income in net income of affiliates $ 401 $
Net Income Attributable to Non-Controlling Interests
In the six months ended June 30, 2022, this amount totaled $2.9 million as compared to $1.1 million in the corresponding period in 2021.
For the six months ended June 30, 2022 and 2021, no transfers, dividends, or distributions have been made between ACM Research, and its subsidiaries, including ACM Shanghai, or to holders of ACM Research Class A common stock.
We do not have any off-balance sheet financing arrangements as defined in Item 303(a)(4) of Regulation S-K.
Grant Contract for State-owned Construction Land Use Right in Shanghai City
• the start of construction within 6 months after the Delivery Date (60% of the
performance deposit), or Construction Start Milestone;
• the completion of construction within 30 months after the Delivery Date (20% of
the performance deposit), or Construction Completion Milestone; and
• the start of production within 42 months after the Delivery Date (20% of the
performance deposit), or Production Start Milestone.
The status of the performance milestones for the period ending June 30, 2022 is as follows:
• ACM Shengwei achieved the Construction Start Milestone and 60% of the
performance deposit was refunded to ACM Shanghai in 2020.
• The Construction Completion Milestone is required to be met prior to January 9,
2023. Although this date has not yet been reached, due to COVID-19 related
restrictions, ACM Shengwei has experienced delays and does not expect to meet
the milestone, and plans to file a request for an extension in December
2022. We cannot guarantee the extension will be met or that ACM Shengwei will
be refunded this 20% portion of the performance deposit.
Contractual penalties in the case of a delay of Construction Completion Milestone:
o If ACM Shengwei fails to complete the construction pursuant to the date agreed
under the Grant Agreement or any extended completion date approved by the
Grantor, ACM Shengwei shall pay 50% of the deposit for timely completion of
o If the ACM Shengwei delays the completion for more than six months beyond the
date agreed under the Grant Agreement, or beyond any extended completion date
approved by the Grantor, it shall pay the total deposit for timely completion
of construction as liquidated damages.
o If the delay is more than one year, the Grantor is entitled to terminate the
Grant Agreement and take back the Land Use Right. In such case, the Grantor
shall refund the Grant Fees for the remaining land use term after deducting the
deposit agreed under the Grant Agreement and refund the deposit for timely
commencement of production and relevant bank interests in full to ACM Shengwei.
• The Production Start Milestone is required to be met prior to January 9, 2024.
Although this date has not yet been reached, ACM Shengwei plans to also file a
request for an extension of this milestone due to COVID-related delays. We
Contractual penalties in the case of a delay of Production Start Milestone:
o If ACM Shengwei fails to commence production pursuant to the date agreed under
the Grant Agreement or any extended commencement date approved by the Grantor,
ACM Shengwei shall pay the total deposits for timely commencement of production
o If ACM Shengwei fails to commence production pursuant to the extended
commencement of production date, the Grantor is entitled to terminate the Grant
Agreement and take back the Land Use Right. In such case, the Grantor shall
refund the Grant Fees for the remaining land use term after deducting the
deposit agreed under the Grant Agreement to ACM Shengwei.
Loan and Mortgage Contract for Lingang, Shanghai Housing Units
(1) Converted from RMB to dollars as of June 30, 2022. All of the amounts owing
under the line of credit with Bank of Shanghai Pudong Branch are guaranteed
CleanChip Technologies LTD, a wholly-owned subsidiary of ACM Shanghai. The
loan from China Merchants Bank is secured by a pledge of the property of ACM
How We Evaluate Our Operations
We present information below with respect to four measures of financial performance:
? We define "shipments" of tools to include (a) a "repeat" delivery to a customer
of a type of tool that the customer has previously accepted, for which we
recognize revenue upon delivery, and (b) a "first-time" delivery of a "first
tool" to a customer on an approval basis, for which we may recognize revenue in
the future if contractual conditions are met, or if a purchase order is
? We define "adjusted EBITDA" as our net income excluding interest expense (net),
income tax benefit (expense), depreciation and amortization, and stock-based
compensation. We define adjusted EBITDA to also exclude restructuring costs,
although we have not incurred any such costs to date.
? We define "free cash flow" as net cash provided by operating activities less
purchases of property and equipment (net of proceeds from disposals).
? We define "adjusted operating income (loss)" as our income (loss) from
Shipments, adjusted EBITDA, free cash flow and adjusted operating income (loss) are not prepared in accordance with GAAP, and should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP.
We consider shipments a key operating metric as it reflects the total value of products delivered to customers and prospective customers by our productive assets.
Shipments consist of two components:
? a shipment to a customer of a type of tool that the customer has previously
accepted, for which we recognize revenue when the tool is delivered; and
? a shipment to a customer of a type of tool that the customer is receiving and
evaluating for the first time, in each case a "first tool," for which we may
recognize revenue at a later date, subject to the customer's acceptance of the
tool upon the tool's satisfaction of applicable contractual requirements or
subject to the costumer's subsequent discretionary commitment to purchase the
There are a number of limitations related to the use of adjusted EBITDA rather than net income (loss), which is the nearest GAAP equivalent. Some of these limitations are:
? adjusted EBITDA excludes depreciation and amortization and, although these are
non-cash expenses, the assets being depreciated or amortized may have to be
? we exclude stock-based compensation expense from adjusted EBITDA and adjusted
operating income (loss), although (a) it has been, and will continue to be for
the foreseeable future, a significant recurring expense for our business and an
important part of our compensation strategy and (b) if we did not pay out a
portion of our compensation in the form of stock-based compensation, the cash
salary expense included in operating expenses would be higher, which would
? the expenses and other items that we exclude in our calculation of adjusted
EBITDA may differ from the expenses and other items, if any, that other
companies may exclude from adjusted EBITDA when they report their operating
? adjusted EBITDA does not reflect changes in, or cash requirements for, working
? adjusted EBITDA does not reflect interest expense, or the requirements
necessary to service interest or principal payments on debt;
? adjusted EBITDA does not reflect income tax expense (benefit) or the cash
? adjusted EBITDA does not reflect historical cash expenditures or future
requirements for capital expenditures or contractual commitments;
? although depreciation and amortization charges are non-cash charges, the assets
being depreciated and amortized will often have to be replaced in the future,
and adjusted EBITDA does not reflect any cash requirements for such
? adjusted EBITDA includes expense reductions and non-operating other income
attributable to PRC governmental grants, which may mask the effect of
underlying developments in net income, including trends in current expenses and
interest expense, and free cash flow includes the PRC governmental grants, the
amount and timing of which can be difficult to predict and are outside our
The following table reconciles net income, the most directly comparable GAAP financial measure, to adjusted EBITDA:
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