ACM Research Likely To Gain From China's Mature Node Investment, DRAM Spend, Analyst Says

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  • Needham analyst Quinn Bolton maintained ACM Research Inc ACMR with a Buy and raised the price target from $10 to $12.
  • Bolton appreciates ACMR's reaffirming of its full-year 2022 revenue guidance of $365MM-$385MM, an encouraging sign that no unexpected issues arose in F4Q22 from U.S. export restrictions.
  • More importantly, the company also provided an initial 2023 sales outlook of $515MM-$585MM, significantly higher than the analyst's prior $400MM estimate.
  • The analyst believes ACMR's strength in 2023 came from continued mature node investment in China, DRAM spending at or above a 19nm half pitch, new product ramps, and new customer wins.
  • ACMR expects a temporary spending pause as domestic Chinese customers, and U.S. parts suppliers assess plans in response to the U.S. trade restrictions. 
  • The company's outlook implies continued strength in mature node investments in China next year as customers add capacity to meet local semiconductor market consumption.
  • The analyst believes ACMR is leveraging its local equipment status in China to gain a share with domestic manufacturers. 
  • The analyst also believes the company is gaining share with new products (semi-critical clean, ECP, and Furnace in 2023; track and PECVD in 2024) and new customers inside and outside China.
  • Price Action: ACMR shares traded higher by 5.53% at $12.60 on the last check Tuesday.
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