ACM Research Inc

Current report

Regulatory Risks

Current report

The U.S. Government is reportedly considering an outbound investment review mechanism, which may prevent us from taking advantage of investment opportunities outside the United States that could otherwise be advantageous to our stockholders

Current report

On June 21, 2024, the Office of Investment Security of the U.S. Department of the Treasury issued a proposed rule to implement President Biden’s August 2023 Executive Order on Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern (the EO). The EO provided for the establishment of a new and targeted national security regulatory framework directed at controlling outbound investment from the United States in certain sensitive industry sectors in the People’s Republic of China (PRC) and the Special Administrative Regions of Hong Kong and Macau (collectively, China). As implemented by the proposed rule, the new framework would impose notification requirements and prohibitions on specified investments by U.S. persons in the semiconductor and microelectronics sector, quantum information technologies, and artificial intelligence (AI) systems.

Current report

Within the semiconductor and microelectronics sector, prohibited investments would include certain covered investments in electronic design automation software; certain fabrication and advanced packaging tools; the design, fabrication, or packaging of certain advanced integrated circuits, and supercomputers. Notifiable investments would include any covered investments related to the design, fabrication, or packaging of integrated circuits not otherwise covered by the prohibition.

Current report

If the outbound investment regime is implemented as set out in the proposed rule, given the breadth of the notification requirement as applicable within the semiconductor industry, we will likely be subject to increased regulatory burden to engage in certain investments in the PRC. Such a mechanism could negatively impact our ability to realize value from certain existing and future investments, including by limiting exit opportunities or causing us to favor buyers that may avoid complex notification requirements, even in circumstances where other buyers may offer better terms or more consideration. There can be no assurances that we will be able to maintain or proceed with investments on terms acceptable to us. Furthermore, while the requirements are still in proposed form, the range or extent of possible effects that could flow from such a measure cannot be determined with any degree of certainty at this time. It is possible that the outbound investment reporting requirements and prohibitions could adversely affect our business, financial condition, and operating results.

Previous report

Risks Related to Ownership of Class A Common Stock

Previous report

Our management identified a material weakness in our internal control over financial reporting that, if not properly remediated, could result in material misstatements in our consolidated financial statements that could cause investors to lose confidence in our reported financial information and have a negative effect on the trading price of our stock.

Previous report

Effective internal control over financial reporting is necessary for us to provide accurate financial information. The Sarbanes-Oxley Act requires us to, among other things, evaluate the effectiveness of our internal control over financial reporting. As further discussed in “Item 4. Controls and Procedures” of Part I of this report, our internal controls over financial reporting were not effective as of March 31, 2024 due to the existence of a material weakness in such controls.

Previous report

As of, and for the quarter ended, March 31, 2024, we identified a material weakness in our internal control over financial reporting related to the design and implementation of information technology general controls related to the implementation of our new enterprise resource planning system in mainland China utilized in the preparation of our consolidated financial statements. Specifically, we did not (1) establish and maintain adequate pre-approval policy and process for the system changes; and (2) maintain a complete system change log. As of March 31, 2024, we determined that the above mentioned material weakness had not been remediated.

Previous report

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The process of designing and implementing effective internal controls and procedures and remediating the material weakness will be a continual effort that may require us to expend significant resources to establish and maintain a system of controls that is adequate to satisfy our reporting obligations as a public company. We cannot assure you that the measures we take will be sufficient to remediate the material weakness or that we will implement and maintain adequate controls over our financial processes and reporting in the future in order to avoid additional material weaknesses or control or significant deficiencies in our internal control over financing reporting. If our remediation efforts are not successful or other material weaknesses or control or significant deficiencies occur in the future, we may be unable to report our financial results accurately or on a timely basis, which could cause our reported financial results to be materially misstated and result in the loss of investor confidence and cause the trading price of Class A common stock to decline. Moreover, ineffective controls could significantly hinder our ability to prevent fraud. For further information, see “Item 4. Controls and Procedures” of Part II of this report.