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After ACM Research reported its November results, we updated our fair value and cut our quality score to 4.0. We have added the investment volatility of the company's Shanghai subsidiary and the specific demand for artificial intelligence chip packaging to what we track. We also increased our revenue projections for the year and reset our expectations for how much profit the company keeps after production costs.
ACM Research reported sales of about 370 million dollars, well ahead of the 310 million dollars analysts expected. The company earns its money by selling specialized machines that clean and prepare silicon wafers, and it saw particularly strong demand for its tools used in advanced chip packaging. Profits also came in higher than expected at 55 cents per share.
The company is moving quickly to keep up with this growth. It plans to open a second building at its main manufacturing site before the end of the year, which will double its total floor space for making machines. This expansion is a clear signal that management expects the current wave of orders from chipmakers to continue as they build out more production capacity.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
ACM Research announced that Yue Ma joined the company as Chief Operations Officer on October 1. Mr. Ma spent over a decade at ASML, the world's largest supplier of chipmaking equipment, where he served as a senior architect and technical expert.
This hire is a win for the company as it tries to expand its footprint outside of China. Bringing in a veteran from a top-tier global equipment maker suggests the company is serious about maturing its operations to compete for larger orders from international chip manufacturers.
Source: 8-K filing
ACM Research shipped its first production-level horizontal electroplating tool to a customer in Asia located outside of mainland China. Electroplating is a process that uses electricity to coat chip panels with a thin layer of metal, which is essential for connecting different parts of a high-end chip.
This delivery is a meaningful step because it shows the company is successfully selling more than just its core cleaning machines. It also helps prove that ACM can win business from global manufacturers outside of its primary Chinese market, which is a key part of its plan to grow into a broader supplier for the chip industry.
Source: GlobeNewsWire
ACM Research will share its latest financial results on November 5. Analysts expect the company to report about 310 million dollars in revenue and 50 cents in profit per share. This update is worth watching for news on how well the company is selling its newer chip-making tools beyond its main market in China. We will also look for details on whether its profit margins are staying steady as it builds out its new factory in Oregon.
Management has beaten expectations in six of the last eight quarters, showing they generally set conservative targets that the business can reliably outrun.
| Expectation | |
|---|---|
| EPS | $0.57 |
| Revenue | $338M |
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