Goldman Sachs: Maintaining Shengmei Semiconductor's (ACMR.US) “Buy” Rating Target Price of $166

The Zhitong Finance App learned that Goldman Sachs released a research report stating that it maintains the “buy” rating of Shengmei Semiconductor (ACMR.US), with a 12-month target price of 166 US dollars, calculated based on 40 times the projected price-earnings ratio for 2030 until 2027; based on the closing price of 74.44 US dollars on September 4, it corresponds to 123% upward space. The bank continues to be optimistic about upgrading the company's product portfolio to advanced equipment, as well as ACM Planetary Family's product expansion in the fields of cleaning, furnace tubes, PECVD, and advanced packaging. The bank anticipates that China's WFE spending will increase by 13%, 20%, and 15%, respectively, from 2026 to 2028, and reach 61 billion US dollars by 2028.

Goldman Sachs invited the chairman of the company to participate in the exchange during the China AI tour held in Shanghai on September 8, focusing on product expansion and differentiated devices driven by AI chips, as well as the future of orders supported by China's WFE spending and continuing localization trends.

The company continues to expand SAM through new SPE products, expanding the coverage from cleaning equipment to fields such as electroplating, furnace tubes, advanced packaging, gluing and PECVD, and boosting SAM's expansion from US$7.4 billion to US$22 billion in the global cleaning equipment market. Management continues to drive SPE design innovation, which not only helps differentiate but also develops its own supply chain. The company invests a lot of time in basic R&D and provides competitive product characteristics. Relevant innovations may include new structural designs, such as reducing the need for robotic arms to improve production efficiency, or to save sulfuric acid and improve environmental friendliness; they may also include new designs for heat-related components, nozzles, etc.

The company believes that generative AI is putting forward new requirements for SPE, which may bring about changes in the competitive landscape and benefit manufacturers with strong design capabilities. Taking cleaning equipment as an example, generative AI may bring smaller ICs and 3D structures, making cleaning more difficult. These new challenges may drive the upgrading of cleaning equipment specifications and lead to higher average selling prices. Additionally, in order to increase yield, customers may also increase the frequency of cleaning, such as cleaning every 1 to 2 processes, thereby expanding SAM. Management anticipates that the share of fab cleaning equipment expenditure in overall WFE may rise from the current high single-digit percentage to the middle double digit level, and that the company's strong R&D capabilities may help customers improve their competitiveness and achieve success.

In terms of orders, the company is still optimistic about terminal demand. It is expected that the year-on-year growth rate of in-hand orders in the second half of 2026 may be higher than in the first half of the year. Cleaning equipment is still the main contributor to in-hand orders, but electroplating equipment is growing the fastest, reflecting progress in the expansion of new products. Strong orders were mainly driven by increased WFE spending in China, mainly in the fields of storage and advanced logic, while also being supported by continued localization trends. Management believes that the current localization rate of cleaning equipment is about 30%, and it may continue to increase to 50%-60% in the future.