Eric Jhonsa
Technology Portfolio Manager at Dutch Asset
ACM Research should benefit as China's wafer fab equipment spending soars over the next couple of years across memory and leading-edge logic, more than offsetting lower mature-node spending. Its advanced packaging sales to non-Chinese clients are also growing well, and valuation looks reasonable after the recent pullback. x.com
ACM Research looks underpriced because its Chinese subsidiary alone has a backlog equal to about half the company's market cap. ACM Shanghai's backlog rose 88.2% to $2.5B, yet the stock barely reacted. x.com x.com
ACM Research trades at a discount of more than 50% to the value of its China subsidiary, which is worth over twice the parent and has posted back-to-back gains above 15%. China's mainland market rally should eventually flow through to consumption. x.com
ACM Research looked great as a value stock, but less so once it is clear it only makes wafer-cleaning equipment. @masayoshisson sees it, like nearly every AI stock, showing textbook complacency before complete capitulation, perhaps a few months after an Anthropic IPO. x.com
ACM Research is the best idea under $5B in market cap right now because China is going to keep pushing for localization. Ongoing dilution of its stake in its Shanghai subsidiary is a valid concern, but a necessary one. x.com x.com
ACM Research is breaking out cleanly from a big base on strong earnings and theme momentum, the combination behind some of the biggest winners. It builds the tools that clean and process wafers in every chip factory, yet remains one of the least talked-about names. x.com
ACM Research carries binary China risk: China is about 97% of its business, and authorities could stop it any day, forcing management to choose between San Jose and China. The CCP's threats toward other countries make that exposure uglier, whatever the company's $4B revenue ambition. x.com x.com x.com
ACM Research is the cleanest second-derivative play on AI capex, and Kimi's rise makes it more bullish. A China that is frontier-competitive in models but cannot buy Nvidia's best chips must build its own compute, HBM and packaging, and that spend lands on ACM Shanghai, its STAR-listed operating company, where new orders rose 65% year over year in Q1. Its new Lingang flagship site has about $3B of annual output capacity as it ramps. x.com x.com x.com
ACM Research is the simplest way to play the inevitable capacity ramp at Chinese memory makers CXMT and YMTC, because CXMT's capex is ACM's revenue. Bernstein believes CXMT is building an undisclosed Shanghai fab with up to 100k wafers a month of capacity, due to start production early next year, and models its capex rising 70% a year through 2028 to $35B. x.com x.com
ACM Research's discount to the value of its China-listed unit means nothing if management never acts to close it. That unit trades at roughly 70-80x in China, which looks a bit pricey, so fair value probably lies somewhere in between. x.com
Lam Research's record results suggest the equipment cycle is not ending despite its stock selloff. Revenue reached $8.22B, up 54% year over year and over 20% sequentially, while EPS rose 75%; ASML and TSMC also report customers needing more tools. Overweight with a $355 target and 35% upside, but the selloff is a gift only if Lam guides December higher. x.com x.com
