ACM Research, Inc.

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We may be subject to risks related to recent U.S. tariffs on the semiconductor industry

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On April 5, 2025, the Trump administration imposed sweeping new “reciprocal” tariffs on most imported items, including a “baseline” rate of 10% on most countries. This baseline 10% rate was scheduled to increase on various countries on April 9, 2025, but was subject to a 90-day “pause” for the administration to negotiate agreements with affected countries. However, full reciprocal tariffs did go into effect on China, which currently stand at 125%. Earlier 20% tariffs against China imposed under an executive order targeting the fentanyl import trade “stack” on top of the reciprocal tariffs, such that China is subject to 145% tariffs. Additional 25% tariffs may also apply to goods from China that are subject to earlier duties imposed by the first Trump Administration under Section 301 of the Trade Act of 1974.

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Semiconductors are currently exempted from coverage of the reciprocal tariffs (including the 125% reciprocal tariffs on China). This exemption was later clarified to include certain electronic items incorporating semiconductors. However, this exemption may be temporary as the U.S. Department of Commerce on April 1, 2025, initiated an investigation under Section 232 of the Trade Expansion Act of 1962 to assess the national security implication of imports of semiconductors, semiconductor manufacturing equipment, and derivative products. Under Section 232, the Department of Commerce has 270 days (by December 27, 2025) to complete its investigation, although the Trump administration has indicated a desire to finish on a timeline of a few months. After that, the administration may take measures to address national security concerns, such as imposing specific tariffs on semiconductors or taking other actions to curtail imports.

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As a company that designs and manufactures equipment and products used in the semiconductor industry, we are exposed to risks arising from these proposed tariffs due to our reliance on global supply chains. Tariffs may also disrupt the global electronics supply chain, as semiconductors are critical components in products such as servers, smartphones, and automotive systems. Increased costs for our customers could lead to reduced demand for our products, particularly in price-sensitive markets, which may adversely affect our revenue and market share. Furthermore, the Section 232 national security investigation into semiconductors (as well as the overall tariff regime) introduces additional uncertainty, as it could result in broader trade restrictions or changes to import policies that further impact our ability to source raw materials and sell our products efficiently.

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The uncertainty surrounding the current semiconductor Section 232 investigation, its implementation timeline, and other issues, combined with the potential for retaliatory trade actions from key markets like China, poses a significant risk to our financial condition, results of operations, and competitive position in the global market.