ACM Research, Inc. - Annual Report: 2021 (Form 10-K)

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

(Mark One)

For the fiscal year ended December 31, 2021

or

For the transition period from _________ to _____________

 

ACM Research, Inc.

(Exact Name of Registrant as Specified in Its Charter)

 

Registrant’s telephone number, including area code: (510) 445-3700

 

Securities registered pursuant to Section 12(b) of the Act:

 

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☑

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  ☑

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

 

The aggregate market value on June 30, 2021 (the last business day of the registrant’s most recently completed second quarter) of the voting common equity held by non-affiliates of the registrant, computed by reference to the $102.22 closing price of the stock on that date, was $1,980.6 million. The registrant does not have non-voting common equity outstanding.

 

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

 

Documents Incorporated By Reference

The registrant intends to file a proxy statement pursuant to Regulation 14A within 120 days of the end of the fiscal year ended December 31, 2021. Portions of such proxy statement are incorporated by reference in Part III of this report.

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PART I
Item 1	Business	4
Item 1A	Risk Factors	19
Item 2	Properties	52
Item 3	Legal Proceedings	52
PART II
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	53
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	55
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	78
Item 8	Financial Statements and Supplementary Data	80
Item 9A	Controls and Procedures	124
PART III
Item 10	Directors, Executive Officers and Corporate Governance	128
Item 11	Executive Compensation	128
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	128
Item 13	Certain Relationships and Related Transactions, and Director Independence	128
Item 14	Principal Accountant Fees and Services	128
PART IV
Item 15	Exhibits and Financial Statement Schedules	129
Signatures		134

Item 1.

Business

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Space Alternated Phase Shift, or SAPS, technology for flat and patterned (deep via or deep trench with stronger structure) wafer surfaces. SAPS technology employs alternating phases of megasonic waves to deliver megasonic energy in a highly uniform manner on a microscopic level. We have shown SAPS technology to be more effective than conventional megasonic and jet spray technologies in removing random defects across an entire wafer, with increasing relative effectiveness at more advanced production nodes.

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Timely Energized Bubble Oscillation, or TEBO, technology for patterned wafer surfaces at advanced process nodes. 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.

●	Tahoe technology for cost and environmental savings. Tahoe technology delivers high cleaning performance using significantly less sulfuric acid and hydrogen peroxide than is typically consumed by conventional high-temperature single-wafer cleaning tools.

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ECP technology for advanced metal plating. Our Ultra ECP ap, or Advanced Packaging, technology was developed for back-end assembly processes to deliver a more uniform metal layer at the notch area of wafers prior to packaging. Our Ultra ECP map, or Multi-Anode Partial Plating, technology was developed for front-end wafer fabrication processes to deliver advanced electrochemical copper plating for copper interconnect applications. Ultra ECP map offers improved gap-filling performance for ultra-thin seed layer applications, which is critical for advanced nodes at 28nm, 14nm and beyond.

●

Post CMP: Chemical mechanical planarization, or CMP, uses an abrasive chemical slurry following other fabrication processes, such as deposition and etching, in order to achieve a smooth wafer surface in preparation for subsequent processing steps. SAPS technology can be applied following each CMP process to remove residual random defects deposited or formed during CMP.

●

Post Hard Mask Deposition: As part of the photolithographical patterning process, a mask is applied with each deposition of a material layer to prevent etching of material intended to be retained. Hard masks have been developed to etch high aspect-ratio features of advanced chips that traditional masks cannot tolerate. SAPS technology can be applied following each deposition step involving hard masks that use nitride, oxide or carbon based materials to achieve higher etch selectivity and resolution.

●	Post Contact/Via Etch: Wet etching processes are commonly used to create patterns of high-density contacts and vias. SAPS technology can be applied after each such etching process to remove random defects that could otherwise lead to electrical shorts.

●

Pre Barrier Metal Deposition: Copper wiring requires metal diffusion barriers at the top of via holes to prevent electrical leakage. SAPS technology can be applied prior to deposition of barrier metal to remove residual oxidized copper, which otherwise would adhere poorly to the barrier and impair performance.

	●     compact design, with footprint of 2.65m x 4.10m x 2.85m (WxDxH), requiring limited clean room floor space;
	●     up to 8 chambers, providing throughput of up to 225 wafers per hour;
	●     double-sided cleaning capability, with up to 5 cleaning chemicals for process flexibility;
	●     2-chemical recycling capability for reduced chemical consumption;
	●     image wafer detection method for lowering wafer breakage rates; and
	●    chemical delivery module for delivery of dilute hydrofluoric acid, RCA SC-1 solution, functional de-ionized water and carbon dioxide to each of the chambers.

	●     compact design, with footprint of 2.55m x 5.1m x 2.85m (WxDxH), requiring limited clean room floor space;
	●     up to 12 chambers, providing throughput of up to 375 wafers per hour;
	●     chemical supply system integrated into mainframe;
	●     inline mixing method replaces tank auto-changing, reducing process time; and
	●     improved drying technology using hot isopropyl alcohol and de-ionized water.

●	Memory Chips: We estimate that TEBO technology can be applied in as many as 50 steps in the fabrication of a DRAM chip, consisting of up to 10 steps in cleaning ISO structures, 20 steps in cleaning buried gates, and 20 steps in cleaning high aspect-ratio storage nodes and stacked films.

●	Logic Chips: In the fabrication process for a logic chip with a FinFET structure, we estimate that TEBO technology can be used in 15 or more cleaning steps.

	●     an equipment front-end module, or EFEM, which moves wafers from chamber to chamber; ●     one or more chamber modules, each equipped with a TEBO megasonic generator system; ●     an electrical module to provide power for the tool; and ●     a chemical delivery module.
Ultra C TEBO II (released in 2016). Highlights of our Ultra C TEBO II equipment include:
	●     compact design, with footprint of 2.25m x 2.25m x 2.85m (WxDxH);   ●   up to 8 chambers with an upgraded transport system and optimized robotic scheduler, providing throughput of up to 300 wafers per hour;   ●     EFEM module consisting of 4 load ports, transfer robot and 1 process robot; and   ●     focus on dilute chemicals contributes to environmental sustainability and lower cost of ownership.
Ultra C TEBO V (released in 2016). Highlights of our Ultra C TEBO V equipment include:
	●     footprint of 2.45m x 5.30m x 2.85m (WxDxH);   ●     up to 12 chamber modules, providing throughput of up to 300 wafers per hour;   ●     EFEM module consisting of 4 load ports, 1 transfer robot and 1 process robot; and   ●    chemical delivery module for delivery of isopropyl alcohol, dilute hydrofluoric acid, RCA SC-1 solution, functional de-ionized water and carbon dioxide to each of the chambers.

●	new cleaning steps for Ultra C SAPS cleaners for application in logic chips and for DRAM, and 3D NAND technologies;

●	new cleaning steps for Ultra C TEBO cleaners for FinFET in logic chips, gates in DRAM, and deep vias in 3D NAND  technologies;

●	new hardware, including new system platforms, new and additional chamber structures and new chemical blending systems; and

●	new software to integrate new functionalities to improve tool performance.

●	better established credibility and market reputations, longer operating histories, and broader product offerings;

●	significantly greater financial, technical, marketing and other resources, which may allow them to pursue design, development, manufacturing, sales, marketing, distribution and service support of their products;

●	more extensive customer and partner relationships, which may position them to identify and respond more successfully to market developments and changes in customer demands; and

●	multiple product offerings, which may enable them to offer bundled discounts for customers purchasing multiple products or other incentives that we cannot match or offer.

●	performance of products, including particle removal efficiency, rate of damage to wafer structures, high temperature chemistry, throughput, tool uptime and reliability, safety, chemical waste treatment, and environmental impact;

●	service support capability and spare parts delivery time; innovation and development of functionality and features that are must-haves for advanced fabrication nodes;

●	ability to anticipate customer requirements, especially for advanced process nodes of less than 45nm; ability to identify new process applications;

●	brand recognition and reputation; and

●	skill and capability of personnel, including design engineers, manufacturing engineers and technicians, application engineers, and service engineers.

Item 1A.

Risk Factors

●	our potential future needs for additional capital that may not be available at all or on terms acceptable to us;

●	the cyclicality in the semiconductor industry that may lead to substantial variations in demand for our products,

●	industry manufacturers of integrated circuits, or chips, adopting our Space Alternated Phase Shift or SAPS, Timely Energized Bubble Oscillation or TEBO, Tahoe and Electro-Chemical Plating or ECP, and furnace and other capital equipment, or tools;

●	our SAPS, TEBO, Tahoe, ECP, furnace and other technologies not achieving widespread market acceptance;

●	our ability to continue to enhance our existing single-wafer wet cleaning tools and identifying and entering  new product markets;

●	our ability to establish and maintain a reputation for credibility and product quality;

●	our ability to expand our customer base;

●	our dependence on a small number of customers for a substantial portion of our revenue;

●	our long and unpredictable sales cycle, including our incurrence of significant expenses long before we can recognize revenue from new products, if at all;

●	difficulties in forecasting demand for our tools;

●	our reliance on third parties to manufacture significant portions of our tools and our ability to manage our relationships with these parties;

●	any shortage of components or subassemblies, which could result in delayed delivery of products to us or in increased costs to us;

●	our dependence on a limited number of suppliers, including single source suppliers, for critical components and subassemblies;

●	our dependence on our Chief Executive Officer and President and other senior management and key employees;

●	changes in government trade policies that could limit the demand for our tools and increase the cost of our tools;

●	regulatory action limiting our ability to sell our tools to Chinese customers;

●	changes in political and economic policies with respect to the People’s Republic of China or PRC;

●	the PRC’s currency exchange control and government restrictions on investment repatriation may impact our ability to transfer funds outside of the PRC;

●	the inability of the U.S. Public Company Accounting Oversight Board, or PCAOB, to inspect our auditor, as a registered public accounting firm operating in the PRC and the adoption of proposed legislation related to companies operating in “restrictive markets”

●	our ability to implement our strategy to expand our PRC operations;

●	our ability to achieve the results contemplated by our business strategy and our strategy for growth in the PRC and expectations related to the STAR Market listing;

●	the effect of ACM Shanghai’s status as a publicly traded company that is controlled, but less than wholly owned, by ACM Research;

●	our ability to manage potentially inconsistent accounting and disclosure requirements of ACM Research and ACM Shanghai as a result of the STAR Market Listing;

●	our ability to protect our intellectual property, including in the PRC;

●	breaches of our cybersecurity systems;

●	impacts on our global supply chain due to the COVID‑19 pandemic, and our ability to successfully manage the demand, supply, and operational challenges associated with the global semiconductor shortage;

●	the impact of the COVID‑19 pandemic on our currently planned projects and investments in the PRC, including the STAR IPO;

●	the volatility in the market price of Class A common stock;

●	manipulative short sellers of our stock, which may drive down the market price of our Class A common stock and could result in litigation;

●	the difficulty to predict the effect of the STAR Listing and STAR IPO on the Class A common stock;

●	the dual class structure of Class A common stock, which has the effect of concentrating voting control with our executive officers and directors; and

●	the limited experience of our management team managing a public company, including a “large accelerated filer.”

●	our sales growth;

●	the costs of applying our existing technologies to new or enhanced products;

●	the costs of developing new technologies and introducing new products;

●	the costs associated with protecting our intellectual property;

●	the costs associated with our expansion, including capital expenditures and Lingang-related land purchases and deposits,  and with increasing our sales and marketing and service and support efforts, and with expanding our geographic operations;

●	our ability to continue to obtain governmental subsidies for developmental projects in the future;

●	future debt repayment obligations; and

●	the number and timing of any future acquisitions.

●	the cyclicality of the semiconductor industry and the related impact on the purchase of equipment used in the manufacture of chips;

●	the timing of purchases of our tools by chip fabricators, which order types of tools based on multi-year capital plans under which the number and dollar amount of tool purchases can vary significantly from year to year;

●

the relatively high average selling price of our tools and our dependence on a limited number of customers for a substantial portion of our revenue in any period, whereby the timing and volume of purchase orders or cancellations from our customers could significantly reduce our revenue for that period;

●	the significant expenditures required to customize our products often exceed the deposits received from our customers;

●	the lead time required to manufacture our tools;

●	the timing of recognizing revenue due to the timing of shipment and acceptance of our tools;

●	our ability to sell additional tools to existing customers;

●	the changes in customer specifications or requirements;

●	the length of our product sales cycle;

●	changes in our product mix, including the mix of systems, upgrades, spare parts and service;

●	the timing of our product releases or upgrades or announcements of product releases or upgrades by us or our competitors, including changes in customer orders in anticipation of new products or product enhancements;

●	our ability to enhance our tools with new and better functionality that meet customer requirements and changing industry trends;

●	constraints on our suppliers’ capacity;

●	our ability to sell our tools to Chinese customers due to regulatory restrictions, including the addition of our customers to the Entity List;

●	the ability of other suppliers to provide sufficient quantities of their tools to our Chinese customers which may indirectly the production plans of our customers and result in a reduction of demand for our tools;

●	the timing of investments in research and development related to releasing new applications of our technologies and new products;

●	delays in the development and manufacture of our new products and upgraded versions of our products and the market acceptance of these products when introduced;

●	our ability to control costs, including operating expenses and the costs of the components and subassemblies used in our products;

●	the costs related to the acquisition and integration of product lines, technologies or businesses; and

●	the costs associated with protecting our intellectual property, including defending our intellectual property against third-party claims or litigation.

●	our ability to demonstrate the differentiated, innovative nature of our SAPS, TEBO, Tahoe, ECP, furnace and other technologies and the advantages of our tools over those of our competitors;

●	compatibility of our tools with existing or potential customers’ manufacturing processes and products;

●	the level of customer service available to support our products; and

●	the experiences our customers have with our products.

●	accurate anticipation of market requirements, changes in technology and evolving standards;

●	the availability of qualified product designers and technologies needed to solve difficult design challenges in a cost-effective, reliable manner;

●	our ability to design products that meet chip manufacturers’ cost, size, acceptance and specification criteria, and performance requirements;

●	the ability and availability of suppliers and third-party manufacturers to manufacture and deliver the critical components and subassemblies of our tools in a timely manner;

●	market acceptance of our customers’ products, and the lifecycle of those products; and

●	our ability to deliver products in a timely manner within our customers’ product planning and deployment cycle.

●	greater financial, technical, sales and marketing, manufacturing, distribution and other resources;

●	established credibility and market reputations;

●	longer operating histories;

●	broader product offerings;

●	more extensive service offerings, including the ability to have large inventories of spare parts available near, or even at, customer locations;

●	local sales forces; and

●	more extensive geographic coverage.

●	efforts by our sales force;

●	the complexity of our customers’ manufacturing processes and the compatibility of our tools with those processes;

●	our customers’ internal technical capabilities and sophistication; and

●	our customers’ capital spending plans and processes, including budgetary constraints, internal approvals, extended negotiations or administrative delays.

●	our customers may delay or reject acceptance of our tools that contain defects or fail to meet their specifications;

●	we may suffer customer dissatisfaction, negative publicity and reputational damage, resulting in reduced orders or otherwise damaging our ability to retain existing customers and attract new customers;

●	we may incur substantial costs as a result of warranty claims or service obligations or in order to enhance the reliability of our tools;

●	the attention of our technical and management resources may be diverted;

●	we may be required to replace defective systems or invest significant capital to resolve these problems; and

●	we may be required to write off inventory and other assets related to our tools.

●	potential price increases;

●	capacity shortages or other inability to meet any increase in demand for our products;

●	reduced control over manufacturing process for components and subassemblies and delivery schedules;

●	limited ability of some suppliers to manufacture and sell subassemblies or parts in the volumes we require and at acceptable quality levels and prices, due to the suppliers’ relatively small operations and limited manufacturing resources;

●	increased exposure to potential misappropriation of our intellectual property; and

●	limited warranties on subassemblies and components supplied to us.

●	hire, train, integrate and manage additional qualified engineers for research and development activities, sales and marketing personnel, service and support personnel and financial and information technology personnel;

●	manage multiple relationships with our customers, suppliers and other third parties; and

●	continue to enhance our information technology infrastructure, systems and controls.

●	the acquired product lines, technologies or businesses may not improve our financial and strategic position as planned;

●	we may determine we have overpaid for the product lines, technologies or businesses, or that the economic conditions underlying our acquisition have changed;

●	we may have difficulty integrating the operations and personnel of the acquired company;

●	we may have difficulty retaining the employees with the technical skills needed to enhance and provide services with respect to the acquired product lines or technologies;

●	the acquisition may be viewed negatively by customers, employees, suppliers, financial markets or investors;

●	we may have difficulty incorporating the acquired product lines or technologies with our existing technologies;

●	we may encounter a competitive response, including price competition or intellectual property litigation;

●

we may encounter difficulties related to required CFIUS approval (see also “—Regulatory and Litigation Risks—Certain of our investments may be subject to review by and approval from CFIUS, which may prevent us from taking advantage of investment opportunities that would otherwise be advantageous to our stockholders”);

●	we may become a party to product liability or intellectual property infringement claims as a result of our sale of the acquired company’s products;

●	we may incur one-time write-offs, such as acquired in-process research and development costs, and restructuring charges;

●	we may acquire goodwill and other intangible assets that are subject to impairment tests, which could result in future impairment charges;

●	our ongoing business and management’s attention may be disrupted or diverted by transition or integration issues and the complexity of managing geographically or culturally diverse enterprises; and

●	our due diligence process may fail to identify significant existing issues with the target business.

●	a decline in demand for our products;

●	an increase in reserves on accounts receivable due to our customers’ inability to pay us;

●	an increase in reserves on inventory balances due to excess or obsolete inventory as a result of our inability to sell such inventory;

●	valuation allowances on deferred tax assets;

●	restructuring charges;

●	asset impairments including the potential impairment of goodwill and other intangible assets;

●	a decline in the value of our investments;

●	exposure to claims from our suppliers for payment on inventory that is ordered in anticipation of customer purchases that do not come to fruition;

●	a decline in the value of certain facilities we lease to less than our residual value guarantee with the lessor; and

●	challenges maintaining reliable and uninterrupted sources of supply.

●	imposition of, or adverse changes in, foreign laws or regulatory requirements, such as work stoppages and travel restrictions imposed in connection with the COVID-19 pandemic;

●	the need to comply with the import laws and regulations of various foreign jurisdictions, including a range of U.S. import laws;

●	potentially adverse tax consequences, including withholding tax rules that may limit the repatriation of our earnings, and higher effective income tax rates in foreign countries where we conduct business;

●	competition from local suppliers with which potential customers may prefer to do business;

●	seasonal reduction in business activity, such as during the Lunar New Year in parts of Asia and in other periods in various individual countries;

●	increased exposure to foreign currency exchange rates;

●	reduced protection for intellectual property;

●	longer sales cycles and reliance on indirect sales in certain regions;

●	increased length of time for shipping and acceptance of our products;

●	greater difficulty in responding to customer requests for maintenance and spare parts on a timely basis;

●	greater difficulty in enforcing contracts and accounts receivable collection and longer collection periods;

●	difficulties in staffing and managing foreign operations and the increased travel, infrastructure and legal and compliance costs associated with multiple international locations;

●	heightened risk of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact financial results and result in restatements of, or irregularities in, our consolidated financial statements; and

●	general economic conditions, geopolitical events or natural disasters in countries where we conduct our operations or where our customers are located, including political unrest, war, acts of terrorism or responses to such events.

•	In December 2018 the SEC and the PCAOB issued a joint statement highlighting continued challenges faced by U.S. regulators in their oversight of financial statement audits of U.S.-listed reporting companies with significant operations in the PRC.

•

In June 2019 a bipartisan group of lawmakers introduced bills in both houses of the U.S. Congress that, if passed, would have required the SEC to maintain a list of foreign reporting companies for which the PCAOB is not able to inspect or investigate an auditor report issued by a foreign public accounting firm. The proposed Ensuring Quality Information and Transparency for Abroad-Based Listings on our Exchanges Act, also referred to as the EQUITABLE Act, would have prescribed increased disclosure requirements for these reporting companies and, beginning in 2025, provided for the delisting from U.S. stock exchanges of reporting companies included on the SEC’s list for three consecutive years.

•

In May 2020 Nasdaq requested approval by the SEC of proposals that would impact companies with businesses principally administered in jurisdictions defined as “restrictive markets,” which likely would encompass the PRC. These proposals contemplate, among other things, the application of more stringent listing criteria if a listed company’s auditor does not demonstrate a PCAOB inspection record (as is the case with our auditor), employee expertise and training, or geographic or other resources sufficient to perform the company’s audit satisfactorily. Examples of more stringent criteria that Nasdaq could apply include requiring: (a) higher levels of equity, assets, earnings or liquidity than are otherwise needed; (b) that any public offering to be underwritten on a firm commitment basis (involving more due diligence by the underwriter); and (c) the imposition of lock-up restrictions on directors and officers to allow market mechanisms to determine an appropriate price for shares before the insiders could sell. Alternatively, Nasdaq could deny continued listing to a company.

•	In April 2020 the SEC and the PCAOB issued a joint statement highlighting the significant disclosure, financial reporting and other risks associated with emerging market investments, including the PCAOB’s continued inability to inspect audit work papers of auditors in the PRC.

•

The Holding Foreign Companies Accountable Act, which became law in December 2020, includes requirements for the SEC to identify issuers whose audit work is performed by auditors that the PCAOB is unable to inspect or investigate completely because of a restriction imposed by a non-U.S. authority in the auditor’s local jurisdiction. The Holding Foreign Companies Accountable Act also requires that, to the extent that the PCAOB has been unable to inspect an issuer’s auditor for three consecutive years since 2021, the SEC shall prohibit its securities registered in the United States from being traded on any national securities exchange or over-the-counter market in the United States. Furthermore, on June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, which, if enacted, would amend the Holding Foreign Companies Accountable Act to require the SEC to prohibit an issuer’s securities from trading on any national securities exchange or over-the-counter market in the United States if the PCAOB has been unable to inspect an issuer’s auditor for two consecutive years instead of three. On September 22, 2021, the PCAOB adopted a final rule implementing the Holding Foreign Companies Accountable Act, which provides a framework for the PCAOB to use when determining, as contemplated under the Holding Foreign Companies Accountable Act, whether the PCAOB is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction. On December 16, 2021, the PCAOB designated China and Hong Kong as jurisdictions where the PCAOB is not allowed to conduct full and complete audit inspections and has identified firms registered in such jurisdictions, including BDO China Shu Lun Pan Certified Public Accountants LLP, our independent registered public accounting firm. Pursuant to each annual determination by the PCAOB, the SEC will, on an annual basis, identify issuers that have used non-inspected audit firms.

●

The U.S. Patent and Trademark Office and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other provisions during the patent process. There are situations in which noncompliance can result in abandonment or lapse of a patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, competitors might be able to enter the market earlier than would otherwise have been the case.

●	Patent applications may not result in any patents being issued.

●	Patents that may be issued may be challenged, invalidated, modified, revoked, circumvented, found to be unenforceable or otherwise may not provide any competitive advantage.

●	Our competitors may seek or may have already obtained patents that will limit, interfere with, or eliminate our ability to make, use and sell our potential product candidates.

●	The PRC and other countries other than the United States may have patent laws less favorable to patentees than those upheld by U.S. courts, allowing foreign competitors a better opportunity to create, develop and market competing product candidates.

●	be time consuming and expensive to defend, whether or not meritorious;

●	force us to stop selling products or using technology that allegedly infringes the third party’s intellectual property rights;

●	delay shipments of our products;

●	require us to pay damages or settlement fees to the party claiming infringement;

●	require us to attempt to obtain a license to the relevant intellectual property, which may not be available on reasonable terms or at all;

●	force us to attempt to redesign products that contain the allegedly infringing technology, which could be expensive or which we may be unable to do;

●	require us to indemnify our customers, suppliers or other third parties for any loss caused by their use of our technology that allegedly infringes the third party’s intellectual property rights; or

●	divert the attention of our technical and managerial resources.

●	actual or anticipated fluctuations in our revenue and other operating results;

●	the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;

●	actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors;

●	changes in projections for the chips or chip equipment industries or in the operating performance or expectations and stock market valuations of chip companies, chip equipment companies or technology companies in general;

●	changes in operating results;

●	any changes in the financial projections we may provide to the public, our failure to meet these projections, or changes in recommendations by any securities analysts that elect to follow Class A common stock;

●	additional shares of Class A common stock being sold into the market by us or our existing stockholders or the anticipation of such sales;

●	price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole;

●	lawsuits threatened or filed against us;

●	litigation and other developments relating to our patents or other proprietary rights or those of our competitors;

●	developments in new legislation and pending lawsuits or regulatory actions, including interim or final rulings by judicial or regulatory bodies; and

●	general economic trends, including changes in the demand for electronics or information technology or geopolitical events such as war or acts of terrorism, or any responses to such events.

●	our dual class common stock structure provides holders of Class B common stock with the ability to control the outcome of matters requiring stockholder approval, even if they own significantly less than a majority of the total number of outstanding shares of Class A and Class B common stock;

●	when the outstanding shares of Class B common stock represent less than a majority of the combined voting power of common stock;

●	amendments to our charter or bylaws will require the approval of two-thirds of the combined vote of our then-outstanding shares of Class A and Class B common stock;

●	vacancies on the board of directors will be able to be filled only by the board and not by stockholders;

●	the board, which currently is not staggered, will be automatically separated into three classes with staggered three-year terms;

●	directors will only be able to be removed from office for cause; and

●	our stockholders will only be able to take action at a meeting and not by written consent;

●	only our chair, our chief executive officer or a majority of our directors is authorized to call a special meeting of stockholders;

●	advance notice procedures apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders;

●	our charter authorizes undesignated preferred stock, the terms of which may be established, and shares of which may be issued, without stockholder approval; and

●	cumulative voting in the election of directors is prohibited.

●	any derivative action or proceeding brought on our behalf;

●	any action asserting a claim of breach of a fiduciary duty owed to us, our stockholders, creditors or other constituents by any of our directors, officers, other employees, agents or stockholders;

●	any action asserting a claim arising under the Delaware General Corporation Law, our charter or bylaws, or as to which the Delaware General Corporation Law confers jurisdiction on the Court of Chancery of the State of Delaware; or

●	any action asserting a claim that is governed by the internal affairs doctrine.

●	the requirement that our independent registered public accounting firm attest to the effectiveness of our internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act of 2002;

●	compliance with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements;

●	the requirement that we provide full and more detailed disclosures regarding executive compensation; and

●	the requirement that we hold a non-binding advisory vote on executive compensation and obtain stockholder approval of any golden parachute payments not previously approved.

Item 2.

Properties

Item 3.

Legal Proceedings

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

		Base Period								Years Ending
Company Name/Index		11/3/17				12/29/17				12/31/18				12/31/19				12/31/20				12/31/21
ACM Research, Inc.		$	100			$	87			$	180			$	305			$	1,343			$	1,409
Russell 1000 Index		$	100			$	103			$	97			$	124			$	148			$	157
Nasdaq Composite Index		$	100			$	102			$	98			$	133			$	191			$	231

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

●	Space Alternated Phase Shift, or SAPS, technology for flat and patterned wafer surfaces, which employs alternating phases of megasonic waves to deliver megasonic energy in a highly uniform manner on a microscopic level;

●	Timely Energized Bubble Oscillation, or TEBO, technology for patterned wafer surfaces at advanced process nodes, which provides effective, damage-free cleaning for 2D and 3D patterned wafers with fine feature sizes;

●	Tahoe technology for cost and environmental savings, which delivers high cleaning performance using significantly less sulfuric acid and hydrogen peroxide than is typically consumed by conventional high-temperature single-wafer cleaning tools; and

●

Electro-Chemical Plating, or ECP, technology for advanced metal plating, which includes Ultra ECP ap, or Advanced Packaging, technology for back-end assembly processes, Ultra ECP 3d for through-silicon-via, or tsv, and Ultra ECP map, or Multi-Anode Partial Plating, technology for front-end wafer fabrication processes.

•	a listing, which we refer to as the STAR Listing, of shares of ACM Shanghai on the Shanghai Stock Exchange’s Sci-Tech innovAtion boaRd, known as the STAR Market; and

•	a concurrent initial public offering, which we refer to as the STAR IPO, of ACM Shanghai shares in the PRC, at a pre-offering valuation of not less than RMB 5.15 billion ($747.1 million).

•	the land lease for, and construction of, ACM Shanghai’s proposed development and production center in the Lingang region of Shanghai;

•

product development to upgrade and expand our process equipment targeted at more advanced process nodes, including technical improvement and development of TEBO megasonic cleaning equipment, Tahoe single wafer wet bench combined cleaning equipment, front-end brush scrubbing equipment, auto bench and backside cleaning equipment, electroplating equipment, stress free polish equipment, vertical furnace equipment, and additional new products to expand our product portfolio; and

•	working capital.

•

Operations: We conduct substantially all of our product development, manufacturing, support and services in the PRC, and those activities have been directly impacted by the COVID–19 pandemic and related restrictions on transportation and public appearances. Currently substantially all of our staff have returned to work at both of our Shanghai facilities. To date we have not experienced absenteeism of management or other key employees, other than certain of our executive officers being delayed in traveling back to the PRC when working from our California office. Our corporate headquarters are located in Alameda County in the San Francisco Bay Area and are the subject of a number of state and county public health directives and orders. These actions have not negatively impacted our business to date, however, because of the limited number of employees at our headquarters and the nature of the work they generally perform.

•

Customers: Our customers’ business operations have been, and are continuing to be, subject to business interruptions arising from the COVID–19 pandemic. Historically a majority of our revenue has been derived from customers located in the PRC and surrounding areas that have been impacted by COVID–19. Two customers that accounted for 48.9% of our revenue in 2021 are based in the PRC, and three customers that accounted for 75.8% of our revenue in 2020, and  73.8% of our revenue in 2019 are based in the PRC and South Korea. One of those customers, Yangtze Memory Technologies Co., Ltd. — which accounted for 20.2% of our 2021 revenue, 26.8% of our 2020 revenue, and 27.5% of our 2019 revenue — is based in Wuhan. While Yangtze Memory Technologies Co., Ltd. and other key customers continued to operate their fabrication facilities without interruption during and after the first quarter of 2020, have been forced to restrict access of service personnel and deliveries to and from their facilities. We have experienced longer and in some cases more costly shipping expenses in the delivery of tools to certain customers.

•

Suppliers: Our global supply chain includes components sourced from the PRC, Japan, Taiwan, the United States and Europe. While, to date, we have not experienced material issues with our supply chain, supply chain constraints have intensified due to COVID-19, contributing to global shortages in the supply of semiconductors and other materials used in the production of our own tools. As with our customers, we continue to be in close contact with our key suppliers to help ensure we are able to identify any potential supply issues that may arise.

•

Projects: Our strategy includes a number of plans to support the growth of our core business, including ACM Shanghai’s acquisition of a land use right in the Lingang area of Shanghai where we began construction of a new research and development center and factory in July 2020. The extent to which COVID–19 impacts these projects will depend on future developments that are highly uncertain, but to date, the timing of these ongoing projects has not been delayed or significantly  disrupted by COVID–19 or related government measures.

●

Sales and Development. During the sale process we may, depending on a prospective customer’s specifications and requirements, need to perform additional research, development and testing to establish that a tool can meet the prospective customer’s requirements. We then host an in-house demonstration of the customized tool prototype. Sales cycles for orders that require limited customization and do not require that we develop new technology usually take from 6 to 12 months, while the product life cycle, including the initial design, demonstration and final assembly phases, for orders requiring development and testing of new technologies can take as long as 2 to 4 years. As we expand our customer base, we expect to gain more repeat purchase orders for tools that we have already developed and tested, which will reduce the need for a demonstration phase and shorten the development cycle.

●

Evaluation Periods. When a chip manufacturer proposes to purchase a particular type of tool from us for the first time, we offer the manufacturer an opportunity to evaluate the tool for a period that can extend for 24 months or longer. In some cases, we do not receive any payment on first-time purchases until the tool is accepted. As a result, we may spend more than $2.0 million to produce a tool without receiving payment for more than 24 months or, if the tool is not accepted, without receiving any payment. Please see “Item 1A. Risk Factors—Risks Related to Our Business and Our Industry—We may incur significant expenses long before we can recognize revenue from new products, if at all, due to the costs and length of research, development, manufacturing and customer evaluation process cycles.”

●

Purchase Orders. In accordance with industry practice, sales of our tools are made pursuant to purchase orders. Each purchase order from a customer for one of our tools contains specific technical requirements intended to ensure, among other things, that the tool will be compatible with the customer’s manufacturing process line. Until a purchase order is received, we do not have a binding purchase commitment. Some of our customers to date have provided us with non-binding one- to two-year forecasts of their anticipated demands, and we expect future customers to furnish similar non-binding forecasts for planning purposes. Any of those forecasts would be subject to change, however, by the customer at any time, without notice to us.

●

Fulfillment. We seek to obtain a purchase order for a tool from three to four months in advance of the expected delivery date. Depending upon the nature of a customer’s specifications, the lead time for production of a tool generally will extend from two to four months. The lead-time can be more than six months, however, and in some cases we may need to begin producing a tool based on a customer’s non-binding forecast, rather than waiting to receive a binding purchase order.

●	direct costs, which consist principally of costs of tool components and subassemblies purchased from third-party vendors;

●	compensation of personnel associated with our manufacturing operations, including stock-based compensation;

●	depreciation of manufacturing equipment;

●	amortization of costs of software used for manufacturing purposes;

●	other expenses attributable to our manufacturing department; and

●	allocated overhead for rent and utilities.

●	compensation of personnel associated with pre- and after-sales 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;

●	travel and entertainment; and

●	allocated overhead for rent and utilities.

●	compensation of personnel associated with our research and development activities, including stock-based compensation;

●	costs of components and other research and development supplies;

●	travel expense associated with customer support;

●	amortization of costs of software used for research and development purposes; and

●	allocated overhead for rent and utilities.

●	compensation of executive, accounting and finance, human resources, information technology, and other administrative personnel, including stock-based compensation;

●	professional fees, including accounting and legal fees;

●	other corporate expenses; and

●	allocated overhead for rent and utilities.

●

Stock-based awards granted to employees and non-employees are measured at the fair value of the awards on the grant date and are recognized as expenses either (a) immediately on grant, if no vesting conditions are required, or (b) using the graded vesting method, net of estimated forfeitures, over the requisite service period. The fair value of stock options is determined using the Black-Scholes valuation model. Stock-based compensation expense, when recognized, is charged to cost of revenue or to the category of operating expense corresponding to the service function of the employee or non-employee.

●	We also grant discounts to employees when they subscribe for the new shares of ACM Shanghai, and we account for those stock-based awards in accordance with Accounting Standards Codification, or ASC, Topic 718, Compensation—Stock Compensation

		Year Ended December 31,
		2021				2020				2019
Stock-Based Compensation Expense:
Cost of revenue		$	397			$	175			$	250
Sales and marketing expense			1,802				1,199				328
Research and development expense			1,115				763				1,093
General and administrative expense			1,803				3,491				1,901
		$	5,117			$	5,628			$	3,572

●

Government subsidies relating to current expenses are recorded as reductions of those expenses in the periods in which the current expenses are recorded. For the years ended December 31, 2021, 2020 and 2019, related government subsidies recognized as reductions of relevant expenses in the consolidated statements of operations and comprehensive income were $11.3 million, $2.7 million , and $3.2 million, respectively.

●

Government subsidies related to depreciable assets are credited to income over the useful lives of the related assets for which the grant was received. For the years ended December 31, 2021, 2020 and 2019, related government subsidies recognized as other income in the consolidated statements of operations and comprehensive income were $200,000, $149,000, and $147,000, respectively.

●

We define “shipments” of tools to include (a) a “repeat” delivery to a customer of a type of tool that the customer has previously accepted, for which we recognize revenue upon delivery, and (b) a “first-time” delivery 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 our net income excluding interest expense (net), income tax benefit (expense), depreciation and amortization, 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 of intangible assets.

●	We define “adjusted operating income (loss)” as our income (loss) from operations excluding stock-based compensation.

●	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 costumer’s subsequent discretionary commitment to purchase the tool.

●	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;

●	although depreciation and amortization charges are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and adjusted EBITDA does not reflect any cash requirements for such replacements; and

●

adjusted EBITDA includes expense reductions and non-operating other income attributable to PRC 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 the PRC governmental grants, the amount and timing of which can be difficult to predict and are outside our control.

		Year Ended December 31,
		2021				2020				2019
		(in thousands)
Adjusted EBITDA Data:
Net Income		$	42,921			$	21,677			$	19,458
Interest expense, net			260				85				412
Income tax expense (benefit)			134				(2,382	)			(518	)
Depreciation and amortization			2,353				1,055				788
Stock based compensation			5,117				5,628				3,572
Change in fair value of financial liability			-				11,964				-
Unrealized gain on trading securities			(607	)			(12,574	)			-
Adjusted EBITDA		$	50,178			$	25,453			$	23,712

		Year Ended December 31,
		2021				2020				2019
		(in thousands)
Free Cash Flow Data:
Net cash used in (provided by) in operating activities		$	(40,093	)		$	(13,547	)		$	9,403
Purchase property and equipment			(9,153	)			(5,211	)			(971	)
Purchase of intangible assets			(559	)			(324	)			(154	)
Purchase of land-use-right			-				(9,744	)			-
Prepayment for property			-				(40,206	)			-
Purchase of trading securities			-				(15,020	)			-
Free cash flow		$	(49,805	)		$	(84,052	)		$	8,278

`		Year Ended December 31,
		2021												2020												2019
		Actual (GAAP)				SBC				Adjusted (Non- GAAP)				Actual (GAAP)				SBC				Adjusted (Non-GAAP)				Actual (GAAP)				SBC				Adjusted (Non-GAAP)
		(in thousands)
Revenue		$	259,751			$	-			$	259,751			$	156,624			$	-			$	156,624			$	107,524			$	-			$	107,524
Cost of revenue			(144,895	)			(397	)			(144,498	)			(87,025	)			(175	)			(86,850	)			(56,870	)			(250	)			(56,620	)
Gross profit			114,856				(397	)			115,253				69,599				(175	)			69,774				50,654				(250	)			50,904
Operating expenses:
Sales and marketing			(26,733	)			(1,802	)			(24,931	)			(16,773	)			(1,199	)			(15,574	)			(11,902	)			(328	)			(11,574	)
Research and development			(34,207	)			(1,115	)			(33,092	)			(19,119	)			(763	)			(18,356	)			(12,900	)			(1,093	)			(11,807	)
General and administrative			(15,214	)			(1,803	)			(13,411	)			(12,215	)			(3,491	)			(8,724	)			(8,061	)			(1,901	)			(6,160	)
Income (loss) from operations			38,702				(5,117	)			43,819				21,492				(5,628	)			27,120				17,791				(3,572	)			21,363

1.

identify the contract(s) with a customer;

2.

identify the performance obligations in the contract;

3.

determine the transaction price;

4.

allocate the transaction price to the performance obligations in the contract; and

5.

recognize revenue when (or as) the entity satisfies a performance obligation.

●	when the customer has previously accepted the same tool with the same specifications and we can objectively demonstrate that the tool meets all of the required acceptance criteria;

●	when the sales contract or purchase order contains no acceptance agreement or lapsing acceptance provision and we can objectively demonstrate that the tool meets all of the required acceptance criteria;

●	when the customer withholds acceptance due to issues unrelated to product performance, in which case revenue is recognized when the system is performing as intended and meets predetermined specifications; or

●	when our sales arrangements do not include a general right of return.

●	We use the market closing price for the Class A common stock as reported on the Nasdaq Global Market to determine the fair value of the Class A common stock.

●	The risk-free interest rates for periods within the expected life of the option are based on the yields of zero-coupon U.S. Treasury securities.

●

Due to a lack of company-specific historical and implied volatility data, we have based our estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded. For these analyses, we have selected companies with comparable characteristics to ours including enterprise value, risk profile, position within the industry, and with historical share price information sufficient to meet the expected life of the stock-based awards. We compute the historical volatility data using the daily closing prices for the selected companies’ shares during the equivalent period of the calculated expected term of our stock-based awards. We will continue to apply this process until a sufficient amount of historical information regarding the volatility of our own stock price becomes available.

●	The expected term represents the period of time that options are expected to be outstanding. The expected term of stock options is based on the average between the vesting period and the contractual term for each grant according to Staff Accounting Bulletin No. 110.

●	The expected dividend yield is assumed to be 0%, based on the fact that we have never paid cash dividends and have no present intention to pay cash dividends.

		Year Ended December 31,
		2021				2020				2019
Revenue			100.0	%			100.0	%			100.0	%
Cost of revenue			55.8				55.6				52.9
Gross margin			44.2				44.4				47.1
Operating expenses:
Sales and marketing			10.3				10.7				11.1
Research and development			13.2				12.2				12.0
General and administrative			5.9				7.8				7.5
Total operating expenses, net			29.4				30.7				30.6
Income from operations			14.8				13.7				16.5
Interest income (expense), net			(0.1	)			(0.1	)			(0.4	)
Change in fair value of financial liability			-				(7.6	)			-
Unrealized gain on trading securities			0.2				8.0				-
Other income (expense), net			(0.2	)			(2.2	)			1.3
Equity income in net income of affiliates			1.8				0.4				0.2
Income before income taxes			16.5				12.3				17.6
Income tax benefit (expense)			(0.1	)			1.5				0.5
Net income			16.4				13.8				18.1
Less: Net income attributable to non-controlling interests and redeemable non-controlling interests			2.0				1.8				0.4
Net income attributable to ACM Research, Inc.			14.4	%			12.0	%			17.7	%

		Year Ended December 31,
		2021				2020				2019				% Change 2021 v 2020				% Change 2020 v 2019
		(in thousands)
Cost of revenue		$	144,895			$	87,025			$	56,870				66.5	%			53.0	%
Gross profit			114,856				69,599				50,654				65.0	%			37.4	%
Gross margin			44.2	%			44.4	%			47.1	%			-0.2				-2.67

		Year Ended December 31,
		2021				2020				2019				% Change 2021 v 2020				% Change 2020 v 2019
		(in thousands)
Sales and marketing expense		$	26,733			$	16,773			$	11,902				59.4	%			40.9	%
Research and development expense			34,207				19,119				12,900				78.9	%			48.2	%
General and administrative expense			15,214				12,215				8,061				24.6	%			51.5	%
Total operating expenses		$	76,154			$	48,107			$	32,863				58.3	%			46.4	%

		Year Ended December 31,
		2021				2020				2019				% Change 2021 v 2020			% Change 2020 v 2019
		(in thousands)
Unrealized gain on trading securities			607				12,574				-				-95.2	%	NM
Change in fair value of financial liability and trading securities			-				(11,964	)			-			NM			NM

		Year Ended December 31,
		2021				2020				2019				% Change 2021 v 2020				% Change 2020 v 2019
		(in thousands)
Interest Income		$	505			$	897			$	333				-43.7	%			169.4	%
Interest Expense			(765	)			(982	)			(745	)			-22.1	%			31.8	%
Interest Income (expense), net		$	(260	)		$	(85	)		$	(412	)			205.9	%			-79.4	%
Other income (expense), net		$	(631	)		$	(3,377	)		$	1,393				-81.3	%			-342.4	%

•	the start of construction within 6 months after the Delivery Date (60% of the performance deposit);

•	the completion of construction within 30 months after the Delivery Date (20% of the performance deposit); and

•	the start of production within 42 months after the Delivery Date (20% of the performance deposit).

Lender		Agreement Date		Maturity Date		Annual Interest Rate				Maximum Borrowing Amount(1)				Amount Outstanding at December 31, 2021
										(in thousands)
Bank of Shanghai Pudong Branch		June 2021		June 2022			2.70	%		RMB100,000				RMB29,439
										$	15,680			$	4,616
China Everbright Bank		July 2021		October 2022			1.95	%		RMB150,000				RMB21,731
										$	23,520			$	3,407
Bank of Communications		October 2021		October 2022			3.85	%		RMB60,000				RMB10,000
										$	9,408			$	1,568
China Merchants Bank		November 2020		Repayable by installments and the last installments repayble in November 2030			4.65	%		RMB128,500				RMB117,281
										$	20,149			$	18,390
Bank of China		June 2021		Repayable by installments and the last installments repayble in June 2024			2.60	%		RMB10,000				RMB9,500
										$	1,568			$	1,490
Bank of China		September, 2021		Repayable by installments and the last installments repayble in September 2021			2.60	%		RMB35,000				RMB35,000
										$	5,487			$	5,487
										$	75,812			$	34,958

(1)

Converted from RMB to dollars as of December 31, 2021. All of the amounts owing under the line of credit of Bank of Shanghai, Pudong Branch is guaranteed by CleanChip Technologies LTD, a wholly owned subsidiary of ACM Shanghai.

		December 31, 2021
		(in thousands)
Cash and cash equivalents		$	563,067
Accounts receivable, less allowance for doubtful amounts			105,553
Inventory			218,116
Working capital		$	886,736

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

Item 8.

Financial Statements and Supplementary Data

	Page
Consolidated Financial Statements	80
Report of Independent Registered Public Accounting Firm (BDO China Shu Lun Pan Certified Public Accountants LLP, Shenzhen, China, PCAOB ID#1818)	81
Consolidated Balance Sheets as of December 31, 2021 and 2020	84
Consolidated Statements of Operations and Comprehensive Income for the Years ended December 31, 2021, 2020 and 2019	85
Consolidated Statements of Changes in Stockholders’ Equity for the Years ended December 31, 2021, 2020 and 2019	86
Consolidated Statements of Cash Flows for the Years ended December 31, 2021, 2020 and 2019	87
Notes to Consolidated Financial Statements	88

•

Testing the design and operating effectiveness of controls over revenue recognition including management’s controls related to the identification and evaluation of performance obligations in contracts with customers and assessment of contract terms.

•

Evaluating management’s accounting policies and practices including the reasonableness of management’s judgments and assumptions relating to the Company’s revenue recognition including evaluation of customer acceptance clauses.

•

Testing a sample of revenue contracts and underlying order documents to evaluate appropriateness of management’s revenue recognition including assessment of customer acceptance clauses.