ACM Research, Inc.: Form 10-Q for the period ended Sep 30, 2025

You should read the following discussion of our financial condition and results of operations together with our condensed consolidated financial statements and the related notes and other financial information included elsewhere in this report and our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, or our Annual Report. The following discussion contains forward‑looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward‑looking statements. Factors that could cause or contribute to these differences include those discussed in Part I, Item 1A. “Risk Factors” in our Annual Report, as well as those discussed below and elsewhere in this report, particularly in the section titled “Item 1A – Risk Factors” in Part II below.

ACM Research, Inc., or ACM Research, is a Delaware corporation founded in California in 1998 to supply capital equipment developed for the global semiconductor industry. Since 2005, ACM Research has conducted its business operations principally through its subsidiary ACM Research (Shanghai), Inc., or ACM Shanghai, a limited liability corporation formed by ACM Research in the People’s Republic of China, or mainland China, in 2005. Unless the context requires otherwise, references in this report to “our Company,” “our,” “us,” “we” and similar terms refer to ACM Research, Inc. and its subsidiaries, including ACM Shanghai, collectively.

Our principal corporate office is located in Fremont, California. We conduct a substantial majority of our product development, manufacturing, support and services in mainland China through ACM Shanghai. We perform, through a subsidiary of ACM Shanghai, additional product development and subsystem production in South Korea, and we conduct, through ACM Research, sales and marketing activities focused on sales of ACM Shanghai products in North America, Europe and certain regions in Asia outside mainland China.

ACM Research is not a mainland China operating company, and we do not conduct our operations in mainland China through the use of a variable interest entity, or VIE, or any other structure designed for the purpose of avoiding mainland China legal restrictions on direct foreign investments in mainland China-based companies. ACM Research has a direct ownership interest in ACM Shanghai as the result of its holding 74.6% of the outstanding shares of ACM Shanghai. Stockholders of ACM Research may never directly own equity interests in ACM Shanghai. We do not believe that our corporate structure or any other matters relating to our business operations require that we obtain any permissions or approvals from the China Securities Regulatory Commission, the Cyberspace Administration of China, or any other mainland China central government authority in order to continue to list shares of Class A common stock of ACM Research on the Nasdaq Global Select Market. This determination was based on the aforementioned facts and mainland China Company Law, mainland China Securities Law, cybersecurity regulations and other relevant laws, regulations and regulatory requirements in mainland China currently in effect. However, if this determination proves to be incorrect, then it could have a material adverse effect on ACM Research. See “Item IA. Risk Factors—Risks Related to International Aspects of Our Business—If any mainland China central government authority were to determine that existing mainland China laws or regulations require that ACM Shanghai obtain the authority’s permission or approval to continue the listing of ACM Research’s Class A common stock in the United States or if those existing mainland China laws and regulations, or interpretations thereof, were to change to require such permission or approval, or if we inadvertently conclude that permissions or approvals are not required, ACM Shanghai may be unable to obtain the required permission or approval or may only be able to obtain such permission or approval on terms and conditions that impose material new restrictions and limitations on operation of ACM Shanghai, either of which could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects and on the trading price of ACM Research Class A common stock, which could decline in value or become worthless” in our Report on Form 10-K for the year ended December 31, 2024.

In addition, in the ordinary course of business, ACM Shanghai is required to obtain certain operating permits and licenses necessary for us to operate in mainland China, including business licenses, certifications relating to quality management standards, import and export-related qualifications from customs, as well as environmental and construction permits, licenses and approvals relating to construction projects. We believe ACM Shanghai has all such required permits and licenses. However, from time to time mainland China government issues new regulations, which may require additional actions on the part of ACM Shanghai to comply. If ACM Shanghai does not, or is unable to, obtain any such additional permits or licenses, ACM Shanghai may be subjected to restrictions and penalties imposed by the relevant mainland China regulatory authorities, and it could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects and on the trading price of ACM Research Class A common stock, which could decline in value or become worthless.

The following chart depicts our corporate organization as of September 30, 2025:

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 our condensed consolidated financial statements included in this report.

The U.S. Holding Foreign Companies Accountable Act, or the HFCA Act, requires that the Public Company Accounting Oversight Board, or the PCAOB, determine whether it is unable to inspect or completely investigate registered public accounting firms located in a non-U.S. jurisdiction because of a position taken by one or more authorities in any non-U.S. jurisdiction. Under current regulations, if ACM Research were to be included on the U.S. Securities and Exchange Commission’s (“SEC”) "Conclusive list of issuers identified under the HFCA Act" 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. See “Item 1A. Risk Factors—Risks Related to International Aspects of Our Business—We could be adversely affected if we are unable to comply with legislation and regulations regarding improved access to audit and other information and audit inspections of accounting firms, including registered public accounting firms, such as our prior and current audit firms, operating in mainland China” in our Report on Form 10-K for the year ended December 31, 2024 for more information.

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"). Among 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 South 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, directly or indirectly to ACM Shanghai or ACM Korea without obtaining authorization. See “Item 1A. Risk Factors—Regulatory Risks—Our operations in mainland China and South 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” in our Report on Form 10-K for the year ended December 31, 2024, for more information.

On November 15, 2024, the U.S. Department of the Treasury published a final rule implementing a framework for the regulation of outbound foreign investment from the United States. The new program, known as the Outbound Investment Security Program (“OISP”) was codified in the United States Code of Federal Regulations at 31 C.F.R. Part 850, effective as of January 2, 2025. The OISP marks a shift in U.S. economic policy, as historically the United States government declined to restrict outbound investment from the United States for national security reasons. Going forward, the investment activities of multinational companies, including ACM Research are subject to both Committee on Foreign Investment in the United States (“CFIUS”) and OISP requirements, which together will limit cross-border investment opportunities, especially as they relate to China. See “Item 1A. Risk Factors—Regulatory Risks—The U.S. Government has implemented an outbound investment review mechanism, which may prevent us from taking advantage of investment opportunities outside the United States that could otherwise be advantageous to our stockholders” in our Report on Form 10-K for the year ended December 31, 2024, for more information.

In addition to the matters discussed above, we are also subject to a number of legal and operational risks associated with our corporate structure, including, as the result of a substantial portion of our operations being conducted in mainland China. Consequences of any of those risks could result in a material adverse change in our operations or cause the value of ACM Research Class A common stock to significantly decline in value or become worthless. Please carefully read the information included in “Item 1A. Risk Factors” in our Report on Form 10-K for the year ended December 31, 2024, in particular, the risk factors addressing the following issues:

• If any mainland China central government authority were to determine that existing mainland China laws or regulations require that ACM Shanghai obtain the authority’s permission or approval to continue the listing of ACM Research’s Class A common stock in the United States or if those existing mainland China laws and regulations, or interpretations thereof, were to change to require such permission or approval, or if we inadvertently conclude that such permissions or approvals are not required, ACM Shanghai may be unable to obtain the required permission or approval or may only be able to obtain such permission or approval on terms and conditions that impose material new restrictions and limitations on operations of ACM Shanghai, either of which could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects and on the trading price of ACM Research Class A common stock, which could decline in value or become worthless.
• Mainland China central government authorities may intervene in, or influence, ACM Shanghai’s mainland China-based operations at any time, and those authorities’ rules and regulations in mainland China can change quickly with little or no advance notice.
• The mainland China central government may determine to exert additional control over offerings conducted overseas or foreign investment in mainland China-based issuers, which could result in a material change in operations of ACM Shanghai and cause significant declines in the value of ACM Research Class A common stock, or make them worthless.

Past statements and regulatory actions by mainland China central government authorities with respect to the use of VIEs and to data security and anti-monopoly concerns have not affected our ability to conduct our business operations in mainland China. For further information, see “Item 1A. Risk Factors —Risks Related to International Aspects of Our Business” in our Report on Form 10-K for the year ended December 31, 2024, for more information.

Overview

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 dynamic random-access memory, or DRAM, and 3D NAND-flash memory chips. We also develop, manufacture and sell a range of advanced packaging tools to wafer assembly and packaging customers.

Since 2009 we have delivered more than 1,350 tools to our customers, more than 1,155 of which were repeat orders or acceptances upon contractual performance obligations having been met and thereby generated revenue for 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. To date, substantially all of our sales of equipment for semiconductor-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. We have begun to add to our efforts to further address customers in North America, Western Europe and Southeast Asia, by expanding our direct sales teams and increasing our global marketing activities.

We estimate, based on third-party reports and on customer and other information, that our current product portfolio addresses approximately $20 billion of the 2025 global wafer fab equipment, or WFE, market. By product line, we estimate an approximately $7.0 billion market opportunity is addressed by our wafer cleaning equipment, $5.1 billion by our Plasma-Enhanced Chemical Vapor Deposition, or PECVD, equipment, $2.9 billion by our Track equipment, $2.6 billion by our furnace equipment, $1.4 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 Wafer Fab Equipment ("WFE") market grew by 8.6% from $102.8 billion in 2023 to $111.6 billion in 2024, and estimates will increase by 4.7% to $116.8 billion in 2025. Gartner estimates China WFE grew by 21.1%, from $33.3 billion in 2023 to $40.4 billion in 2024, and is expected to decrease by 17.1% to $33.5 billion in 2025.1

Recent Developments

ACM Shanghai Completed Private Offering

During the three months ended September 30, 2025, ACM Research's principal operating subsidiary, ACM Shanghai issued 38,601,326 ordinary shares at RMB 116.11 per share, raising net proceeds of RMB 4.4 billion (approximately US $623.0 million) after deducting offering-related expenses ("Private Offering"). The proceeds are intended to be used for research and development, capital expenditures and working capital. It is unlikely that any of such proceeds will be distributed to ACM Research. Following the Private Offering, ACM Research's equity interest in ACM Shanghai is now 74.6%.

ACM Shanghai Dividend & Share Repurchase

During the three months ended September 30, 2025, ACM Research's principal operating subsidiary, ACM Shanghai, paid a cash dividend for a net total of approximately RMB 264.9 million (approximately USD $36.8 million) to the stockholders of ACM Shanghai, including ACM Research, which owned 81.1% 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. The cash portion of the dividend paid by ACM Shanghai to non-controlling interests was $7.6 million (note 2).

During the nine months ended September 30, 2025, ACM Shanghai repurchased 443,400 of its shares traded on the Shanghai Stock Exchange for total consideration of $7.0 million. These shares have not been cancelled.

Mainland China Government Research and Development Funding

Since 2008, ACM Shanghai has received various government grants for the development and commercialization of certain technologies, and the development of the R&D and production center in the Lingang Special Area of Shanghai.

The governmental grants contain certain operating conditions, and we are required to complete 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 received by ACM Shanghai.

Grant amounts are recognized in our condensed consolidated statements of comprehensive income 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. Such subsidies included in our condensed consolidated statements of comprehensive income were $1.7 million and $0.1 million, in the three months ended September 30, 2025 and 2024, respectively, and $2.5 million and $0.7 million in the nine months ended September 30, 2025 and 2024, respectively. We received $1.4 million cash funding from government subsidies in the three and nine months ended September 30, 2025. However, we did not receive any cash funding from government subsidies for the three and nine months ended September 30, 2024.
• 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. Such subsidies included in our condensed consolidated statements of comprehensive income were less than $0.1 million and $0.1 million, in the three months ended September 30, 2025 and 2024, respectively, and $0.7 million and $1.9 million in the nine months ended September 30, 2025 and 2024, respectively.

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, 2Q25 Update, Bob Johnson et al., 29 July 2025."

Recent Accounting Pronouncements

A discussion of recent accounting pronouncements is included in our Report on Form 10-K for the year ended December 31, 2024 and is updated in note 2 to the condensed consolidated financial statements included in this report.

Net Income Attributable to 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 of 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. ACM Research's ownership has since declined to 74.6% due to the Private Offering. 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

In preparing our condensed 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 condensed consolidated balance sheets. We base our assumptions, judgments and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances. At least quarterly, we evaluate our assumptions, judgments and estimates and make changes as deemed necessary. Actual results could differ materially from these estimates under different assumptions or conditions.

We believe that the assumptions, judgments and estimates involved in the accounting for the following accounting policies have the greatest potential impact on our condensed consolidated financial statements, and we therefore consider these to be our critical accounting estimates. For information on our significant accounting policies, see note 2 in the notes to our condensed consolidated financial statements in Part I, Item 1 of this report and in note 2 to the Consolidated Financial Statements in Part II, Item 8 in our Report on Form 10-K for the year ended December 31, 2024, which describes the significant accounting policies and methods used in the preparation of the our financial statements. There have been no material changes to the critical accounting estimates included in our Form 10-K for the year ended December 31, 2024.

Results of Operations

The following table sets forth our results of operations for the periods presented, as percentages of revenue:

Comparison of Three Months Ended September 30, 2025 and 2024

Revenue

(Dollars in thousands)

36

The increase in revenue for three months ended September 30, 2025 as compared to the same period in 2024 reflects 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 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.

Cost of Revenue and Gross Margin

(Dollars in thousands)

Cost of revenue and gross profit increased due to the increased sales volume, and a decrease in gross margin. The change in gross margin versus the prior-year period was primarily due to revenue mix between product categories and a higher provision for inventory. Gross margin may vary from period to period, primarily related to the level of utilization, the timing and mix of revenue, the impact of foreign currency fluctuations, inventory provisions and other adjustments. We expect gross margin to be between 42.0% and 48.0% for the foreseeable future.

Operating Expenses

(Dollars in thousands)

Sales and marketing expense increased due to a $5.1 million increase in commissions, professional services, travel and entertainment, outside services and other expenses and a $2.5 million increase in personnel costs, offset by a $1.0 million decrease in stock-based compensation.

Sales and marketing expense consists primarily of:

• 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;
• fees paid to sales consultants;
• cost of trade shows;
• costs of tools built for promotional purposes for potential new customers;
• travel and entertainment; and
• rent and utilities.

We expect that, for the foreseeable future, sales and marketing expenses will increase in dollars, as we incur additional costs associated with growing our customer base in mainland China and regions outside of mainland China.

Research and development expense increased due to an increase of $8.4 million in costs of components for tools built for product development purposes, an increase of $4.0 million in personnel and travel and entertainment costs, and a net increase of $0.9 million in depreciation, outside services and other costs, offset by a decrease of $1.5 million in stock-based compensation.

Research and development expense represented 14.7% and 13.6% of our revenue in the three months ended September 30, 2025 and 2024, respectively. Excluding grant amounts received from mainland China governmental authorities (see "Mainland China Government Research and Development Funding’’), gross research and development expense totaled $41.4 million, or 15.4% of total revenue, in the three months ended September 30, 2025 as compared to $27.9 million, or 13.7% of revenue, in the corresponding period in 2024.

Research and development expense consists primarily of:

• compensation of personnel associated with our research and development activities, including stock based compensation;
• costs of components and other research and development supplies;
• costs of tools built for product development purposes;
• travel expense associated with the research of technical requirements for product development purposes and testing of concepts under consideration;
• amortization of costs of software used for research and development purposes; and
• rent and utilities.

We expect that, for the foreseeable future, research and development expenses will increase in dollars, as we incur additional costs to expand our product portfolio to address additional production steps and expand our research and development team to new regions.

General and administrative expense increased primarily reflecting a $2.7 million net increase in personnel costs, professional services costs, and other costs related to general and administrative expenses and a $4.2 million increase in allowance for credit losses offset by a $1.7 million decrease in stock-based compensation.

General and administrative expense consists primarily of:

• compensation of executive, accounting and finance, human resources, information technology, and other administrative personnel, including stock-based compensation;
• professional fees, including accounting and corporate legal and defense fees;
• other corporate expenses including insurance;
• allowance for credit losses; and
• rent and utilities.

We expect that, for the foreseeable future, general and administrative expenses will increase in dollars, as we incur additional costs associated with growing our business, operating ACM Research, as a public company in the United States and operating ACM Shanghai as a public company in mainland China.

Interest income, Interest expense, and Other expense, net

(Dollars in thousands)

38

Interest income consists of interest earned on our cash and cash equivalents, restricted cash accounts, and time deposits and interest expense is incurred on our borrowings. 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.

Other expense, net primarily reflects (a) loss recognized from the impact of exchange rates on our working-capital which was $(4.0) million for the three months ended September 30, 2025 compared to $(5.4) million recognized from the impact of exchange rates on our working capital for the three months ended September 30, 2024, and (b) government subsidies, as described under “Mainland China Government Research and Development Funding” above, and other factors.

Gain on short-term investment, and income from equity method investments

(Dollars in thousands)

Realized gain on short-term investments includes dividends received during the period. The unrealized gain on short-term investments is based on a change in the market value of ACM Shanghai’s short-term investments (note 12). Income from equity investments is due to an increase of net income from investments in affiliates (note 13).

Income Tax Expense

The following presents components of income tax expense for the indicated periods:

(Dollars in thousands)

The tax expense for the three months ended September 30, 2025 primarily resulted from tax effect of a decrease in our effective income tax rate applied to operating profit for the period. The decrease in our effective income tax rate for the nine months ended September 30, 2025 compared to the same period of the prior year was primarily due to a lower estimated effective tax rate for ACM Shanghai and other factors.

Our effective tax rate differs from statutory rates of 21% for 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. Our four mainland China subsidiaries, ACM Shanghai, ACM Wuxi, ACM Beijing, and ACM Lingang, are liable for mainland China corporate income taxes at the rates of 15%, 25%, 25%, and 25%, respectively. Pursuant to the Corporate Income Tax Law of mainland China, our mainland China subsidiaries generally would be liable for mainland China corporate income taxes at a rate of 25%. According to Guoshuihan 2009 No. 203, an entity certified as an “advanced and new technology enterprise” is entitled to a preferential income tax rate of 15%. 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.

Net Income Attributable to Non-Controlling Interests

(Dollars in thousands)

As of September 30, 2025, ACM Research owns 74.6% of ACM Shanghai’s (note 1) outstanding shares, which is reflected in our condensed consolidated financial statements. We reflect the portion of net income allocable to the non-controlling interest holders of ACM Shanghai shares as net income attributable to non-controlling interests.

Foreign currency translation adjustment

(Dollars in thousands)

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.

Comprehensive income attributable to non-controlling interests

(Dollars in thousands)

Comprehensive income attributable to non-controlling interests was comparable period over period.

Comparison of Nine Months Ended September 30, 2025 and 2024

Revenue

(Dollars in thousands)

The increase in revenue 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.

Cost of Revenue and Gross Margin

(Dollars in thousands)

41

Cost of revenue and gross profit increased 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.

Operating Expenses

(Dollars in thousands)

Sales and marketing expense increased due to a $7.9 million in increased personnel costs, an increase of $4.8 million in outside services and other expenses, an increase of $3.5 million for commissions and travel and entertainment, and a $0.3 million increase in promotional tools, offset by a $2.8 million decrease in stock-based compensation.

Research and development expense increased due to a $15.5 million increase in costs of components for tools built for product development purposes, a $9.1 million increase in personnel costs, and a net increase of $3.4 million in depreciation, outside services and other R&D-related costs, offset by a decrease of $4.8 million in stock-based compensation.

Research and development expense represented 15.4% and 13.9% of our revenue in the nine months ended September 30, 2025 and 2024, respectively. Excluding grant amounts received from mainland China governmental authorities (see "Mainland China Government Research and Development Funding"), gross research and development expense totaled $103.5 million, or 15.8% of total revenue, in the nine months ended September 30, 2025 as compared to $78.4 million, or 14.0% of revenue, in the corresponding period in 2024.

General and administrative expense increased primarily reflecting a $6.0 million increase in personnel and professional services costs, and a $3.6 million increase in allowance for credit losses, partially offset by a $1.4 million decrease in other costs related to general and administrative expenses, and a $5.2 million decrease in stock-based compensation.

Interest income, Interest expense and Other expense, net

(Dollars in thousands)

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.

Other expense, net primarily reflects (a) loss recognized from the impact of exchange rates on our working-capital which was $(4.6) million for the nine months ended September 30, 2025 compared to $(2.6) million for the nine months ended September 30, 2024, and (b) government subsidies, as described under “Mainland China Government Research and Development Funding” above, and other factors.

Gain (loss) on short-term investments, and income from equity method investments

(Dollars in thousands)

Realized gain on short-term investments includes dividends and net gains from sales of short-term investments during the period. 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 13).

Income Tax Expense

The following presents components of income tax expense for the indicated periods:

(in thousands)

The tax expense for the nine months ended September 30, 2025 primarily resulted from the tax effect of a decrease in our effective income tax rate applied to a decrease in operating profit for the period. The decrease in our effective income tax rate for the nine months ended September 30, 2025 compared to the same period of the prior year was primarily due to a lower estimated effective tax rate for ACM Shanghai and other factors.

Net Income Attributable to Non-Controlling Interests

(Dollars in thousands)

43

Foreign currency translation adjustment

(Dollars in thousands)

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.

Comprehensive income attributable to non-controlling interests

(Dollars in thousands)

Comprehensive income attributable to non-controlling interests for the nine months ended September 30, 2025 increased by $3.8 million as compared to the same period in 2024, reflecting a change in net income attributable to the non-controlling interests for the period together with the impact of foreign exchange rate fluctuations on the cumulative balance.

Liquidity and Capital Resources

During the first nine months of 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, and time deposits were as follows:

(In thousands)

The $656.4 million increase in cash and time deposits was primarily driven by $738.1 million net cash provided by financing activities, and a $5.6 million increase from the effect of the exchange rate on cash, cash equivalents, restricted cash and non-cash items, offset by $44.2 million of cash used in operations, and $43.0 million of net cash used in investing activities, excluding the change in net cash related to time deposits.

Our future working capital needs beyond the next twelve months will depend on many factors, including the rate of our business and revenue growth, the payment schedules of our customers, the timing and magnitude of our capital expenditures, and the timing of investment in our research and development as well as sales and marketing costs. We believe our existing cash and cash equivalents, time deposits, cash flow from operating activities, and bank borrowings will be sufficient to meet our anticipated cash needs for at least the next 12 months from the issuance of this report.

ACM Shanghai has historically participated in certain mainland China government-sponsored grant and subsidy programs, as described under “—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. Periodically, the public relations department researches the availability of these grants and subsidies through mainland China government agencies with whom ACM Shanghai files business surveys and taxes. Management of ACM Shanghai then assesses which grants and subsidies for which ACM Shanghai may be eligible and submits the relevant application. 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.

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. We also may need to raise additional funds in the event we determine in the future to effect one or more acquisitions of businesses, technologies and products. If additional funding is necessary or desirable, we may not be able to obtain bank credit arrangements or to obtain an equity or debt financing on terms acceptable to us or at all.

Restrictions under mainland China laws and regulations as well as restrictions under ACM Shanghai’s bank loan agreements, may significantly restrict ACM Shanghai’s ability to transfer a portion of ACM Shanghai’s net assets to ACM Research, other subsidiaries of ACM Research and to holders of ACM Research Class A common stock. See “Item 1A. Risk Factors – Regulatory Risks – Mainland China's currency exchange control and government restrictions on investment repatriation may impact our ability to transfer funds outside of mainland China, which could materially and adversely affect our ability to grow, make investments or acquisitions that could benefit our business, otherwise fund and conduct our business, or pay dividends on our common stock” in our Report on Form 10-K for the year ended December 31, 2024.

For the nine months ended September 30, 2025 and 2024, with the exception of sales and services-related transfer-pricing payments in the ordinary course of business, and dividends paid by ACM Shanghai to the stockholders of ACM Shanghai (including ACM Research), no transfers or distributions have been made between ACM Research, and its subsidiaries, including ACM Shanghai, or to holders of ACM Research Class A common stock.

Our cash and cash equivalents at September 30, 2025 were held for working capital purposes and other potential investments. 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 and Private Offering, without further approvals, are limited to specific usage. 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.

ACM Research has never declared or paid cash dividends on our capital stock. ACM Research intends 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 (Used in) Provided by Operating Activities. Net cash (used in) provided by operating activities during the nine months ended September 30, 2025 and 2024 consisted of:

(In thousands)

Significant net changes in operating asset and liability accounts primarily include the following:

• uses of cash: a $80.7 million increase in inventories, net, a $91.3 million net increase in accounts receivable, net, a $43.3 million decrease in advances from customers, and a $14.1million increase in other receivables and other assets.
• sources of cash: a $44.5 million increase in accounts payable and related party accounts payable, a $9.9 million net increase in other liabilities which includes long-term operating lease liabilities, other long-term liabilities, other payables and accrued expenses, and deferred revenue.

Cash Flow Used in Investing Activities. Net cash used in investing activities, excluding the change in net cash related to time deposits, for the nine months ended September 30, 2025 was ($43.0) million, primarily consisting of purchase of property, plant and equipment, and intangible assets for ($43.3 million), and $(0.5) million for purchase of long-term investments, net of a $0.7 million deposit return for land use right.

Cash Flow Provided by Financing Activities. Net cash provided by financing activities for the nine months ended September 30, 2025 was $738.1 million, primarily consisting of $623.0 million in net proceeds from Private Offering by ACM Shanghai, $101.6 million in net proceeds from short-term and long-term borrowing (notes 8 and 10), and $27.9 million in proceeds from exercise of stock options, partly offset by $(7.0) million used for the repurchase of shares held by ACM Shanghai, and $(7.6) million payment of ACM Shanghai dividend.

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

(in thousands)

47

(1) Converted from RMB to dollars as of September 30, 2025.

(2) These China CITIC bank facility agreements are with ACM Research, Inc.

(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.”

Loan Covenants

In 2025, ACM Shanghai secured long-term loan facilities with China Merchants Bank (note 10) for ACM Shanghai’s project expenditures. The facilities contain certain covenants, which require ACM Shanghai to either repay 50% of the outstanding principal within two months, or repay the loan in accordance with an accelerated payment schedule, if ACM Shanghai does not complete, within three years after then initial drawdown, or before January 2028, a Private Offering with more than RMB 900 million of proceeds.

In 2025, ACM Shanghai secured long-term loan facilities with the Bank of China (note 10) and in April 2025, ACM Shanghai secured a short-term loan facility with the Bank of China for ACM Shanghai’s project expenditures (notes 6 and 8). The facility requires ACM Shanghai’s year-end outstanding interest-bearing debt not to exceed five times of its annual EBITDA, and to comply with other non-financial covenants, or Bank of China has the right to suspend the facility, or request ACM Shanghai to accelerate repayment or provide credit enhancement.

Contractual Obligations

Grant Contract for State-owned Construction Land Use Right in Shanghai City

In 2020 ACM Shanghai, through its wholly-owned subsidiary ACM Lingang, entered into a Grant Contract for State-owned Construction Land Use Right in Shanghai City (Category of R&D Headquarters and Industrial Projects), or the Grant Agreement, with the China (Shanghai) Pilot Free Trade Zone Lin-gang Special Area Administration, or the Grantor. 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), related to the achievement of the certain performance milestones. As of September 30, 2025, ACM Lingang had officially achieved the milestones, and the performance deposit has been refunded in full (note 7).

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.

How We Evaluate Our Operations

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

• We define shipments of tools to include (a) a repeat shipment to a customer of a type of tool that the customer has previously accepted, for which we recognize revenue upon shipment or delivery, and (b) a first-time shipment 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 (net), income tax benefit (expense), depreciation and amortization, unrealized (gain) loss on short-term investments, and stock-based compensation. We define adjusted EBITDA to also exclude restructuring costs, although we have not incurred any such costs to date.
• We define “free cash flow” as net cash provided by operating activities less purchases of property and equipment (net of proceeds from disposals) and purchase of short-term and long-term investments.
• We define “adjusted operating income (loss)” as our income (loss) from operations excluding stock-based compensation.

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.

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. We believe that these financial measures help identify underlying trends in our business that could otherwise be masked by the effect of the expenses that we exclude. In particular, we believe that the exclusion of the expenses eliminated in calculating adjusted EBITDA and adjusted operating income (loss) can provide useful measures for period-to-period comparisons of our core operating performance and that the exclusion of property and equipment purchases from operating cash flow can provide a usual means to gauge our capability to generate cash. Accordingly, we believe that these financial measures provide useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects, and allowing for greater transparency with respect to key financial metrics used by our management in its financial and operational decision-making.

Shipments, adjusted EBITDA, free cash flow and adjusted operating income (loss) are not prepared in accordance with GAAP, and should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP.

Shipments

We consider shipments a key operating metric as it reflects the total value of products delivered to customers and prospective customers by our productive assets.

Shipments consist of two components:

• a shipment to a customer of a type of tool that the customer has previously accepted, for which we recognize revenue when the tool is delivered; and
• a shipment to a customer of a type of tool that the customer is receiving and evaluating for the first time, in each case a first tool, for which we may recognize revenue at a later date, subject to the customer’s acceptance of the tool upon the tool’s satisfaction of applicable contractual requirements or subject to the customer’s subsequent discretionary commitment to purchase the tool.

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 in the nine months ended September 30, 2025 totaled $626.2 million, as compared to $709.6 million for the same period in 2024. Repeat tool shipments in the nine months ended September 30, 2025 totaled $336.4 million, as compared to $353.5 million for same period in 2024. First tool shipments in the nine months ended September 30, 2025 totaled $289.8 million, as compared to $356.2 million for the same period in 2024.

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. The cumulative cost of “first tool” shipments under evaluation at customers which have not been accepted by the customer is carried at cost and reflected in finished goods inventory (see note 5 to the condensed consolidated financial statements included in this report). “First tool” shipments exclude deliveries to customers for which ACM Research does not have a basis to expect future revenue.

Adjusted EBITDA

There are a number of limitations related to the use of adjusted EBITDA rather than net income (loss), which is the nearest GAAP equivalent. Some of these limitations are:

• adjusted EBITDA excludes depreciation and amortization and, although these are non-cash expenses, the assets being depreciated or amortized may have to be replaced in the future;
• 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;
• the expenses and other items that we exclude in our calculation of adjusted EBITDA may differ from the expenses and other items, if any, that other companies may exclude from adjusted EBITDA when they report their operating results;
• adjusted EBITDA does not reflect changes in, or cash requirements for, working capital needs;
• adjusted EBITDA does not reflect interest expense, or the requirements necessary to service interest or principal payments on debt;
• adjusted EBITDA does not reflect income tax expense (benefit) or the cash requirements to pay taxes;
• adjusted EBITDA does not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; and
• adjusted EBITDA includes expense reductions and non-operating other income attributable to mainland China governmental grants, which may mask the effect of underlying developments in net income, including trends in current expenses and interest expense, and free cash flow includes mainland China governmental grants, the amount and timing of which can be difficult to predict and are outside our control.

The following table reconciles net income, the most directly comparable GAAP financial measure, to adjusted EBITDA:

(Dollars in thousands)

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. If we did not receive the grants, our cash expenses therefore would be lower, and our cash position would not be affected, to the extent we have accurately anticipated the amounts of the grants. For additional information regarding our mainland China grants, please see “—Mainland China Government Research and Development Funding.”

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:

(Dollars in thousands)

The decrease in free cash flow for the nine months ended September 30, 2025 as compared to the same period in 2024 reflected the factors driving net cash used in operating activities, a decrease of purchases of property and equipment, and long-term investment. 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. We do not adjust free cash flow for the effects of time-deposits, which for our internal purposes are considered as largely similar to cash.

Adjusted Operating Income

Adjusted operating income excludes stock-based compensation from income from operations. Although stock-based compensation is an important aspect of the compensation of our employees and executives, determining the fair value of certain of the stock-based instruments we utilize involves judgment and estimation and the expense recorded may bear little resemblance to the actual value realized upon the vesting or future exercise of the related stock-based awards. Furthermore, unlike cash compensation, the value of stock options, which is an element of our ongoing stock-based compensation expense, is determined using a complex formula that incorporates factors. Management believes it is useful to exclude stock-based compensation in order to better understand the long-term performance of our core business and to facilitate comparison of our results to those of peer companies. The use of non-GAAP financial measures excluding stock-based compensation has limitations, however. 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 and our cash holdings would be less. The following tables reflect the exclusion of stock-based compensation, or SBC, from line items comprising income from operations:

(in thousands)

Our market risks and the ways we manage them are summarized in the section captioned “Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report. There have been no material changes in the first nine months of 2025 to our market risks or to our management of such risks.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, or the Exchange Act, as of September 30, 2025. In designing and evaluating the disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that our management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2025, our disclosure controls and procedures were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There were no material changes to the risk factors discussed in Item 1A. “Risk Factors” of Part I in our Annual Report for the fiscal year ended December 31, 2024, as amended and supplemented by the information in “Item 1A. Risk Factors” of Part II in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025. In addition to the other information set forth in this report, you should carefully consider those risk factors, which could materially affect our business, financial condition and future operating results. Those risk factors are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may have a material adverse effect on our business, financial condition and operating results.