What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2026-03-02 compared with 2025-03-03 · 199 added, 328 removed, 438 unchanged (55% of the section changed)

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We supply advanced, innovative capital equipment developed for the global semiconductor industry.

Fabricators of advanced integrated circuits, or chips, can use our wet-cleaning and other front-end processing tools in numerous steps to

improve product yield, even at increasingly advanced process nodes.

We have designed these tools for use in fabricating foundry, logic and memory chips, including DRAM 3D NAND-flash memory chips, power semiconductor and compound semiconductor chips.

Fabricators of advanced integrated circuits, or chips, can use our wet-cleaning and other front-end processing tools in numerous steps to improve product yield, even at increasingly advanced process nodes.

We have designed these tools for use in fabricating foundry, logic and memory chips, including DRAM 3D NAND-flash memory chips, power semiconductor and compound

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semiconductor chips.

We also develop, manufacture and sell a range of advanced packaging tools to wafer assembly and packaging customers.

We are focused on building a strategic portfolio of intellectual property to support and protect our key innovations.

Our tools have been developed using our key proprietary technologies:

• SAPS technology for flat and patterned wafer surfaces , which employs alternating phases of megasonic waves to deliver megasonic energy in a highly uniform manner on a microscopic level;

• TEBO technology for patterned wafer surfaces at advanced process nodes , which provides effective, damage-free cleaning for 2D and 3D patterned wafers with fine feature sizes;

• Tahoe technology for cost and environmental savings , which delivers high cleaning performance using significantly less sulfuric acid and hydrogen peroxide than is typically consumed by conventional high-temperature single-wafer cleaning tools;

• ECP technology for advanced metal plating , which includes Ultra ECP ap, or Advanced Packaging, technology for back-end assembly processes, Ultra ECP 3d for through-silicon-via, or tsv, and Ultra ECP map, or Multi-Anode Partial Plating, technology for front-end wafer fabrication processes.

In 2022, 2023 and 2024 we introduced and delivered a range of new tools intended to broaden our revenue opportunity with global semiconductor manufacturers.

Product extensions include the Ultra SFP ap tool for advanced packaging solutions, the Ultra C VI 18-chamber single wafer cleaning tool for advanced memory devices, and the Ultra ECP 3d platform for through-silicon-via, or tsv, application.

New product lines include the Ultra fn Furnace, our first dry processing tool, and a suite of semi-critical cleaning systems which include single wafer back side cleaning, scrubber, and auto bench cleaning tools.

We added two major new product categories in 2022 with the launch of the Ultra Pmax™ PECVD tool, which is equipped with a proprietary designed chamber, gas distribution unit and chuck, and is intended to provide better film uniformity, reduced film stress, and improved particle performance, and the introduction of the Ultra Track tool, a 300mm process tool that delivers uniform air downflow, fast robot handling and customizable software to address specific customer requirements, and has multiple features that enhance performance across defectivity, throughput, and cost of ownership.

We conduct a substantial majority of our product development, manufacturing, support and services in mainland China, with additional product development and subsystem production in Korea.

Substantially all of our tools are built to order at our Chuansha manufacturing facilities in the Pudong region of Shanghai.

In the three-months ended December 31, 2024, we began initial operations at our Lingang development and production center.

The facility, when fully completed, is intended incorporate state-of-the-art manufacturing systems and automation technologies to expand our production capacity and support additional research and development activities.

Substantially all of our tools are built to order at our Lingang manufacturing facilities in Shanghai.

Properties,” of Part I of this report.

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Risk Factors—Risks Related to International Aspects of Our Business—We could be adversely affected if we are unable to comply with recent and proposed legislation and regulations regarding improved access to audit and other information and audit inspections of accounting firms operating in mainland China” of this report for more information.

Under current regulations, if ACM Research were to be included on the Conclusive List

for two consecutive years due to our independent auditor being located in a jurisdiction that does not allow for PCAOB inspections, the SEC would prohibit trading in our securities and this ultimately could cause our securities to be delisted in the U.S., and their value may significantly decline or become worthless.

STAR Listing and IPO

On November 18, 2021, ACM’s operating subsidiary ACM Shanghai completed:

• a listing, which we refer to as the STAR Listing, of shares of ACM Shanghai on the Shanghai Stock Exchange’s SciTech innovAtion boaRd, known as the STAR Market;

• a concurrent initial public offering, which we refer to as the STAR IPO, of ACM Shanghai shares in mainland China, at a pre-offering valuation of not less than RMB 5.15 billion ($747.1 million).

ACM Shanghai’s shares began trading on the STAR Market under the stock code 688082.

In the STAR IPO, ACM Shanghai issued 43,355,753 shares, representing ten percent of the total 433,557,100 shares outstanding after the STAR IPO.

The shares were issued at a public offering price of RMB 85.00 per share, and the proceeds of the STAR IPO totaled approximately $545.5 million, net of fees and expenses.

Upon completion of the STAR IPO, ACM owned approximately 82.5% of the outstanding ACM Shanghai shares.

As of December 31, 2024, ACM's ownership declined to 81.5% due to the exercise of 2,150,309, and 3,033,344 stock options in May 2023 and December 2024, respectively, related to ACM Shanghai shares (note 17).

We believe the STAR Listing will continue to help scale our business in mainland China, and we continue to seek to broaden our markets in Europe, Japan, Korea, Taiwan and the United States.

Our global headquarters are located in Fremont, California, and we are committed to maintaining the listing of Class A common stock on the Nasdaq Global Market.

Under current regulations, if ACM Research were to be included on the Conclusive List for two consecutive years due to our independent auditor being located in a jurisdiction that does not allow for PCAOB inspections, the SEC would prohibit trading in our securities and this ultimately could cause our securities to be delisted in the U.S., and their value may significantly decline or become worthless.

ACM Shanghai STAR Listing

The shares of ACM Shanghai, our principal operating subsidiary, began trading on the STAR Market under the stock code 688082 on November 18, 2021.

ACM Shanghai Dividend

During the year ended December 31, 2024, ACM Research's principal operating subsidiary, ACM Shanghai (SSEC:

688082.SS), paid a cash dividend for an aggregate total of approximately RMB 273.2 million ($38.4 million) to the stockholders of ACM Shanghai, including ACM Research, which owned 82.0% of the outstanding shares of ACM Shanghai at the time.

ACM Research intends to use the net proceeds for working capital and general corporate purposes.

ACM Shanghai Proposed Private Offering

In January 2024, ACM Research announced ACM Shanghai's intended plan to offer up to 43.6 million of its ordinary shares, subject to market conditions, the approval of ACM Shanghai’s stockholders, completion of the review process by the Shanghai Stock Exchange, completion of the registration process by the China Securities Regulatory Commission, and other factors, in a private offering to qualified buyers, in compliance with the requirements of the China Securities Regulatory Commission, which would constitute up to 10% of ACM Shanghai’s share capital prior to the transaction (the “Private Offering”).

ACM Research estimates that if consummated in full, the proposed Private Offering would generate gross proceeds of up to RMB 4.5 billion ($642.2 million) to ACM Shanghai, whose management would have broad discretion over the use of such proceeds.

It is unlikely that any of such proceeds would be distributed to ACM Research.

ACM Research's equity interest in ACM Shanghai, if the proposed Private Offering is consummated in full, would decline from 81.5% to approximately 74.1%.

As of December 31, 2024 and the date of this report, the proposed Private Offering has not been completed.

In September 2025, ACM Shanghai, paid a cash dividend of approximately RMB 264.9 million (approximately USD $36.8 million) to the stockholders of ACM Shanghai, including ACM Research.

The cash portion of the dividend paid by ACM Shanghai to non-controlling interests was $7.6 million (note 2) .

During the years ended December 31, 2024 and 2023, ACM Shanghai paid cash dividends of approximately RMB 273.2 million ($38.4 million) and RMB 161.28 million ($22.2 million), respectively.

ACM Research intends to use the dividend proceeds for working capital and general corporate purposes.

ACM Shanghai Private Offering

In September 2025, ACM Shanghai completed a private offering, in which ACM Shanghai sold 38,601,326 ordinary shares at price per share of RMB 116.11, raising net proceeds of RMB 4.4 billion (approximately US $623.0 million) after deducting offering-related expenses (the "Private Offering").

The proceeds are intended to be used by ACM Shanghai for research and development, capital expenditures and working capital.

As a result, our ownership interest in ACM Shanghai de clined to 74.6%.

Addition of ACM Shanghai and ACM Korea to U.S.

Effective on December 2, 2024, the U.S.

Department of Commerce’s Bureau of Industry and Security (“BIS”) promulgated a final rule naming a number of companies to the BIS Entity List (the "BIS Entity List").

Amo ng the 140 companies added to the BIS Entity List were two subsidiaries of ACM Research, ACM Shanghai, located in the People’s Republic of China, and ACM Korea, a direct subsidiary of ACM Shanghai, which is located in the Republic of Korea, and other related entities.

Effective on December 2, 2024, BIS promulgated a final rule naming a number of companies to the BIS Entity List Among the 140 companies added to the BIS Entity List were two subsidiaries of ACM Research, ACM Shanghai, located in the

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People’s Republic of China, and ACM Korea, a direct subsidiary of ACM Shanghai, which is located in the Republic of Korea, and other related entities.

In general terms, the new BIS Entity List designations prohibit any party worldwide from furnishing hardware, software, or technologies that are subject to U.S.

export controls jurisdiction to ACM Shanghai or ACM Korea.

See “Item 1A.

Risk Factors—Regulatory Risks— Our operations in mainland China and Korea, including the import of components,

technology, and activities of U.S.

personnel therein, may be further impacted by the addition of ACM Shanghai, ACM Korea and related entities to the BIS Entity List ” of this report for more information.

export controls jurisdiction directly or indirectly to ACM Shanghai or ACM Korea without obtaining authorization.

Restrictions Imposed by the U.S.

Department of Commerce on Mainland China-Based Semiconductor Producers

In early October 2022 the U.S.

government enacted new rules aimed at restricting U.S.

support for mainland China’s ability to manufacture advanced semiconductors.

The rules included new export license requirements for exports, re-exports or transfers to or within mainland China of additional types of semiconductor manufacturing items, items for use in manufacturing designated types of semiconductor manufacturing equipment in mainland China, and semiconductor manufacturing equipment for use at certain IC manufacturing and development facilities in mainland China.

In addition, the U.S.

government imposed new restrictions by which U.S.

persons anywhere in the world are effectively barred from engaging in certain activities related to the development and production of certain semiconductors at mainland China fabrication facilities meeting specified criteria, even if no items subject to the U.S.

Export Administration Regulations (EAR) are involved.

These restrictions were later updated to extend to Macau.

In October 2023, the U.S.

government revised and expanded the October 2022 controls with the release of additional rules.

While the release primarily clarified the October 2022 regulations, certain changes have the potential to be more significant.

In particular, the U.S.

government expanded license requirements on additional types of semiconductors, semiconductor manufacturing items, and items for use in manufacturing certain types of semiconductor manufacturing equipment, and also expanded the scope to include additional countries beyond mainland China and Macau.

ACM Shanghai has determined that several of its customers have mainland China-based facilities that meet the restricted criteria set out in the October 2022 and October 2023 rules, and has also determined that several of its products, and/or components for its products, may meet the parameters of export control classification numbers, or ECCNs, affected by the restrictions.

ACM and ACM Shanghai have implemented modifications to their existing business policies and practices in response to the October 2022 restrictions, including by imposing limitations on the activities of their U.S.

ACM Shanghai utilizes certain items subject to export controls under the U.S.

Export Administration Regulations (EAR) in manufacturing and supplying its products.

The EAR applies to exports of commodities, software and technology from the United States, including for use in manufacturing products outside the United States, as well as to certain products manufactured outside the United States that incorporate, or are based on, designated U.S.

content, software or technology.

The Bureau of Industry and Security of the U.S.

Department of Commerce (BIS), which administers the EAR, has imposed, and may continue to impose, additional restrictions under the EAR on certain exports to China, to include Hong Kong and Macau, including restrictions targeting the semiconductor manufacturing industry in China.

These types of restrictions may impact the operations of ACM Shanghai.

Beginning in October 2022 and continuing through 2025, BIS announced a series of new rules that significantly expanded U.S.

export controls as applied to advanced IC products, related manufacturing equipment and technology, and supercomputers, where the destination or ultimate end user is based in mainland China, Hong Kong and Macau.

In the case of semiconductor manufacturing equipment, the new rules require an export license for the export, re-export, or transfer to or within mainland China, Hong Kong and Macau of additional types of semiconductor manufacturing equipment, items for use in manufacturing designated types of semiconductor manufacturing equipment (along with other items subject to the EAR, for use in the development or production of ICs), and semiconductor manufacturing equipment for use at certain IC manufacturing and development facilities in mainland China.

In most cases, license applications for these exports are reviewed under a presumption of denial.

In addition, BIS imposed new restrictions by which U.S.

persons anywhere in the world are effectively barred from engaging in certain activities related to the development and production of semiconductors at mainland China fabrication facilities meeting specified criteria, even if no items subject to the EAR are involved.

These new restrictions have impacted the procurement by ACM Shanghai and ACM Korea of items, technology and software from the United States, and of certain commodities subject to U.S.

export controls from outside the United States, for use in manufacturing its products.

The new restrictions may also limit the ability of ACM Shanghai and ACM Korea personnel to provide services to U.S.

customers, as these activities could involve the disclosure of U.S.

technology to ACM Shanghai or ACM Korea personnel, which could require authorization from BIS.

See “Item 1A.

Risk Factors—Regulatory Risks—Our operations in mainland China and Korea, including the import of components, technology, and activities of U.S.

personnel therein, may be further impacted by the addition of ACM Shanghai, ACM Korea and related entities to the BIS Entity List” of this report for more information.

ACM and ACM Shanghai have implemented modifications to their existing business policies and practices in response to these enhanced export restrictions, including by imposing limitations on the activities of their U.S.

persons and undertaking measures in connection with their supply chains more broadly to comply with the new regulations.

ACM Shanghai is continuing to assess the impact of the October 2023 changes, together with the October 2022 rules, and will continually adjust or modify its policies and practices as required to comply with these or other related updates.

ACM Shanghai is continuing to assess the impact of these export control restrictions, and will continually adjust or modify its policies and practices as required to comply with these or other related updates.

Based on our ongoing review, we believe these regulations may directly impact ACM Shanghai’s ability to meet its future production plans, or indirectly impact the spending plans of ACM Shanghai’s customer base.

ACM may not be able to import, or may face substantial restrictions in importing, certain parts from the United States or parts subject to U.S.

export controls from outside the United States to support tool shipments to such facilities, or to be embedded into tools defined by affected ECCNs.

ACM and ACM Shanghai believe that as a result of the October 2022 and October 2023 restrictions, several ACM Shanghai customers have significantly reduced production and related capital spending at facilities meeting the restricted advanced node capabilities.

In addition, ACM Shanghai has experienced challenges as the companies in its supply chain adapt their policies to the new regulations.

These factors had an adverse impact on ACM Shanghai’s shipments and sales for the twelve months ended December 30, 2023.

During the twelve months ended December 30, 2023, two prominent exporters of advanced semiconductor manufacturing equipment, the Netherlands and Japan, announced and began to implement plans to join the United States in imposing semiconductor-focused export controls.

ACM Shanghai may not import, or faces substantial restrictions in importing, parts from the United States or parts subject to U.S.

export controls from outside the United States to support tool shipments to such facilities.

Outside of the U.S., during the three and twelve months ended December 30, 2023, two prominent exporters of advanced semiconductor manufacturing equipment, the Netherlands and Japan, announced and began to implement plans to join the United States in imposing semiconductor-focused export controls.

On May 23, 2023, the Japanese government issued the final amendment to an ordinance implementing new export controls to require licensing for export of certain advanced semiconductor manufacturing equipment, effective as of July 23, 2023.

The amendment expands the scope of export controls to prohibit (1) exporting twenty-three additional categories of items relating to semiconductor manufacturing and (2) providing technology relating to manufacturing, development or use of these categories of items, in both cases, without an advance license.

The amendment expands the scope of export controls to prohibit (1) exporting 23 additional categories of items relating to semiconductor manufacturing and (2) providing technology relating to manufacturing, development or use of these categories of items, in both cases, without an advance license.

While the expanded export controls apply to exports to any jurisdiction, exports to certain jurisdictions, such as the United States, are expected to be permitted by certain types of broad general licenses.

However, it remains to be seen whether the Japanese government will authorize any exports of these items to mainland China by a limited general license or specific license, if at all.

On June 30, 2023, the Government of the Netherlands published additional export control measures for advanced semiconductor manufacturing equipment.

The Regulation on Advanced Semiconductor Manufacturing Equipment took effect on September 1, 2023.

From that point on, the export of certain advanced semiconductor manufacturing equipment, as specified in the Annex to the Regulation , has been subject to a national export license authorization requirement by the Dutch Central Import and Export Service.

As a result of the new restrictions imposed by the Japanese and Dutch governments, ACM Shanghai and/or several of its customers in mainland China may be impacted by, and required to reduce their production capabilities due to, the lack of, or reduced, ability to source items relating to semiconductor manufacturing from Japan and the Netherlands.

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Likewise, on September 30, 2023, the Government of the Netherlands published additional export control measures for advanced semiconductor manufacturing equipment.

The Regulation on Advanced Semiconductor Manufacturing Equipment entered force on September 1, 2023.

From that point on, the export of certain advanced semiconductor manufacturing equipment, as specified in the Annex to the Regulation, is now subject to a national export license authorization requirement by the Dutch Central Import and Export Service.

Efforts to further tighten semiconductor-related export controls have continued in 2025.

In December 2025, the Government of the Netherlands implemented supplemental export controls on certain emerging technology items including sensitive goods, software, and technology related to the semiconductor sector.

See “Part II.

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We develop, manufacture and sell innovative capital equipment to the global semiconductor industry.

Since we sell tools to a small number of customers and we customize those tools to fulfill the customers’ specific requirements, our revenue generation fluctuates, depending on the length of the sales, development and evaluation phases:

Since we sell tools to a small number of customers and we configure those tools to fulfill the customers’ specific requirements, our revenue generation fluctuates, depending on the length of the sales, development and evaluation phases:

• Sales and Development.

During the sale process we may, depending on a prospective customer’s specifications and requirements, need to perform additional research, development and testing to establish that a tool can meet the prospective customer’s requirements.

Sales cycles for orders that require limited customization and do not require that we develop new technology usually take from 6 to 12 months, while the product life cycle, including the initial design, demonstration and final assembly phases, for orders requiring development and testing of new technologies can take as long as 2 to 4 years.

Sales cycles for orders that require limited configuration and do not require that we develop new technology usually take from 6 to 12 months, while the product life cycle, including the initial design, demonstration and final assembly phases, for orders requiring development and testing of new technologies can take as long as 2 to 4 years.

As we expand our customer base, we expect to gain more repeat purchase orders for tools that we have already developed and tested, which we believe will reduce the need for a demonstration phase and shorten the development cycle.

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The sales price of a particular tool will vary depending upon the required specifications.

We have designed equipment models using a modular configuration that we customize to meet customers’ technical specifications.

We have designed equipment models using a modular platform that we configure to meet customers’ technical specifications.

For example, our Ultra C models for SAPS, TEBO, Tahoe and other solutions use common modular configurations that enable us to create a wet-cleaning tool meeting a customer’s specific requirements, while using pre-existing designs for chamber, electrical, chemical delivery and other modules.

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Because of the relatively high purchase prices of our tools, customers generally pay in installments.

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We have increased our sales efforts to penetrate the markets in North America and Western Europe.

We utilize ASC 606 which was adopted in 2018 set forth in Accounting Standards Update, or ASU, No.

2014-09, Revenue from Contracts with Customers (Topic 606) , of the Financial Accounting Standards Board, or FASB, regarding the recognition, presentation and disclosure of revenue in our financial statements as described below under “—Critical Accounting Estimates—Revenue Recognition.”

We offer extended maintenance service contracts to provide services such as trouble-shooting or fine-tuning tools, and installing spare parts, following expiration of applicable initial standard assurance type warranty coverage periods, which for sales to date have extended from 12 to 36 months as described under “—Critical Accounting Estimates—Warranty.” In 2024, 2023, and 2022, we received payments for parts and labor for service activities provided from time to time, but as of December 31, 2024 we had not yet entered into extended maintenance service contracts with respect to the substantial majority of tools for whi ch initial warranty coverage had expired.

We expect to enter into extended maintenance service contracts with customers as additional initial warranties expire, but we do not expect revenue from extended maintenance service contracts to represent a material portion of our revenue in the future.

We recognize and disclose revenue in accordance with Accounting Standards Codification 606, Revenue from Contracts with Customers (Topic 606) , of the Financial Accounting Standards Board, or FASB.

Refer to “—Critical Accounting Estimates—Revenue Recognition" for more detail.

The loss or delay of multiple large sale transactions in a quarter could impact our results of operations for that quarter and any future quarters for which revenue from that transaction is lost or delayed, as described under “Item 1A.

Risk Factors—Risks Related to Our Business and Our Industry—Our quarterly operating results can be difficult to predict and can fluctuate substantially, which could result in volatility in the price of Class A common stock.” It is difficult to predict accurately when, or even if, we can complete a sale of a tool to a potential customer or to increase sales to any existing customer.

Risk Factors—Risks Related to Our Business and Our Industry—Our quarterly operating results can be difficult to predict and can fluctuate substantially, which could result in volatility in the price of our Class A common stock.” It is difficult to predict accurately when, or even if, we can complete a sale of a tool to a potential customer or to increase sales to any existing customer.

Our tool demand forecasts are based on multiple assumptions, including non-binding forecasts received from customers years in advance, each of which may introduce error into our estimates.

Difficulties in forecasting demand for our tools make it difficult for us to project future operating results and may lead to periodic inventory shortages or excess spending on inventory or on tools that may not be purchased, as further described in “Item 1A.

Future operating results are also difficult to project due to the long lead time for initial tools that we produce for a customer that potentially may not be accepted.

Refer to “Item 1A.

Risk Factors—Risks Related to Our Business and Our Industry—Difficulties in forecasting demand for our tools may lead to periodic inventory shortages or excess spending on inventory items that may not be used.”

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• depreciation of manufacturing equipment;

• amortization of costs of software used for manufacturing purposes;

• other expenses attributable to our manufacturing department;

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• allocated overhead for rent and utilities.

We are not party to any long-term purchasing agreements with suppliers.

We are not generally party to long-term purchasing agreements with suppliers.

Please see “Item 1A.

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The rates at which we add customers and install tools will affect the level and time of this spending.

In addition, because we often import components and spare parts from various foreign countries, we have experienced, and expect to continue to experience, the effect of the currency fluctuations on our cost of revenue.

In addition, because we often import components and spare parts from various foreign countries, we have experienced, and expect to continue to experience, the effect of currency fluctuations on our cost of revenue.

We generally expect gross margin to range betw een 42% and 48% for the foreseeable future, with direct manufacturing costs approximating 50% to 55% of revenue and overhead costs totaling ap proximately 5% of revenue.

We seek to maintain our gross margin by continuing to develop proprietary technologies that avoid pricing pressure for our wet cleaning equipment.

We actively manage our operations through principles of operational excellence designed to

ensure continuing improvement in the efficiency and quality of our manufacturing operations by, for example, implementing factory constraint management and change control and inventory management systems.

We actively manage our operations through principles of operational excellence designed to ensure continuing improvement in the efficiency and quality of our manufacturing operations by, for example, implementing factory constraint management and change control and inventory management systems.

In addition, our purchasing department actively seeks to identify and negotiate supply contracts with improved pricing to reduce cost of revenue.

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A significant portion of our raw materials are denominated in the RMB, while the majority of our purchase orders from customers are denominated in U.S.

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Sales and marketing expense consists primarily of:

• compensation of personnel associated with pre- and after-sales support and other sales and marketing activities, including stock-based compensation;

• compensation of personnel associated with pre-sale and after-sale services and support and other sales and marketing activities, including stock-based compensation;

• sales commissions paid to independent sales representatives;

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• cost of trade shows;

• cost of promotional tools to potential new customers;

• costs of tools built for promotional purposes for potential new customers;

• travel and entertainment;

• allocated overhead for rent and utilities.

• rent and utilities.

Sales and marketing expense can be significant and may fluctuate, in part because of the resource-intensive nature of our sales efforts and the length and variability of our sales cycle.

The length of our sales cycle, from initial contact with a customer to the execution of a purchase order, is generally 6 to 24 months.

The length of our sales cycle, from initial contact with a customer to the fulfilling purchase order, is generally 6 to 24 months.

During the sales cycle, we expend significant time and money on sales and marketing activities, including educating customers about our tools, participating in extended tool evaluations and configuring our tools to customer-specific needs.

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• allocated overhead for rent and utilities.

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Stock-Based Compensation Expense

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• Stock-based awards granted to employees and non-employees are measured at the fair value of the awards on the grant date and are recognized as expenses either (a) immediately on grant, if no vesting conditions are required, or (b) using the graded vesting method, net of estimated forfeitures, over the requisite service period.

The fair value of stock options is determined using the Black-Scholes valuation model when there are service and performance condition attached, or the Monte Carlo valuation model when there is market condition attached.

Stock-based compensation expense, when recognized, is charged to cost of revenue or to the category of operating expense corresponding to the service function of the employee or non-employee.

• We also grant discounts to employee s when they subscribe for the new shares o f ACM Shanghai.

• We also grant discounts to employee s when they subscribe for new shares o f ACM Shanghai.

Mainland China Government Research and Development Funding

ACM Shanghai has received seven special government grants.

The first grant, which was awarded in 2008, relates to the development and commercialization of 65nm to 45nm stress-free polishing technology.

The second grant was awarded in 2009 to fund interest expense on short-term borrowings.

The third grant was made in 2014 and relates to the development of electro copper-plating technology.

The fourth grant was made in June 2018 and related to development of polytetrafluoroethylene.

The fifth grant was made in 2020, and relates to the development of Tahoe single bench cleaning technologies.

As of December 31, 2021, the fourth and fifth grants had been fully utilized.

The sixth grant was made in 2020, and relates to the development of other cleaning technologies.

The seventh grant was made in 2021, and relates to the development of the R&D and production center in the Lin-gang Special Area of Shanghai.

These governmental authorities provide significant funding, although ACM Shanghai and ACM Lingang is also required to invest certain amounts in the projects.

The governmental grants contain certain operating conditions, and we are required to go through a government due diligence process once the project is complete.

The grants therefore are recorded as long-term liabilities upon receipt, although we are not required to return any funds ACM Shanghai receives.

Grant amounts are recognized in our statements of comprehensive income (loss) as follows:

• 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 years ended December 31, 2024, 2023, and 2022, related government subsidies recogn ized as reductions of relevant expenses in the consolidated statements of comprehensive income (loss) were $0.5 million, $1.7 million and $1.2 million, respectively.

• Government subsidies related to depreciable assets are credited to income over the useful lives of the related assets for which the grant was received.

Government subsidies related to VAT reduction are credited to income in the period received.

F or the years ended December 31, 2024, 2023, and 2022, related government subsidies recognized as other income in the consolidated statements of comprehensive income (loss) were $2.0 million, $0.4 million, and $0.3 million, respectively.

Unearned government subsidies received are deferred for recognition and recorded as other long-term liabilities (see note 12 in the Notes to Consolidated Financial Statements included herein under “Item 8.

Financial Statements and Supplementary Data.”) in the consolidated balance sheet until the criteria for such recognition are satisfied.

Net Income Attributable to Non-Controlling Interests and Redeemable Non-Controlling Interests

In 2019 ACM Shanghai sold a total number of shares representing 8.3% of its outstanding ACM Shanghai shares, after which ACM Research held the remaining 91.7% of ACM Shanghai’s outstanding shares.

In 2021 ACM Shanghai sold a total number shares representing an additional 10% of its outstanding ACM Shanghai shares in its STAR IPO, after which ACM Research held the remaining 82.5% of ACM Shanghai’s outstanding shares.

During the year-ended December 31,2024, ACM's ownership declined to 81.5% due to the exercise of stock options related to ACM Shanghai shares (note

ACM Shanghai and ACM Lingang periodically receive government grants for items associated with technology development and related facilities.

The grants contain certain operating conditions, subject to government review upon completion of each specific project.

The grants are recorded as long-term liabilities upon receipt, and subsequently recognized in statements of comprehensive income as follows:

• Government grants are credited to research & development expense in the periods in which the specific projects are completed.

For the years ended December 31, 2025, 2024, and 2023, such credits to research & development expenses recognized in the consolidated statements of comprehensive income w ere $8.0 million , $0.5 million and $1.7 million, respectively.

• Government subsidies related to depreciable assets are credited to other income over the useful lives of the related assets for which the grant was received.

Government subsidies related to VAT reduction are credited to other income in the period received.

F or the years ended December 31, 2025, 2024, and 2023, related government subsidies recognized as other income in the consolidated statements of comprehensive income were $1.4 million, $2.0 million, and $0.4 million, respectively.

Unearned government subsidies received are deferred for recognition and recorded as other long-term liabilities on our consolidated balance sheet until the criteria for such recognition have been satisfied.

All of the company’s other long-term liabilities represent unearned government subsidies.

Net Income Attributable to Non-Controlling Interests

Net income attributable to non-controlling interests is attributable to the minority holders of shares of ACM Shanghai stock.

As a result, we reflect the portion of our net income allocable to the minority holders of ACM Shanghai shares as net income attributable to non-controlling interests.

Critical Accounting Policies and Estimates

As of December 31, 2025, ACM Research held 74.6% of ACM Shanghai’s outstanding shares.

Critical Accounting Estimates

In preparing our consolidated financial statements in conformity with GAAP, we make assumptions, judgments and estimates in applying our accounting policies that can have a significant impact on our revenue, operating income and net income, as well as on the value of certain assets and liabilities on our consolidated balance sheets.

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For information on our significant accounting policies, see note 2 in the notes to consolidated financial statements.

Revenue Recognition

We derive revenue principally from the sale of semiconductor capital equipment.

Revenue from contracts with customers is recognized using the following five steps pursuant to ASC Topic 606, Revenue from Contracts with Customers :

Identify the contract(s) with a customer;

Identify the performance obligations in the contract;

Determine the transaction price;

Allocate the transaction price to the performance obligations in the contract;

Recognize revenue when, or as, a performance obligation is satisfied.

Identify the contract(s) with a customer.

We generally consider written documentation including, but not limited to, signed purchase orders, master agreements, and sales orders as contracts, provided it has approval and commitment from the customer, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collection is probable.

Collectability is assessed based on our management’s assessment of the customer’s creditworthiness, historical payment experience, as well as other relevant factors.

Identify the performance obligations in the contract.

Performance obligations are accounted for separately if they are distinct.

A good or service is distinct if the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer, and the good or service is distinct in the context of the contract.

Our performance obligations generally include sales of tools and spare parts.

In addition, customer contracts can contain provisions for installation, training, software updates, most-favored pricing for spare parts, and other items which have been deemed immaterial in the context of the contract.

Determine the transaction price.

The transaction price for our contracts with customers may include fixed and variable consideration.

We include variable consideration in the transaction price to the extent that it is probable that a significant reversal of revenue will not occur in the future based on our historical experience with similar arrangements.

Allocate the transaction price to the performance obligations in the contract.

For contracts that contain multiple performance obligations, primarily those that include multiple tools, or spare parts sold together with tools, the Company allocates the transaction price to the performance obligations on a relative standalone selling price basis.

The Company recognizes contract liabilities associated w ith unsatisfie d performance obligations, based on the stand-alone observable selling prices or using an expected cost-plus-margin approach when a stand-alone selling price is not directly observable, and recognizes revenue as the related performance obligations are satisfied.

Recognize reve nue when, or as, a performance obligation is satisfied.

We recognize revenue from tools and spare parts at a point in time, when we have satisfied our performance obligation.

Our sales arrangements do not include a general right of return.

For shipments made to a customer that has not previously accepted a specific type of tool in the past, or first tools, revenues are recognized when the goods are accepted by the customer.

For shipments made to a customer that has previously accepted a specific type of tool, revenues are recognized upon shipment or delivery because we can objectively demonstrate that the goods meet all the required customer specifications.

Stock-based compensation

We account for grants of stock options based on their grant date fair value and recognize compensation expense over the vesting periods.

We estimate the fair value of the stock options granted with a service period-based condition and/or performance condition at the date of grant using the Black-Scholes option pricing model.

We estimate the fair value of the stock options granted with a market-based condition at the date of grant using the Monte Carlo simulation model.

For options granted with a service period-based and/or performance condition, we estimate the fair value of these stock option grants using the Black-Scholes option pricing model, which requires the input of subjective assumptions, including (a)Fair value of share of common stock, (b)the risk-free interest rate, (c) volatility, and (d) the expected term of the award.

• We use the market closing price for the Class A common stock as reported on the Nasdaq Global Market to determine the fair value of the Class A common stock.

We use the market closing price for the ACM Shanghai’s common stock as reported on the STAR Market to determine the fair value of ACM Shanghai’s common stock.

• For options granted by ACM Research, risk-free interest rate is based on the yields of U.S.

Treasury securities with maturities similar to the expected term of the share options in effect at the time of grant.

For options granted by ACM Shanghai, risk-free interest rate is based on the yields of RMB deposit in mainland China with maturities similar to the expected term of the share options in effect at the time of grant.

• We use historical volatility of our shares in the period equal to the expected term of each grant.

• The expected term of share options is based on the average of the vesting period and the contractual term for each grant.

Inventories consist of finished goods, raw materials, work-in-process and consumable materials.

Finished goods are comprised of direct materials, direct labor, depreciation and manufacturing overhead.

Inventory is stated at the lower of cost and net realizable value.

Our costing of inventories is principally determined by the weighted average cost method for raw materials.

We assess the recoverability of all inventories to determine if any adjustments are required.

We recognize a loss or impairment if in our judgement the inventory cannot be sold or used for production, if it has been damaged or should be considered as obsolete, or if the net realizable value is lower than the cost.

We also assess the status of our raw materials.

We recognize a loss or impairment for any raw materials aged more than three years.

The three-year aging is based on our assessment of technology change, our requirement to maintain stock, and other factors.

For raw materials aged less than three years of age, we recognize a specific loss or impairment if we determine the item does not have future use or is otherwise impaired.

Actual demand may differ from forecasted demand, and those differences may have a material effect on recorded inventory values.

We assess the recoverability of inventories to determine if any adjustments are required.

Our products each require a certain level of configuration, and the majority of work-in-process and finished goods inventory is built to fulfill specific

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customer orders for repeat shipments or first tool deliveries.

Inventory provisions are primarily made for slow-moving inventories.

Such estimates may differ from actual results, and these differences could have a material impact on the recorded inventory values.

Allowance for Credit Losses

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In determining the amount of the allowance for credit losses, we consider historical collectability based on past due status, the age of the accounts receivable balances, credit quality of our customers based on ongoing credit evaluations, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect our ability to collect from customers.

Income taxes are accounted for using the liability method.

Under this method, deferred income tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in

income in the period that includes the enactment date.

A valuation allowance would be provided for the deferred tax assets if it is more likely than not that the related benefit will not be realized.

On a quarterly basis, we provide income tax provisions based upon an estimated annual effective income tax rate.

The effective tax rate is highly dependent upon the geographic composition of worldwide earnings, tax regulations governing each region, availability of tax credits and the effectiveness of our tax planning strategies.

We carefully monitor the changes in many factors and adjust our effective income tax rate on a timely basis.

If actual results differ from these estimates, this could have a material effect on our financial condition and results of operations.

We maintained a partial valuation allowance as of December 31, 2024 with respect to certain net deferred tax assets based on our estimates of recoverability.

We determined that the partial valuation allowance was appropriate given our historical operating losses and uncertainty with respect to our ability to generate profits from our business model sufficient to take advantage of the deferred tax assets in all applicable tax jurisdictions.

The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations.

In accordance with the authoritative guidance on accounting for uncertainty in income taxes, we recognize liabilities for uncertain tax positions based on the two-step process.

The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained in audit, including resolution of related appeals or litigation processes, if any.

The second step is to measure the tax benefit as the largest amount that is more than fifty percent likely of being realized upon ultimate settlement.

We reevaluate these uncertain tax positions on a quarterly basis.

This evaluation is based on factors including changes in facts or circumstances, changes in tax law, effectively settled issues under audit and new audit activity.

Any change in these factors could result in the recognition of a tax benefit or an additional charge to the tax provision.

Interest and penalties related to uncertain tax positions are recorded in the provision for income tax expense on the consolidated statements of comprehensive income (loss).

We have provided standard assurance type warranty coverage on our tools for 12 to 36 months, covering labor and parts necessary to repair a tool during the warranty period.

Warranty obligations are affected by historical failure rates and associated replacement costs.

Utilizing historical warranty cost records, we calculate a rate of warranty expenses to revenue to determine the estimated warranty charge.

We update these estimated charges on a regular basis.

The actual product performance and field expense profiles may differ, and in those cases, we adjust our warranty accruals according ly.

Recent Accounting Pronouncements

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Unrealized gain (loss) on short-term investments 1.9 0.1 (0.5)

Other income (expense), net 0.8 -0.3 0.9

Other (expense) income, net (1.1) 0.8 (0.3)

Income from equity method investments 1.1 0.1 1.8

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Net income attributable to ACM Research, Inc.

13.2 % 13.8 % 10.1 %

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Comparison of Years Ended December 31, 2025, 202 4, and 2023

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Other Regions 3,331 6,366 16,754

Total revenue by geographic region

$ 901,309 $ 782,118 $ 557,723

The increase in revenue for 2025 compared to 2024 reflects higher sales of single wafer cleaning, Tahoe and semi-critical cleaning equipment, and ECP (front-end and packaging), furnace and other technologies and advanced packaging (excluding ECP), services and spares.

We attribute the increase to a longer-term commitment by our mainland China-based customers to increase production capacity to achieve a greater share of the global semiconductor market together with the market share changes and product cycles.

The increase in revenue for 2024 compared to 2023 was driven by higher sales of single wafer cleaning, Tahoe and semi-critical cleaning equipment, ECP (front-end and packaging), furnace and other technologies, and advanced packaging (excluding ECP), services & spares.

We attribute the revenue growth to continued investments in mature process nodes by current and new mainland China-based customers amidst an ongoing target to achieve a greater share of the global semiconductor market, incremental contribution from our new products, and better penetration of our product portfolio across our customer base.

The increase in revenue for 2023 compared to 2022 was driven primarily by higher sales of single wafer cleaning, Tahoe and semi-critical cleaning equipment, and increased contribution from newer ECP (front-end and packaging), furnace and other technologies.

Our Shanghai production operations were adversely impacted in the first half of 2022 to COVID-19-related restrictions, with a return to more normal operations in the second half of the year.

export regulations imposed in October of 2022 had an adverse impact on ACM Shanghai’s shipments and sales in the fourth quarter of 2022.

Cost of Revenue and Gross Margin

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Gross profit 400,067 391,554 276,215 2.2 % 41.8 %

Gross margin 50.1 % 49.5 % 47.2 % 0.5 2.30

Gross margin 44.4 % 50.1 % 49.5 % (570) bps 60 bps

Cost of revenue and gross profit increased in 2025 as compared to 2024 due to the increased sales volume, partly offset by a decrease in gross margin.

The decrease in gross margin versus the prior-year period was primarily due to revenue mix between product categories, and a higher provision for inventory.

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Cost of revenue and gross profit increased in 2024 as compared to 2023 due to the increased sales volume and an increase in gross margin.

The increased gross margin versus the prior-year period was primarily due to improved gross margins for certain products and overall product mix.

Cost of revenue and gross profit increased in 2023 as compared to 2022 due to the increased sales volume and an increase in gross margin.

The increased gross margin versus the prior-year period was primarily due to a higher mix of ECP (front-end and packaging), furnace, and other technologies, and a positive impact due to a change in the RMB to U.S.

dollar currency exchange rate.

Gross margin may vary from period to period, primarily related to the level of utilization and the timing and mix of revenue.

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Total operating expenses $ 290,638 $ 240,556 $ 180,376 20.8 % 33.4 %

Sales and marketing expense increased in 2024 as compared to 2023, and reflected an increase of $8.4 million due to higher personnel costs, an increase of $4.9 million due to higher stock-based compensation, and increase of $4.4 million from travel & entertainment and commissions, and an increase of $0.7 million in professional & outside services and other expenses.

Sales and marketing expense increased in 2023 as compared to 2022, and reflected an increase of $8.1 million due to

higher costs for personnel, commissions, travel and entertainment and other costs, an increase of $4.7 million due to higher

costs for professional services, outside services and other costs, and an increase of $3.8 million due to higher stock -based

compensation, partly offset by a decrease of $9.6 million for the cost of tools built for promotional purposes.

Sales and marketing expense increased $11.5 million in 2025 as compared to 2024 reflecting increases of $8.4 million in personnel costs, $3.3 million in outside services and other expenses, and $3.7 million for commissions and travel, entertainment, and promotional tools, offset by a $3.9 million decrease in stock-based compensation.

Sales and marketing expense increased $18.4 million in 2024 as compared to 2023, reflecting increases of $8.4 million in personnel costs, $4.9 million in stock-based compensation, $4.4 million from travel and entertainment and commissions, and $0.7 million in professional & outside services and other expenses.

We expect that, for the foreseeable future, sales and marketing expense will increase in absolute dollars, as we continue to invest in sales and marketing by hiring additional employees and expanding marketing programs in existing or new markets.

We must invest in sales and marketing processes in order to develop and maintain close relationships with customers.

We are making dollar-based investments in order to support growth of our customer base in the United States, and the relative strength of the dollar could have a significant effect on our sales and marketing expense.

Research and development expense increased in 2024 as compared to 2023, reflecting an increase of $10.1 million for personnel-related costs, an increase of $5.7 million in stock-based compensation, and an increase of $3.7 million in travel and entertainment and other costs to support product development, offset by a $5.5 million decrease in supplies and spares used in product development activities and a $1.2 million decrease in expenses for outside services.

We must invest in sales and marketing processes to develop and maintain close relationships with customers.

We are making dollar-based investments to support the growth of our customer base in the United States, and the relative strength of the dollar could have a significant effect on our sales and marketing expense.

Research and development expense increased $39.5 million 2025 as compared to 2024 reflecting increases of $26.7 million in costs of components for tools built for product development purposes, a $9.9 million in personnel costs, and $8.2 million in depreciation, outside services and other R&D-related costs, offset by a decrease of $5.3 million in stock-based compensation.

Research and development expense represented 16.1% and 13.5% of our revenue in the years ended December 31, 2025 and 2024, respectively.

Without reduction by grant amounts received from mainland China governmental authorities (see “—mainland China Government Research and Development Funding”), gross research and development expense totaled $152.9 million, or 17.0% of total revenue, in the year ended December 31, 2024 as compared to $105.9 million, or 13.5% of revenue, in the corresponding period in 2024.

Research and development expense increased in 2023 as compared to 2022, reflecting an increase of $15.4 million in costs

of components, costs of tools built for product development purposes, and costs of other research and development

supplies, an increase of $7.1 million for personnel-related costs, an increase of $5.9 million in stock-based compensation,

and an increase of $4.2 million in travel and entertainment costs to support product development, professional services, and

other research and development related expenses, offset by a decrease of $2.1 million for outside services.

Research and development expense increased $12.8 million in 2024 as compared to 2023, reflecting increases of $10.1 million for personnel costs, $5.7 million in stock-based compensation, and $3.7 million in travel and entertainment and other costs to support product development, offset by decreases of $5.5 million in supplies and spares used in product development activities and a $1.2 million for outside services.

We expect that, for the foreseeable future, research and development expense will increase in absolute dollars as we continue to invest in research and development to advance our technologies.

We intend to continue to invest in research and development to support and enhance our cleaning, plating, advanced packaging, furnace and future product offerings to build and maintain our technology leadership position.

General and administrative expense increased in 2024 as compared to 2023, reflecting an increase of $10.8 million in allowance for credit losses, $10.7 million in stock-based compensation, $3.1 million in personnel costs, professional services, and $4.3 million for travel & entertainment, depreciation and amortization, outside services, taxes and other general and administrative expenses.

General and administrative expense increased in 2023 as compared to 2022, reflecting an increase of $9.0 million in stock

based compensation, $3.3 million in personnel and professional services costs, $2.7 million in allowance for credit losses,

and $3.1 million for travel & entertainment, depreciation and amortization, outside services, taxes and other general and

administrative expenses.

General and administrative expense decreased $0.9 million in 2025 as compared to 2024, reflecting a $5.7 million decrease in stock-based compensation partially offset by increases of $3.6 million in personnel and professional services costs, $0.7 million in our allowance for credit losses, and $0.5 million in other costs related to general and administrative expenses.

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General and administrative expense increased $29.0 million in 2024 as compared to 2023, reflecting increases of $10.8 million in allowance for credit losses, $10.7 million in stock-based compensation, $3.1 million in personnel costs and professional services, and $4.4 million for travel & entertainment, depreciation and amortization, outside services, taxes and other general and administrative expenses.

Stock-Based Compensation Expense

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(in thousands)

Stock-Based Compensation Expense:

Cost of revenue $ 1,343 $ 2,385 $ 1,406

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General and administrative expense 16,822 22,527 11,789

Total stock-based compensation expense

$ 33,577 $ 49,576 $ 27,338

Interest income, net, Other Income (expense), net

Interest income, net and Other (expense) income, net

Year Ended December 31,

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Interest income, net $ 7,684 $ 5,784 $ 5,673 32.8 % 2.0 %

Other income (expense), net $ 6,334 $ (1,558) $ 3,315 -506.5 % -147.0 %

Interest income, net, increased slightly in 2024 compared to 2023, principally as a result of increase in interest income due to increase in cash balances, offset by increase in interest expenses incurred from a higher balance of total bank loans.

Interest income (expense), net, decreased in 2023 compared to 2022, principally as a result of reduced interest income from

lower interest income on reduced cash balances, offset by increase in interest expenses incurred from a higher balance of

total bank loans.

Other income (expense), net primarily reflects (a) gains or losses recognized from the impact of exchange rates on our foreign currency-denominated working-capital transactions and (b) government subsidies, as described under “—Government Research and Development Funding” above.

Other (expense) income, net $ (9,832) $ 6,334 $ (1,558) * *

*Not meaningful.

Interest income, net, increased in 2025 compared to 2024.

The change in interest income is a result of changes in balances of cash, cash equivalents, time deposits, while the change in interest expense is due to borrowings, together with changes in interest rates on the respective balances.

Interest income, net, increased slightly in 2024 compared to 2023, principally as a result of an increase in interest income due to increase in cash balances, offset by increase in interest expenses incurred from a higher balance of total bank loans.

Other (expense) income, net primarily reflects (a) gains or losses recognized from the impact of exchange rates on our foreign currency-denominated working-capital transactions and (b) government subsidies, as described under “—Government Research and Development Funding” above.

We realized $9.8 million of other expense in the year ended December 31, 2025, reflecting a $10.9 million loss from the impact of exchange rates on our working-capital, partially offset by $1.0 million from government subsidies.

Refer to “Mainland China Government Research and Development Funding” above, and other factors for detail.

We realized $6.3 million of other income in the year ended December 31, 2024, reflecting $4.2 million in gains from the impact of exchange rates on transactions, and $2.1 million from government subsidies and other items, as compared to $2.0 million in losses from the impact of exchange rates on transactions, and $0.5 million from government subsidies in the corresponding period in 2023.

We realized $1.6 million of other expense in the year ended December 31, 2023, of which $2.0 million was due to loss realized from transactions that resulted from changes in the RMB-to-U.S.

dollar exchange rate, as compared to a foreign exchange gain of $1.7 million in the corresponding period in 2022.

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Realized gain and unrealized loss from short-term investments, and income from equity method investments

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2025 v 2024 % Change

2023 v 2022 Absolute Change

(in thousands)

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10,290 423 9,952 2,332.6 % (95.7) %

*Not meaningful.

We recorded a realized gain on short-term investments including dividends and net gains from sales of short-term investments.

We recorded a realized gain on sale of short-term investments of $1.8 million for the year ended December 31, 2024 as compared to a realized gain of $9.0 million for the same period in 2023 primarily due to the sales of ACM Shanghai’s indirect investment in publicly traded shares in the 2023 fiscal year.

We recorded an unrealized gain on short-term investments of $1.0 million for the year ended December 31, 2024 as compared to an unrealized loss of $2.7 million for the same period in 2023, due primarily to a change in market value of ACM Shanghai’s indirect investment in publicly traded shares.

We recorded an unrealized loss on short-term investments of $2.7 million for the year ended December 31, 2023 as

compared to an unrealized loss of $7.9 million for the same period in 2022, due primarily to a change in market value of

ACM Shanghai’s indirect investment in publicly traded shares.

Income from equity method investments for the year ended December 31, 2024 decreased by $9.5 million compared to the year ended December 31, 2023 primarily due to a significant decrease in net income from equity method investments.

Income from equity method investments for the year ended December 31, 2023 increased by $5.3 million compared to the

year ended December 31, 2022 primarily due to higher net income from equity method investments.

Tax Benefit (Expense)

The unrealized gain (loss) is based on a change in market value of ACM Shanghai’s short-term investments (note 12).

Income from equity investments is derived from net income from investments in affiliates (note 11).

Income from equity method investments varies based upon the performance of our investments accounted for under the equity method.

Refer to Long Term Investments (note 11), in our notes to our consolidated financial statements for details on these equity method investments.

Tax (expense) benefit

Year Ended December 31,

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Foreign (19,632) (29,120) (19,696)

Total current tax expense (29,605) (32,603) (11,636)

Total current tax (expense) benefit (28,265) (29,605) (32,603)

federal 652 (5,244) 7,316

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14,966 (5,426) 13,239

Total income tax expense

$ (35,031) $ (19,364) $ (16,798)

Total income tax benefit (expense) $ (13,299) $ (35,031) $ (19,364)

We recognized a tax expense of $13.3 million for the year ended December 31, 2025 as compared to a tax expense of $35 million for the prior year period.

The increased tax expense in 2024 primarily resulted from the tax effect of increased operating profit generated.

The decreased tax expense in 2025 primarily resulted from the tax effect of decreased operating profit generated.

As we collect and prepare necessary data, and interpret the guidance issued by the U.S.

Treasury Department, the Internal Revenue Service, and other standard-setting bodies, we may make adjustments to the provisional amounts.

Those adjustments may materially affect our provision for income taxes and effective tax rate in the period in which the adjustments are made.

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adjustments may materially affect our provision for income taxes and effective tax rate in the period in which the adjustments are made.

Our effective tax rate differs from statutory rates of 21% for U.S.

federal income tax purposes and 12.5% to 25% for mainland China income tax purposes due to the effects of the valuation allowance and certain permanent differences as it pertains to book-tax differences in the treatment of stock-based compensation and non-U.S.

federal income tax purposes and 25% for mainland China income tax purposes due to the effects of the valuation allowance and certain permanent differences as it pertains to book-tax differences in the treatment of stock-based compensation and non-U.S.

research expenses.

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ACM Shanghai was certified as an “advanced and new technology enterprise” in 2012 and again in 2016, 2018, 2021 and 2024, effective until December 31, 2026.

In 2021, ACM Shanghai was certified as an eligible integrated circuit production enterprise and was entitled to a preferential income tax rate of 12.5% from January 1, 2020 to December 31, 2022.

Certain entities which meet requirements according to the Policy of the Lingang New area in China (Shanghai) Pilot Free Trade Zone are entitled to a preferential income tax rate of 15%.

ACM Lingang was certified for this in 2021, and this preferential income tax rate is valid from January 1, 2020 until December 31, 2024.

ACM Lingang’s tax is expected to be exempt for first two profitable years after NOL utilization and half of thestatuatory tax rate for the next three years.

We file income tax returns in the United States and state and foreign jurisdictions.

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Foreign currency translation adjustment $ 33,335 $ (15,728) $ (10,617) * 48.1 %

We recorded a foreign currency translation adjustment of ($15.7 million) for the year ended December 31, 2024, as compared to $(10.6) million for 2023, based on the net effect of RMB to dollar exchange rate fluctuations for the period on the converted value of ACM Shanghai’s RMB-denominated balances to U.S.

*Not meaningful.

The foreign currency translation adjustment is primarily based on the net effect of RMB to dollar exchange rate fluctuations for the period on the converted value of ACM Shanghai’s RMB-denominated balances to U.S.

dollar equivalents.

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Comprehensive income attributable to non-controlling interests

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Comprehensive income attributable to non-controlling interests $ 35,909 $ 26,365 $ 17,689 36.2 % 49.0 %

Comprehensive income attributable to non-c ontrolling interest increased by $8.7 million for the years ended December 31, 2024 and 2023 compared to the prior year, primary due to a significant change in net income generated from the non-controlling interests as impacted from foreign exchange rate fluctuations.

Comprehensive income attributable to non-controlling interests represents the portion of ACM Shanghai's operating results attributable to shares of ACM Shanghai stock held by unaffiliated shareholders.

Liquidity and Capital Resources

The following chart depicts our corporate organization as of December 31, 2024:

A detailed description of how cash is transferred through our organization is set forth unde r “Note 2 – Summary of Significant Accounting Policies – Cash and Cash Equivalents” to the Consolidated Financial Statements of this report.

A detailed description of how cash is transferred through our organization is set forth under “note 2 – Summary of Significant Accounting Policies – Cash and Cash Equivalents” to the Consolidated Financial Statements of this report.

During the year ended December 31, 2025, we funded our technology development and operations principally through our beginning global cash balances, including the cash balances at ACM Shanghai, borrowings by ACM Shanghai from local financial institutions and our loan from China CITIC Bank.

Cash and cash equivalents, restricted cash, short-term time deposits and long-term time deposits wer e $441.9 million at December 31, 2024, compared to $304.5 million at December 31, 2023.

Th e $137.4 m illion increase was primarily driven by $152.5 million of cash generated by operations, ($103.8 million ) used in investing activities excluding the change in time deposits, $92.5 m illion net cash provided by financing activities, a ($4.8) million decre ase from the effect of exchange rate on cash, cash equivalents and restricted cash, and a $1.0 million increase from the effect of exchange rate on non-cash items.

Cash and cash equivalents, restricted cash, short-term time deposits and long-term time deposits were $1,132.6 million at December 31, 2025, compared to $441.9 million at December 31, 2024.

The $690.7 million increase was primarily driven by $742.5 million net cash provided by financing activities, $12.8 million from the effects of exchange rates on cash, cash equivalents and restricted cash, and $1.0 million from the effects of foreign exchange translation rates on time deposits, partially offset by $10.3 million used in operations and $55.3 million used in investing activities excluding the change in time deposits.

The table below represents the cash an d cash equivalents, restricted cash, and time deposits as of December 31, 2025 and 2024:

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We believe our existing cash and cash equivalents and short-term and long-term time deposits, our cash flow from operating activities, and bank borrowings by us and ACM Shanghai will be sufficient to meet our anticipated cash needs within our longer-term planning horizon.

ACM Shanghai has historically participated in certain mainland China government-sponsored grant and subsidy programs, as described under “—Key Components of Results of Operations—mainland China Government Research and Development Funding” and “—Contractual Obligations” and we expect that ACM Shanghai will continue to take advantage of these programs when they are available and fit with our business strategy.

ACM Shanghai has h istorically participated in certai n mainland China government-sponsored grant and subsidy programs, as described under “—Key Components of Results of Operations—mainland China Government Research and Development Funding” and “—Contractual Obligations” and we expect that ACM Shanghai will continue to take advantage of these programs when they are available and fit with our business strategy.

ACM Shanghai generally applies for these grants and subsidies through the applicable mainland China government agency’s defined processes.

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The decision to award the grant to ACM Shanghai is made by the relevant mainland China government agencies based on suitability and the merits of the application.

Neither ACM Research, nor ACM Shanghai or any of our other subsidiaries, has any direct relationship with any mainland China government agency, and our anticipated cash needs for the next twelve months neither anticipate, nor require, receipt of any mainland China government grants or subsidies.

Neither ACM Research, nor ACM Shanghai or any of our other subsidiaries,

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has any direct relationship with any mainland China government agency, and our anticipated cash needs for the next twelve months neither anticipate, nor require, receipt of any mainland China government grants or subsidies.

To the extent our cash and cash equivalents, cash flow from operating activities and short-term bank borrowings are insufficient to fund our future activities in accordance with our strategic plan, we may determine to raise additional funds through public or private debt or equity financings or additional bank credit arrangements.

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ACM Shanghai, our only direct mainland China subsidiary, is, however, subject to mainland China restrictions on distributions to equity holders.

The use of proceeds raised by the STAR Market IPO, without further approvals, are limited to specific usage.

We currently intend for ACM Shanghai to retain all available funds from any

future earnings for use in the operation of its business and do not anticipate it paying any cash dividends.

The use of proceeds raised by Private Offering and the S TAR Market IPO and Private Offering without further approvals, are limited to specific usage.

We currently intend for ACM Shanghai to retain all available funds from any future earnings for use in the operation of its business and do not anticipate it paying any cash dividends.

Our accounts receivable balance fluctuates from period to period, which affects our cash flow from operating activities.

Fluctuations vary depending on cash collections, client mix, and the timing of shipment and acceptance of our tools.

We have never declared or paid cash dividends on our capital stock.

ACM Research has never declared or paid cash dividends on our capital stock.

We intend to retain all available funds and any future earnings to support the operation of and to finance the growth and development of our business and do not anticipate paying any cash dividends in the foreseeable future.

Cash Flow Provided by (Used in) Operating Activities.

Net cash provided by (used in) operations during the year ended December 31, 2024, 2023, and 2022 consisted of:

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Cash Flow from Operating Activities.

Net cash (used in) provided by operating activities during the year ended December 31, 2025, 2024, and 2023 consisted of:

Year Ended December 31,

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Non-cash operating lease cost 4,544 3,815 3,580

3,815 3,580 2,816

Provision for inventory 15,485 2,796 575

Provision for credit losses 14,498 13,517 2,741

Gain on disposals of property plant and equipment

Depreciation and amortization 16,328 9,967 8,092

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Income from equity method investments (10,290) (423) (9,952)

(423) (9,952) (4,666)

Unrealized (gain) loss on short-term investments (17,455) (973) 2,737

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Stock-based compensation 33,577 49,576 27,338

Others 1,309 945 (2)

Dividends from unconsolidated affiliates 2,100 1,529 —

Net changes in operating assets and liabilities (177,827) (63,066) (184,590)

(63,066) (184,590) (137,006)

Net cash flow provided by (used in) operating activities $ 152,450 $ (75,323) $ (62,194)

Significant changes in operating asset and liability accounts during the year-ended December 31, 2024, 2023, and 2022 included the following uses of cash:

increases of inve ntories of $64.1 million (Note 5), and an increase of accounts receivable of $123.3 million (Note 4).

As described under “—Key Components of Results of Operations—Mainland China Government Research and Development Funding,” ACM Shanghai has received research and development grants from local and central mainland China governmental authorities.

ACM Lingang received cash payments of $3.9 million related to such grants in the year ended December 31, 2024, as compared to cash receipts of $51,000 in the same period of 2023.

Net cash (used in) provided by operating activities $ (10,325) $ 152,450 $ (75,323)

Significant changes in operating asset and liability accounts during the year-ended December 31, 2025 included the following uses of cash:

an increase in inve ntories of $108.2 million (note 5), an increase in accounts receivable of $116.1 million (note 4), and a decrease in customer advances of $60.8 million (note 3).

As described under “—Key Components of Results of Operations—Mainland China Government Research and Development Funding,” ACM Shanghai and ACM Lingang have received research and development grants from local and central mainland China governmental authorities.

ACM Lingang received cash payments of $10.3 million related to such grants in the year ended December 31, 2025.

The u ses of cash are offset by the following significant sources of cash:

an increase in other payables and accrued expenses of $27.1 million and an increase in accounts payable of $67.9 million.

Significant changes in operating asset and liability accounts during the year-ended December 31, 2024, included the following uses of cash:

increases of inventories of $64.1 million, and an increase of accounts receivable of $123.3 million.

As described under “—Key Components of Results of Operations—Mainland China Government Research and Development Funding,” As noted above, ACM Lingang received grants of $3.9 million in the year ended December 31, 2024.

The uses of cash are offset by the following significant sources of cash:

an increase in advances from customers of $67.1 (Note 3), an increase in other payables and accrued expenses of $23.2 million, an increase in FIN-48 and income taxes payable of $13.7 m illion, and an increase in accounts payable of $1.4 million.

an increase in advances from customers of $67.1, an increase in other payables and accrued expenses of $23.2 million, an increase in FIN-48 and income taxes payable of $13.7 million, and an increase in accounts payable of $1.4 million.

Cash Flow Used in Investing Activities.

Net cash used in investing activities for the year ended December 31, 2024, excluding net cash proceeds from the sale of time deposits, was $103.8 million, primarily consisting of $85.9 million purchase of property and equipment and intangible assets, and $24.9 million purchase of long-term investments (note 13) and $1.4 million purchase of equity investments, partly offset by $8.4 million net proceeds from the sale of short-term investments.

Net cash used in investing activities for the year ended December 31, 2025, excluding time deposits and long-term investment activities, was $55.3 million, primarily consisting of $57.7 million of purchases of property and equipment and intangible assets, offset by $2.1 million net proceeds from the sale of short-term investments.

Net cash used in investing activities for the year ended December 31, 2024, excluding time deposits and long-term investment activities, was $103.8 million, primarily consisting of $85.9 million for purchases of property and equipment and intangible assets, $24.9 million for purchases of long-term investments and $1.4 million for purchases of equity investments, partly offset by $8.4 million of net proceeds from the sale of short-term investments.

Cash Flow Provided by Financing Activities.

Net cash provided by financing for the year ended December 31, 2024 was $92.5 million, primarily consisting of $130.2 million net proceeds from short and long-term borrowings, and $11.1 million in proceeds from the exercise of stock options, offset by ($ 41.9 million) of short-term and long-term loan repayment, and ($6.9 million) of dividends paid by ACM Shanghai.

We and ACM Shanghai, together with the subsidiaries of ACM Shanghai, have short-term and long-term borrowings with six banks, as follows:

Net cash provided by financing activities for the year ended December 31, 2025 was $742.5 million, primarily consisting of $623.0 in net proceeds to ACM Shanghai from the Private Offering, $206.7 million in net proceeds from short and long-term borrowings, and $34.8 million in proceeds from the exercise of stock options, offset by ($107.6 million) of short-term

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and long-term loan repayments, ($7.6 million) of dividends paid by ACM Shanghai, and ($7.0 million) for the repurchase of shares of stock of ACM Shanghai.

Net cash provided by financing activities for the year ended December 31, 2024 was $92.5 million, primarily consisting of $130.2 million of net proceeds from short and long-term borrowings, and $11.1 million in proceeds from the exercise of stock options, offset by ($41.9 million) of short-term and long-term loan repayments, and ($6.9 million) of dividends paid by ACM Shanghai.

We and ACM Shanghai, together with the subsidiaries of ACM Shanghai, have short-term and long-term borrowings with the following lenders, as follows:

Lender Agreement Date Maturity Date Annual

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(in thousands)

China CITIC Bank (2) July 2023 Repayable by installments and the last installments repayable in December 2025 3.45 % RMB200,000 RMB99,896

China CITIC Bank (2) January 2025 Repayable by installments and the last installments repayable in January 2028 3.60 % RMB200,000 RMB199,980

$ 28,460 $ 28,460

China Everbright Bank December 2024 December 2027 2.60 % RMB600,000 RMB399,327

China Everbright Bank December 2024 September 2027 2.60 % RMB600,000 RMB399,207

$ 85,380 $ 56,806

China Merchants Bank August 2024 August 2025 2.60 % RMB200,000 RMB66,048

China Merchants Bank December 2025 December 2026 2.11%-2.28% RMB500,000 RMB320,192

$ 71,150 $ 45,563

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$ 56,920 $ 48,487

Industrial and Commercial Bank of China November 2024 November 2027 2.50 % RMB300,000 NIL

Shanghai Pudong Development Bank December 2024 September 2025 2.60 % RMB300,000 NIL

China Merchants Bank August 2024 August 2034 2.95 % RMB1,000,000 NIL

$ 139,100 $ —

Bank of China November 2024 November 2035 2.70 % RMB1,000,000 NIL

Industrial and Commercial Bank of China November 2024 November 2027 2.25 % RMB300,000 RMB299,195

$ 42,690 $ 42,576

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$ 42,690 $ 42,008

Bank of Shanghai December 2022 October 2024 2.85 % RMB100,000 RMB100,079

$ 13,910 $ 13,920

China CITIC Bank August 2023 Repayable by installments and the last installments repayable in August,2025 3.10 % RMB100,000 RMB99,886

$ 13,910 $ 13,894

Industrial Bank of Korea December 2023 December 2024 4.27 % KRW2,000,000 KRW2,000,000

Bank of Shanghai June, 2025 June, 2026 2.11 % RMB100,000 NIL

China CITIC Bank August 2023 September 2026 2.11 % RMB100,000 RMB100,059

$ 14,230 $ 14,238

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(1) Converted from RMB to dollars as of December 31, 2025.

The loan from China Merchants Bank is secured by a pledge of the property of ACM Lingang and guaranteed by ACM Shanghai, as described above under “—Contractual Obligations.”

(2) This China CITIC bank facility agreement is with ACM Research, Inc.

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(3) The loan from China Merchants Bank is secured by a pledge of the property of ACM Lingang and guaranteed by ACM Shanghai, as described above under “—Contractual Obligations.”

Effect of exchange rate changes on cash, cash equivalents and restricted cash.

The impact of fluctuations of the RMB to U.S.

dollar currency exchange rate on a significant balance of our cash, and cash equivalents held in RMB-denominated accounts (Note 2) contributed t o a $4.8 million decrease in the value of these items during the year ended December 31, 2024.

dollar currency exchange rate in RMB-denominated accounts (note 2) contributed to a $12.8 million increase in the value of these items during the year ended December 31, 2025.

Contractual Obligations

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ACM Lingang obtained rights to use approximately 43,000 square meters (10.6 acres) of land in the East China Silicon Hub of Lin-gang Special Area of China (Shanghai) Pilot Free Trade Zone, or the Land Use Right, for a period of fifty years, commencing on the date of delivery of the land in July 2020, which we refer to as the Delivery Date.

In exchange for its land use rights, ACM Lingang paid aggregate grant fees of RMB 61.7 million ($9.5 million), or the Grant Fees, and a performance deposit of RMB 12.3 million ($1.9 million), which is equal to 20% of the aggregate Grant Fees, to secure its achievement of the following performance milestones:

• 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;

• the start of production within 42 months after the Delivery Date (20% of the performance deposit), or Production Start Milestone.

Upon satisfaction of a milestone, the portion of the performance deposit attributable to that milestone will be repayable to ACM Lingang within ten business days.

If the achievement of any of the above milestones is delayed or abandoned, ACM Lingang may be subject to additional penalties and may lose its rights to both the use of the granted land and any partially completed facilities on that land.

The status of the performance milestones for the period ended December 31, 2024 is as follows:

• ACM Lingang achieved the Construction Start Milestone and 60% of the performance deposit was refunded to ACM Shanghai in 2020.

• We expect that the Lin-gang Special Area Administration, with supplementary land grant contracts, will adjust certain performance terms, including extension of the Construction Completion and Production Start milestones.

• The Construction Completion Milestone was required to be met by January 9, 2024 but was not achieved.

ACM Lingang believes it will receive the refund without penalty, however, based on extensions expected

in the supplementary land grant contracts.

We cannot guarantee that ACM Lingang will achieve the missed milestone, or even if it does achieve the milestone in 2025, that it will be refunded some or all of the 20% portion of the performance deposit of RMB 2.5 million ($0.4 million).

Contractual penalties in the case of a delay of Construction Completion Milestone :

◦ If ACM Lingang fails to complete the construction pursuant to the date agreed under the Grant Agreement or any extended completion date approved by the Grantor, ACM Lingang shall pay 50% of the deposit for timely completion of construction as liquidated damages;

◦ If ACM Lingang 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.

◦ 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 Lingang.

• The Production Start Milestone, as extended due to COVID-19 related delays, was required to be met by January 23, 2025 but was not achieved.

ACM Lingang believes it will receive the refund without penalty, however, based on extensions expected in the supplementary land grant contracts.

We cannot guarantee that ACM Lingang will meet any extended deadline or be refunded this 20% portion of the performance deposit.

Contractual penalties in the case of a delay of Production Start Milestone :

◦ If ACM Lingang fails to commence production pursuant to the date agreed under the Grant Agreement or any extended commencement date approved by the Grantor, ACM Lingang shall pay the total deposit for timely commencement of production as liquidated damages;

◦ If ACM Lingang fails to commence production pursuant to the extended commencement of production date (more than six months beyond the production start milestone), 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 Lingang.

In addition to the milestones, covenants in the current Agreement require that, among other things, ACM Lingang will be required to pay liquidated damages in the event that within seven years after the Delivery Date, or prior to July 9, 2027, it does not (i) generate a minimum specified amount of annual sales of products manufactured on the granted land or (ii) pay at least RMB 157.6 million ($22.2 million) in annual total taxes (including value-added taxes, corporate income tax, personal income taxes, urban maintenance and construction taxes, education surcharges, stamp taxes, and vehicle and shipping taxes) as a result of operations in connection with the granted land.

If the total tax revenue of the project fails to reach but is no less than 80% of the standard agreed under the Grant Agreement, ACM Lingang shall pay 20% of the actual shortfall amount of the tax revenue as liquidated damages.

In exchange for its land use rights, ACM Lingang paid aggregate grant fees of RMB 61.7 million ($9.5 million), or the Grant Fees, and a performance deposit of RMB 12.3 million ($1.9 million), related to the achievement of the certain performance milestones.

As of December 31 2025, ACM Lingang had officially achieved the milestones, and the performance deposit has been refunded in full (note 9).

In addition to the milestones, covenants in the Grant Agreement require that, among other things, ACM Lingang will be required to pay liquidated damages in the event that within seven years after the Delivery Date, or prior to July 9, 2027, it does not (i) generate a minimum specified amount of annual sales of products manufactured on the granted land or (ii) pay at least RMB 157.6 million ($22.2 million) in annual total taxes (including value-added taxes, corporate income tax, personal income taxes, urban maintenance and construction taxes, education surcharges, stamp taxes, and vehicle and shipping taxes) as a result of operations in connection with the granted land.

If the total tax revenue of the project fails to reach, but is no less than, 80% of the standard amount agreed under the Grant Agreement, ACM Lingang shall pay 20% of the actual shortfall amount of the tax revenue as liquidated damages.

If the total tax revenue of the project fails to reach 80% of the standard agreed under the Grant Agreement within 1 month after the agreed date of reaching target production, the Grantor is entitled to terminate the Grant Agreement, take back the Land Use Right, and shall refund the Grant Fees for the remaining land use term to ACM Lingang.

If the Grant Agreement is terminated because of breach of any terms above, the Grantor shall take back the buildings, fixtures and auxiliary facilities on the land area and provide ACM Lingang with corresponding compensation according to the residual value of the buildings, fixtures and auxiliary facilities when they are taken back.

The total cumulative investment of land, buildings and construction in progress related to ACM Lingang amounted to $156.2 million and $116.9 million at December 31, 2024 and December 31, 2023, respectively.

How We Evaluate Our Operations

We present information below with respect to four measures of financial performance:

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 received.

• 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 received.

• We define “adjusted EBITDA” as net income excluding interest expense (net), income tax benefit (expense), depreciation and amortization, unrealized (gain) loss on short-term investments, and stock-based compensation.

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These financial measures are not based on any standardized methodologies prescribed by accounting principles generally accepted in the United States, or GAAP, and are not necessarily comparable to similarly titled measures presented by other companies.

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We have presented shipments, adjusted EBITDA, free cash flow and adjusted operating income (loss) because they are key measures used by our management and board of directors to understand and evaluate our operating performance, to establish budgets and to develop operational goals for managing our business.

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“First tool” shipments can be made to either an existing customer that has not previously accepted that specific type of tool in the past ─ for example, a delivery of a SAPS V tool to a customer that previously had received only SAPS II tools ─ or to a new customer that has never purchased any tool from us.

Shipments for the years ended December 31, 2024, 2023, and 2022 t otaled $973 million, $596 million, and $539 million, respectively.

Shipments for the years ended December 31, 2025, 2024, and 2023 totaled $854 million, $973 million, and $596 million, respectively.

Repeat tool shipments in the years ended December 31, 2025, 2024, and 2023 totaled $466 million, $505 million, and $310 million, respectively.

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The dollar amount attributed to a “first tool” shipment is equal to the consideration we expect to receive if any and all contractual requirements are satisfied and the customer accepts the tool, or if the customer subsequently determines in its discretion to purchase the tool.

There are a number of limitations related to the use of shipments in evaluating our business, including that customers have significant, or in some cases total, discretion in determining whether to accept or purchase our tools after evaluation and their decision not to accept or purchase delivered tools is likely to result in our inability to

recognize revenue from the delivered tools.

“First tool” shipments reflect the value of incremental new products under evaluation delivered to our customers or prospective customers for a given period and is used as an internal key metric to reflect future potential revenue opportunity.

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• adjusted EBITDA excludes depreciation and amortization and, although these are non-cash expenses, the assets being depreciated or amortized may have to be replaced in the future;

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• 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 affect our cash position;

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Adjusted EBITDA $ 159,958 $ 219,086 $ 148,710 (27.0) % $ (59,128)

The $70.4 million increase in adjusted EBITDA for the year ended December 31, 2024 as compared to the year ended December 31, 2023 primarily reflected an increase in net income, an increase in income tax expense, and an increase in stock-based compensation.

We do not exclude from adjusted EBITDA expense reductions and non-operating other income attributable to mainland China governmental grants because we consider and incorporate the expected amounts and timing of those grants in incurring expenses and capital expenditures.

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For additional information regarding our mainland China grants, please see “—Key Components of Results of Operations—Mainland China Government Research and Development Funding.”

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Free Cash Flow

The following table reconciles net cash provided by (used in) operating activities, the most directly comparable GAAP financial measure, to free cash flow:

The following table reconciles net cash from operating activities, the most directly comparable GAAP financial measure, to free cash flow:

Year Ended December 31,

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Free Cash Flow Data:

Net cash generated by (used in) operating activities

Net cash (used in) provided by operating activities

$ (10,325) $ 152,450 $ (75,323) (106.8) % $ (162,775)

Purchase of property and equipment (82,463) (61,876) (91,094) 33.3 % (20,587)

Purchase of short-term and long-term investments

Purchases of property and equipment

(56,283) (82,463) (61,876) (31.7) % 26,180

Purchases of short-term and long-term investments

(484) (26,264) (25,864) (98.2) % 25,780

Free cash flow $ (67,092) $ 43,723 $ (163,063) (253.4) % $ (110,815)

The changes in free cash flow for the years ended December 31, 2024, 2023, and 2022 reflected the factors driving net cash used in operating activities, and an increase of purchases of property and equipment.

The changes in free cash flow for the years ended December 31, 2025, 2024, and 2023 reflect the factors driving net cash used in operating activities, purchases of property and equipment and purchases of short-term and long-term investments.

Consistent with our methodology for calculating adjusted EBITDA, we do not adjust free cash flow for the effects of mainland China government subsidies, because we take those subsidies into account in incurring expenses and capital expenditures.

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If we did not pay out a portion of our compensation in the form of stock-based compensation, the cash salary expense included in

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operating expenses would be higher and our cash holdings would be less.

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Income (loss) from operations $ 109,429 $ (33,577) $ 143,006 $ 150,998 $ (49,576) $ 200,574 $ 95,839 $ (27,338) $ 123,177

Adjusted operating income for the year ended December 31, 2024, as compared with the year ended December 31, 2023, increased by $77.4 million due to a $55.2 million increase in income from operations and a $22.2 million increase in stock-based compensation expense.

Adjusted operating income for the year ended December 31, 2025, as compared with the year ended December 31, 2024, decreased by $57.6 million due to a $41.6 million decrease in income from operations and a $16.0 million decrease in stock-based compensation expense.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis