HomeTechnologyHandling Political Uncertainty in the Chip Industry.

Handling Political Uncertainty in the Chip Industry.

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  • Investors are interested in ACM Research because it is growing in the chip industry, but its connections to China could be risky.
  • ACM manufactures important equipment for computer chips, but mainly sells it through a Chinese branch, causing concern.
  • ACM looks like it could make money, but there are still dangers because of politics and losing money.

In 2024, people are excited about investing in the semiconductor industry because they think it will do well. Some big companies in the semiconductor industry, like Nvidia and Advanced Micro Devices, are getting a lot of attention. However, smaller companies like ACM Research (NASDAQ: ACMR) have also grabbed the interest of investors, seeing a big increase in their stock performance.

ACM Research is a company that makes machines for making computer chips. Its stock has gone up by 50% in the first few months of 2024 and by 270% since the start of 2023. The company grew because it did better than expected in making money and the demand for its semiconductor equipment went up a lot.

Placing in the chip industry

Big companies like Lam Research and Tokyo Electron make most of the equipment for making computer chips. But ACM Research focuses on making special equipment for cleaning silicon wafers during the chip making process. This part of making semiconductor chips is very important for different uses, like making devices that control power, sensors, computer chips, and memory chips.

ACM Research is a company based in Silicon Valley, but most of its business is done through its subsidiary, ACM Shanghai, which it owns most of. This smaller company, which started selling its stocks to the public in China a few years ago, makes up most of ACM Research’s sales. This situation makes people worry about political problems between countries, especially with new rules about exporting goods from the U. S ACM Research in China is open about how it operates.

In 2023, ACM Research sold more than before, making $558 million. The most sales came in the fourth quarter, with a 56% increase from the previous year. The boss is confident the company will keep growing and expects the revenue to go up by 30% in 2024, reaching around $650 million to $725 million.

Even though ACM Research is in an industry that goes up and down a lot, it seems like a good deal because the price of its shares is low compared to the company’s earnings. Due to the company growing quickly and having the potential to expand in the long term, this valuation seems low, especially when many countries are trying to bring back semiconductor manufacturing after the pandemic.

Investor thoughts and analyst opinions

Although ACM Research could be a good investment, it’s important for investors to think about the risks related to the relationship between the U. S and China, as well as export controls. The company mainly works on making less advanced computer chips. But new rules might change how it operates and how much money it makes.

Moreover, it’s important to think about how much money ACM Research has and how much money it makes from its regular business activities. The company is losing money because it’s spending a lot to grow, but it’s still making a profit according to accounting rules, which makes investors feel better.

ACM Research was not chosen as one of the top 10 stocks for investors to buy right now by the Motley Fool Stock Advisor. Before investing, it’s important to do thorough research and consider different points of view, even when there are missing details.

Warning: The information given is not advice on trading.

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