Ricardo Pillai
3 min read
In This Article:
We came across a bullish thesis on ACM Research, Inc. (ACMR) on Dragon Invest’s Substack. In this article, we will summarize the bulls’ thesis on ACMR. ACM Research, Inc. (ACMR)'s share was trading at $25.02 as of 9th June. ACMR’s trailing and forward P/E were 15.94 and 12.52 respectively according to Yahoo Finance.
A technician measuring a semiconductor material using an advanced 3D metrology system.
ACM Research (ACMR) stands out as a highly undervalued opportunity in the global semiconductor space, primarily through its Chinese subsidiary ACM Shanghai (ACMS), which generates nearly all of its revenue. Specializing in wafer cleaning—a critical and high-barrier step in semiconductor fabrication—ACMR is well-positioned to benefit from China’s aggressive push for semiconductor self-sufficiency amid intense U.S.-China geopolitical rivalry.
Founded by David Wang, a U.S. citizen born in China, ACMR initially struggled to penetrate established supply chains but found a breakthrough by focusing on the fast-growing Chinese market through a joint venture with Shanghai’s government, now wholly owned by ACMR. The Chinese wafer fabrication equipment market is fragmented but moving toward consolidation, and ACMR commands a strong 61% domestic market share in wafer cleaning, rivalling global leaders like Japan’s Screen.
At key Chinese customers like YMTC, ACMR’s technology is preferred despite higher upfront costs due to superior throughput and lower total ownership costs. The company continues to innovate with advanced cleaning technologies and projects commanding 55-60% of China’s cleaning market in the near term.
While ACMR’s U.S.-listed parent trades at about one-tenth the valuation of its Shanghai-listed subsidiary, geopolitical risks explain much of this discount. However, the subsidiary’s operations are largely insulated from sanctions, and a potential sale or partial liquidation of ACMS shares could unlock significant value. Management has been slow to act, but recent moves toward unlocking value, including plans to sell a stake in ACMS, may trigger a market re-rating.
For international investors, ACMR offers a unique, undervalued gateway to China’s booming domestic semiconductor industry, with upside potentially reaching 200-300% if valuation gaps close.
Previously, we covered a bullish thesis on ACM Research from thexcapitalist on X.com, which focused on its strong operational performance and key role in China’s semiconductor self-sufficiency drive despite geopolitical risks and a discounted valuation. The stock has experienced an 18% appreciation. Dragon Invest’s thesis builds on this by highlighting ACMR’s dominant domestic market share in wafer cleaning, its innovative technology preferred by major Chinese customers, and potential value unlocks from its Shanghai subsidiary, presenting a more optimistic view on upside if geopolitical discounts narrow.
