What changed in this filing

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Item 1. Business

2025-03-03 compared with 2024-02-28 · 39 added, 48 removed, 319 unchanged (21% of the section changed)

8 unchanged sentences

We estimate, based on third-party reports and on customer and other information, that our current product portfolio addresses approximately $18 billion of the 2024 global wafer fab equipment, or WFE, market.

By product line, we estimate an approximately $5.2 billion market opportunity is addressed by our wafer cleaning equipment, $4.3 billion by our Plasma-Enhanced Chemical Vapor Deposition, or PECVD, equipment, $2.2 billion by our furnace equipment, $2.5 billion by our Track equipment, $800 million by our electro-chemical plating, or ECP, equipment, and more than $900 million by our stress-free polishing, advanced packaging, wafer processing, and other processing equipment.

Based on Gartner’s estimates, the total available global market for these equipment segments decreased by 11.4% from $21.2 billion in 2022, to $18.7 billion in 2023, and is expected to decrease by 2.8% to $18.2 billion in 2024.

These equipment segments are a subset of the total worldwide semiconductor WFE market, which Gartner estimates decreased by 7.7% from $100.6 billion in 2022 to $92.9 billion in 2023, and estimates will decrease by 1.7% to $91.3 billion in 2024.

We have focused our selling efforts on establishing a referenceable base of leading foundry, logic and memory chip makers, whose use of our products can influence decisions by other manufacturers.

By product line, we estimate an approximately $5.9 billion market opportunity is addressed by our wafer cleaning equipment, $4.7 billion by our Plasma-Enhanced Chemical Vapor Deposition, or PECVD, equipment, $2.8 billion by our Track equipment, $2.4 billion by our furnace equipment, $1 billion by our electro-chemical plating, or ECP, equipment, and more than $1.2 billion by our stress-free polishing, advanced packaging, wafer processing, and other processing equipment.

Gartner estimates the total worldwide semiconductor WFE market grew by 4.1% from $102.9 billion in 2023 to $107.1 (1) billion in 2024, and estimates will increase by 4.1% to $111.5 billion in 2025.

Gartner estimates China WFE grew by 11.5%, from $33.7 billion in 2023 to $37.5 billion in 2024, and is expected to decrease by 23.6% to $28.7 billion in 2025 1 .

We have focused our selling efforts o n establishing a referenceable base of leading foundry, logic and memory chip makers, whose use of our products can influence decisions by other manufacturers.

We believe this customer base has helped us penetrate the mature chip manufacturing markets and build credibility with additional industry leaders.

We have used a “demo-to-sales” process to place evaluation equipment, or “first tools,” with a number of selected customers.

To date, a substantial majority of our sales of single-wafer wet-cleaning equipment for front-end manufacturing have been to customers located in Asia, and we anticipate that a substantial majority of our revenue from these products will continue to come from customers located in this region for the foreseeable future.

To date, a substantial majority of our sales of semiconductor capital equipment have been to customers located in Asia, and we anticipate that a substantial majority of our revenue from these products will continue to come from customers located in this region for the foreseeable future.

Our operation includes sales, marketing and services personnel in North America, Western Europe and Southeast Asia to expand and support major new customer initiatives for the products of ACM Shanghai to additional regions beyond mainland China.

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TEBO technology has been developed to provide effective, damage-free cleaning for 2D and 3D patterned wafers with fine feature sizes.

We have demonstrated the damage-free cleaning capabilities of TEBO technology on patterned wafers for feature nodes as small as 1xnm (16 to 19 nanometers, or nm), and we have shown TEBO technology can be applied in manufacturing processes for patterned chips with 3D architectures having aspect ratios as high as 60‑to‑1.

We have demonstrated the damage-free cleaning capabilities of TEBO technology on

1 The information contains statistical data and estimates, including forecasts, that are based on information provided by Gartner®, "Forecast:

Semiconductor Capital Spending, Wafer Fab Equipment and Capacity, Worldwide, 4Q24 Update, Bob Johnson et al., 26 December 2024."

patterned wafers for feature nodes as small as 1xnm (16 to 19 nanometers, or nm), and we have shown TEBO technology can be applied in manufacturing processes for patterned chips with 3D architectures having aspect ratios as high as 60‑to‑1.

• Tahoe technology for cost and environmental savings.

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We added two major new product categorie s 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 have been issued more than 498 patents in the United States, the People’s Republic of China, or mainland China, Japan, Singapore, Korea and Taiwan.

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 integrated tools are built to order at our manufacturing facilities in the Pudong region of Shanghai, which now encompass a total o f 236,000 square feet of floor space for production capacity, with leased buildings at our Chuansha campus.

In May 2020 ACM Shanghai, through its wholly owned subsidiary Shengwei Research (Shanghai), Inc., or ACM Shengwei, entered into an agreement for a land use right in the Lingang region of Shanghai.

In 2020 ACM Shengwei began a multi-year construction project for a new 1,000,000 square foot development and production center that will incorporate state-of-the-art manufacturing systems and automation technologies and will provide floor space to support significantly increased production capacity and related research and development, or R&D, activities.

We expect to commence initial operations and production activities at our Lingang facilities in the first half of 2024 timeframe.

Our experience has shown that chip manufacturers in mainland China and throughout Asia demand equipment that meets their specific technical requirements and generally prefer to build relationships with local suppliers.

We will continue to seek to leverage our local presence in mainland China and Korea through our subsidiaries to address the growing market for semiconductor manufacturing equipment in the region by working closely with regional chip manufacturers to understand their specific requirements, encourage them to adopt our technologies, and enable us to design innovative products and solutions to address their needs.

On November 18, 2021, ACM Shanghai successfully completed its initial public offering of shares of ACM Shanghai in mainland China, which we refer to as the STAR IPO, and its shares began trading on the Shanghai Stock Exchange’s SciTech innovAtion boaRd, known as the STAR Market, which we refer to as the STAR Listing, as described under “Item 7.

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We use a modular configuration that enables us to create a wet-cleaning tool meeting the specific requirements of a customer, while using pre-existing designs for chamber, electrical, chemical delivery and other modules.

Our modular approach supports a wide range of

customer needs and facilitates the adaptation of our model tools for use with the optimal chemicals selected to meet a customer’s requirements.

Our modular approach supports a wide range of customer needs and facilitates the adaptation of our model tools for use with the optimal chemicals selected to meet a customer’s requirements.

Our tools are offered principally for use in manufacturing chips from 300 millimeter, or mm, silicon wafers, but we also offer solutions for 150mm and 200mm wafers and for nonstandard substrates, including compound semiconductor, quartz, sapphire, glass and plastics.

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Each successive advanced process node has led to finer feature sizes of interconnects such as contacts, which form electrical pathways between a transistor and the first metal layer, and vias, which form electrical pathways between two metal layers.

Advanced nodes have also resulted in higher aspect ratios for interconnect

structures, with thinner, redesigned metal barriers being used to prevent diffusion.

Advanced nodes have also resulted in higher aspect ratios for interconnect structures, with thinner, redesigned metal barriers being used to prevent diffusion.

SAPS technology can improve the removal of residues and other random defects from interconnects during the chip fabrication process:

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Recycled Test Wafers.

In addition to using silicon wafers for chip production, chip manufacturers routinely process wafers through a limited portion of the front-end fabrication steps in order to evaluate the health, performance and reliability of those steps.

Manufacturers also use wafers for non-product purposes such as inline monitoring.

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As a result of the thorough, controlled nature of TEBO processes, cleaning time for TEBO-based solutions may take longer than conventional megasonic cleaning processes.

Conventional processes have proven ineffective, however, for process nodes of 20nm or less, and we believe the increased yield that can be achieved by

using TEBO technology for nodes up to 70nm can more than offset the cost of the additional time in utilizing TEBO technology.

Conventional processes have proven ineffective, however, for process nodes of 20nm or less, and we believe the increased yield that can be achieved by using TEBO technology for nodes up to 70nm can more than offset the cost of the additional time in utilizing TEBO technology.

TEBO Applications

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In addition to providing cost savings resulting from vastly reduced sulfuric acid consumption, Ultra-C Tahoe meets the needs of customers who face increased environmental regulations and demand new, more environmentally-friendly tools.

We delivered our first Ultra C Tahoe tool to a strategic customer in 2019.

Advanced Packaging and other Back-End Processing Tools

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For example, our Ultra C Coater is used in applying photoresist, a light-sensitive material used in photolithography to transfer a pattern from a mask onto a wafer.

Coaters typically provide input and output elevators, shuttle systems and other devices to handle and transport wafers during the coating process.

Coaters typically provide input and output elevators, shuttle systems and other

devices to handle and transport wafers during the coating process.

Unlike most coaters, the Ultra C Coater is fully automated.

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Our Customers

Since 2009 we have delivered more than 765 tools to our customers , more than 650 of which were repeat orders or acceptances upon contractual performance obligations having been met and thereby generated revenue to us.

Since 2009 we have delivered more than 1,120 tools to our customers, more than 920 of w hich were repeat orders or acceptances upon contractual performance obligations having been met and thereby generated revenue to us.

The balance of the delivered tools is subject to the customer's acceptance of the tool upon the tool's satisfaction of applicable contractual requirements or subject to the customer's subsequent discretionary commitment to purchase the tool.

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ChangXin Memory Technologies, or CXMT, a leading mainland China-based memory chip company;

Shenzhen Pengxinwei Integrated Circuit Manufacturing Co., Ltd., or PXW, a leading mainland China-based semiconductor foundry company;

and SiEn, a leading mainland China-based power-semiconductor chip company.

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and Wafer Works Corporation, a mainland China-based wafer supplier.

In 2024, 52.2% of our revenue was derived from four customers:

The Huali Huahong Group accounted for 14.7% of our revenue;

SMIC accounted for 13.6% of our revenue;

YMTC accounted for 12.0%% of our revenue;

and PXW accounted for 11.9% of our revenue.

In 2023, 45.5% of our revenue was derived from three customers:

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SMIC accounted for 15.6% of our revenue, and YMTC accounted for 10.0% of our revenue.

In 2021, 48.9% of our revenue was derived from two customers:

The Huali Huahong Group accounted for 28.1% of our revenue;

and YMTC accounted for 20.8% of our revenue.

Sales and Marketing

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To supplement our direct sales teams, we have contacts with several independent sales representatives in mainland China, Korea and Taiwan.

We select these independent representatives based on their ability to provide effective field sales, marketing forecast and technical requirement updates for our products.

We select these independent representatives based on their ability to provide effective field sales,

marketing forecast and technical requirement updates for our products.

In the case of representatives, our customers place purchase orders with us directly rather than with the representatives.

8 unchanged sentences

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 manufacturing facilities in the Pudong region of Shanghai, which now encomp ass a total of 236,000 square f eet of floor space for production capacity.

In May 2020 ACM Shanghai, through its wholly owned subsidiary ACM Shengwei, entered into an agreement for a land use right in the Lingang region of Shanghai.

In July 2020 ACM Shengwei began a multi-year construction project for a new development and production center.

The planned 1,000,000 square foot facility will incorporate state-of-the-art manufacturing systems and automation technologies and will provide the floor space to support significantly more production capacity and related research and development activities when fully staffed and supplied.

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

In the fourth quarter of 2024, we began initial operations at our Lingang development and production center.

The facility, when fully completed, is intended to comprise more than 1,000,000 square feet and incorporate state-of-the-art manufacturing systems and automation technologies to expand our production capacity and support additional research and development activities.

Properties,” of Part I of this report.

Our experience has shown that chip manufacturers in mainland China and throughout Asia demand equipment meeting their specific technical requirements and prefer building relationships with local suppliers.

We will continue to seek to leverage our local presence to address the growing market for semiconductor manufacturing equipment in the region by working closely with regional chip manufacturers to understand their specific requirements, encourage them to adopt our SAPS, TEBO, Tahoe, ECP, furnace, Track, PECVD, and other technologies in our current portfolio, and enable us to design innovative products and solutions to address their needs.

We purchase some of the components and assemblies that we include in our products from single source suppliers.

We believe that we could obtain and qualify alternative sources to supply these components.

Nevertheless, any prolonged inability to obtain these components could have an adverse effect on our operating results and could unfavorably impact our customer relationships.

W e purchase some of the components and assemblies that we subsequently integrate into our products from a range of suppliers, some of which are single-source suppliers, and/or U.S.

based suppliers which can no longer supply ACM Shanghai, ACM Korea and related entities as a result of recently enacted regulations including designations on the BIS Entity List.

We believe that we can obtain and qualify alternative sources to supply these components.

Nevertheless, any delays or prolonged inability to obtain or to replace th ese components could have an adverse effect on our operating results and could unfavorably impact our customer relationships.

Please see “Item 1A.

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For this reason, we devote significant financial and personnel resources to research and development.

Our research and development team is comprised of highly skilled engineers and technologists with extensive experience in megasonic technology, cleaning processes and chemistry, mechanical design, and control system design.

Our research and development team is comprised of highly skilled engineers and technologists with extensive experience in megasonic and other technologies, cleaning processes and chemistry, mechanical design, and control system design.

For the foreseeable future we are focusing on enhancing our Ultra C SAPS, TEBO, Tahoe, ECP, furnace and other tools and integrating additional capabilities to meet and anticipate requirements from our existing and potential customers.

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Our research and development expense totaled $105.5 million or 13.5% of revenue in 2024, $92.7 million or 16.6% of revenue in 2023, and $62.2 million or 16.0% of revenue in 2022.

We intend to continue to invest in research and development to support and enhance our existing cleaning products and to develop future product offerings to build and maintain our technology leadership position.

We intend to continue to invest in research and development to support and enhance our existing products and to develop future product offerings to build and maintain our technology leadership position.

Intellectual Property

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Our patent strategy is designed to provide a balance between the need for coverage in our strategic markets and the need to maintain costs at a reasonable level.

As of December 31, 2023, we had 64 issued patents, and 29 patents pending, in the United States.

As o f December 31, 2024, we have been issued more than 537 patents in the United States, mainland China, Japan, Korea, Singapore and Taiwan, including 76 issued patents, and 32 patents pending, in the United States.

These patents carry expiration dates from 2027 through 2039.

1 unchanged sentence

Specifically, we own patents in wafer cleaning, electro-polishing and plating, wafer preparation, and other semiconductor processing technologies.

We have been issued more than 498 patents in the United States, mainland China, Japan, Korea, Singapore and Taiwan.

We manufacture advanced single-wafer cleaning systems equipped with our SAPS, TEBO and Tahoe technologies.

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In addition, semiconductor manufacturers must make a substantial investment to qualify and integrate new equipment into semiconductor production lines.

Some manufacturers began fabricating chips for the 5nm node in 2020 and the 3nm node in 2022.

Once a semiconductor manufacturer has selected a particular supplier’s equipment and qualified it for production, the manufacturer generally maintains that selection for that specific production application and technology node as long as the supplier’s products demonstrate performance to specification in the installed base.

1 unchanged sentence

If, however, that cleaning equipment constrains chip yield, we expect, based on our experience to date, that the manufacturer will evaluate implementing new equipment that cleans more effectively.

As of December 31, 2023, we ha d 1,590 fu ll-time equivalent employees, of whom 139 were in administration, 286 were in manufacturing, 733 were in research and development, and 432 were in sales and marketing and customer services.

Of these employees, 1,416 were located in mainland China and the Taiwan region, 159 were located in Korea and 15 were

based in the United States.

As of December 31, 2024, we had 2,023 full-time equivalent employees, of whom 165 were in administration, 328 were in manufacturing, 933 were in research and development, and 597 were in sales and marketing and customer services.

Of these employees, 1,839 were located in mainland China and the Taiwan region, 160 were located in Korea and 24 were based in the United States.

We have never had a work stoppage, and none of our employees are represented by a labor organization or subject to any collective bargaining arrangements.

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The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and amendments to those documents filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, or the Exchange Act, are also available free of charge on our website at www.acmrcsh.com as soon as reasonably practicable after such reports are electronically filed with or furnished to the SEC.

Investors should note that we announce material information to our investors and others using filings with the SEC, press releases, public conference calls, webcasts or our website (www.acmrcsh.com), including news and announcements regarding our financial performance, key personnel, our brands and our business strategy.

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and amendments to those documents filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, or the Exchange Act, are also available free of charge on our website at www.acmr.com a s soon as reasonably practicable after such reports are electronically filed with or furnished to the SEC.

Investors should note that we announce material information to our investors and others using filings with the SEC, press releases, public conference calls, webcasts or our website (www.acmr.com), including news and announcements regarding our financial performance, key personnel, our brands and our business strategy.

Information that we post on our corporate website could be deemed material to investors.

We encourage investors to review the information we post on these channels.

We may from time to time update the list of channels we will use to communicate information that could be deemed material and will post information about any such change on www.acmrcsh.com.

We may from time to time update the list of channels we will use to communicate information that could be deemed material and will post information about any such change on www.acmr.com.

The information on our website is not, and shall not be deemed to be, a part hereof or incorporated into this or any of our other filings with the SEC.

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 1. Business