Financial Data and Key Metrics Changes - Revenues for Q2 2025 were reported at just over $59 million, at the upper end of the outlook provided in May [7] - Q2 gross margin exceeded expectations at 19.5%, with adjusted EBITDA of $2.3 million also stronger than forecast [27] - The company ended Q2 with $49.4 million in cash and total debt outstanding of $65.7 million, with a net increase in borrowings of $5.5 million during the quarter [28] Business Line Data and Key Metrics Changes - The acquisition of Fab 25 is expected to double revenue scale and adjusted EBITDA immediately, with strong free cash flow generation from the outset [10] - Wafer Services revenue from Fab 25 is expected to be in the range of $75 million to $80 million for Q3 [30] - ATS revenue for Q3 is projected at approximately $50 million, with Wafer Services revenue of $5 million to $6 million [31] Market Data and Key Metrics Changes - The company anticipates revenue growth exceeding 30% in the quantum computing segment for 2025, with continued growth expected into 2026 [18] - The advanced packaging operation in Florida is expected to contribute to sequential growth in ATS business in Q4 [13] Company Strategy and Development Direction - The acquisition of Fab 25 establishes the company as the largest U.S.-based pure play foundry service provider, enhancing its capacity and strategic positioning [9] - The company aims to leverage cost optimization across its Minnesota and Texas fabs to drive synergies in engineering and operations [10] - The strategy focuses on enabling the semiconductor industry's evolution through scaled open access 200mm manufacturing paired with high-value IP and specialized process capabilities [23] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term growth potential in the semiconductor industry, particularly in light of national security concerns and the need for domestic production [21] - The company expects to see continued momentum in quantum computing applications and advanced packaging, which are key growth areas moving into 2026 [18][20] - Management acknowledged challenges in the aerospace and defense sectors due to government funding delays but remains optimistic about future funding increases [15] Other Important Information - The company has revised its financial supplement to reflect expected revenue and gross margin disclosures starting in Q3 [4] - The acquisition of Fab 25 was finalized with an upfront payment of $93 million, fully funded through a new debt facility [7] Q&A Session Summary Question: Future milestones for Fab 25 margin expansion - Management indicated that activities are underway to expand margins, including bringing in ATS engineering revenue and new product introductions [38][39] Question: Revenue guidance and fab loadings for Infineon business - The fab is currently running at target utilization, and management expects to maintain output while bringing in new customers and capabilities [46][47] Question: Customer targeting for Fab 25 - The company is targeting hybrid semiconductor manufacturers and those valuing U.S.-based sourcing, particularly in industrial and automotive sectors [62][63]

Q2 2025 Financial Performance - Total revenue for Q2 2025 was $591 million, a decrease of 37% year-over-year[59] - ATS development revenue in Q2 2025 was $526 million, a 15% decrease year-over-year[59] - Wafer Services revenue in Q2 2025 was $54 million, a 6% decrease year-over-year[59] - Tools revenue in Q2 2025 was $11 million, a 96% decrease year-over-year[59] - GAAP gross margin for Q2 2025 was 185%, a 20 basis points increase year-over-year[62] - Non-GAAP gross margin for Q2 2025 was 195%, a 60 basis points increase year-over-year[62] - Adjusted EBITDA for Q2 2025 was $23 million, a 72% decrease year-over-year[63] Fab 25 Acquisition and Outlook - The acquisition of Infineon's Fab 25 in Austin, TX was completed on June 30, funded by a $350 million credit facility[11] - The final purchase price of Fab 25 was approximately $93 million, including cash payment and working capital adjustment[11] - Fab 25 is expected to approximately double the company's annual revenue and adjusted EBITDA[11] - Q3 2025 Wafer Services revenue from Texas (Fab 25) is forecasted to be $75 million to $80 million[56]

[Executive Summary & Business Highlights](index=1&type=section&id=1.%20Executive%20Summary%20%26%20Business%20Highlights) The company highlights the transformative Fab 25 acquisition and strong momentum in emerging technologies despite potential DOD funding delays [CEO Commentary](index=1&type=section&id=1.1%20CEO%20Commentary) The CEO highlights strong Q2 results, the transformative Fab 25 acquisition, and future growth drivers despite potential DOD program delays - The Fab 25 acquisition is expected to contribute at least **$300 million in annual revenue** and generate strong adjusted EBITDA and free cash flow starting in Q3[2](index=2&type=chunk) - The timing of federal funding for certain DOD programs is likely to impact the expected return to ATS revenue growth in 2025[3](index=3&type=chunk) - Strong momentum in quantum computing and advanced packaging, combined with Fab 25's contribution, positions SkyWater for **strong growth in 2026**[3](index=3&type=chunk) [Recent Business Highlights](index=1&type=section&id=1.2%20Recent%20Business%20Highlights) Key developments include the fully funded Fab 25 acquisition, which is expected to double revenue, and progress in quantum computing and advanced packaging - The Fab 25 acquisition was completed on June 30, funded by a new senior secured revolving credit facility with up to **$350 million** in borrowing capacity[4](index=4&type=chunk) - The acquisition is backed by a projected greater-than **$1 billion multi-year supply agreement** and is expected to approximately double annual revenue and adjusted EBITDA[4](index=4&type=chunk) - The company is expanding its quantum computing capabilities and preparing for an expected **revenue ramp in advanced packaging in the second half of 2025**[4](index=4&type=chunk) [Financial Performance & Outlook](index=2&type=section&id=2.%20Financial%20Performance%20%26%20Outlook) The company reports a significant year-over-year revenue decline in Q2 2025 but projects a strong revenue rebound in Q3 driven by the Fab 25 acquisition [Q2 2025 Financial Summary](index=2&type=section&id=2.1%20Q2%202025%20Financial%20Summary) Q2 2025 saw a significant year-over-year decline in revenue and net income, primarily driven by a sharp decrease in Tools revenue Q2 2025 GAAP Financial Summary | In millions, except per share data | Q2 2025 | Q2 2024 | Y/Y * | Q1 2025 | Q/Q * | | :--- | :--- | :--- | :--- | :--- | :--- | | ATS development revenue | $52.6 | $61.7 | (15)% | $52.5 | —% | | Wafer Services revenue | $5.4 | $5.8 | (7)% | $7.5 | (28)% | | Combined ATS development and Wafer Services revenue | $58.0 | $67.4 | (14)% | $60.1 | (3)% | | Tools revenue | $1.1 | $25.9 | (96)% | $1.2 | (8)% | | Total revenue | $59.1 | $93.3 | (37)% | $61.3 | (4)% | | Gross profit | $10.9 | $17.1 | (36)% | $14.3 | (24)% | | Gross margin | 18.5% | 18.3% | 20 bps | 23.3% | (480) bps | | Net loss to shareholders | $(10.0) | $(1.9) | (426)% | $(7.3) | (37)% | | Basic and diluted loss per share | $(0.21) | $(0.04) | (425)% | $(0.15) | (40)% | | Net income (loss) margin to shareholders | (16.9)% | (2.0)% | (1,490) bps | (12.0)% | (490) bps | Q2 2025 Non-GAAP Financial Summary | In millions, except per share data | Q2 2025 | Q2 2024 | Y/Y * | Q1 2025 | Q/Q * | | :--- | :--- | :--- | :--- | :--- | :--- | | Non-GAAP gross profit | $11.5 | $17.6 | (35)% | $14.8 | (22)% | | Non-GAAP gross margin | 19.5% | 18.9% | 60 bps | 24.2% | (470) bps | | Non-GAAP net income (loss) to shareholders | $(5.5) | $0.8 | (675)% | $(3.7) | 49% | | Non-GAAP basic income (loss) per share | $(0.11) | $0.02 | (600)% | $(0.08) | 38% | | Non-GAAP diluted income (loss) per share | $(0.11) | $0.02 | (600)% | $(0.08) | 38% | | Adjusted EBITDA | $2.3 | $8.1 | (72)% | $4.0 | (43)% | | Adjusted EBITDA margin | 3.9% | 8.7% | (480) bps | 6.6% | (270) bps | [Q2 2025 Results Analysis](index=2&type=section&id=2.2%20Q2%202025%20Results%20Analysis) Q2 revenue fell 37% year-over-year to $59.1 million due to a drop in Tools revenue, leading to a wider net loss and lower Adjusted EBITDA - Total revenue was **$59.1 million**, a decrease of **(37)%** year-over-year, primarily due to a **(96)%** decline in Tools revenue[7](index=7&type=chunk) - GAAP gross profit decreased **(36)%** to **$10.9 million**, representing a gross margin of **18.5%**[7](index=7&type=chunk) - GAAP net loss to shareholders widened to **$10.0 million**, and Adjusted EBITDA decreased **(72)%** to **$2.3 million**[7](index=7&type=chunk)[8](index=8&type=chunk) [Q3 2025 Financial Outlook](index=3&type=section&id=2.3%20Q3%202025%20Financial%20Outlook) The company projects a significant Q3 revenue increase to $130-$141 million, driven by the Fab 25 acquisition's contribution to Wafer Services Q3 2025 Financial Outlook (in thousands) | Metric | Low-End | High-End | | :--- | :--- | :--- | | Wafer Services revenue (MN) | $5,000 | $6,000 | | Wafer Services revenue (TX) | $75,000 | $80,000 | | Total Wafer Services revenue | $80,000 | $86,000 | | ATS development revenue | $48,000 | $52,000 | | Combined ATS development and Wafer Services revenue | $128,000 | $138,000 | | Tools revenue | $2,000 | $3,000 | | Total revenue | $130,000 | $141,000 | | GAAP Gross Margin % | 10.5% | 13.5% | | Non-GAAP Gross Margin % | 11.0% | 14.0% | | GAAP Operating Expenses | $21,500 | $23,500 | | Non-GAAP Operating Expenses | $18,000 | $20,000 | | GAAP diluted loss per share | $(0.28) | $(0.22) | | Non-GAAP diluted loss per share | $(0.20) | $(0.14) | - The non-GAAP outlook excludes approximately **$2.3 million** in equity-based compensation and **$2.0 million** in transaction costs[8](index=8&type=chunk) [Company Information & Disclosures](index=3&type=section&id=3.%20Company%20Information%20%26%20Disclosures) This section provides an overview of the company's business, cautionary statements regarding forward-looking information, and contact details [About SkyWater Technology](index=3&type=section&id=3.1%20About%20SkyWater%20Technology) SkyWater is a U.S.-based, trusted semiconductor supplier operating a Technology as a Service model for critical domestic markets - The company is a U.S.-based semiconductor manufacturer and **DMEA-accredited Category 1A Trusted Supplier**[10](index=10&type=chunk) - It operates on a **Technology as a Service (TaaS)** model, offering development, high-volume production, and integration solutions[10](index=10&type=chunk) - Key markets served include aerospace & defense, automotive, biomedical, industrial, and quantum computing[10](index=10&type=chunk) [Cautionary & Forward-Looking Statements](index=3&type=section&id=3.2%20Cautionary%20%26%20Forward-Looking%20Statements) The report contains preliminary, unaudited results and forward-looking statements subject to risks and uncertainties detailed in SEC filings - The Company's Q2 2025 results are **preliminary, unaudited**, and subject to finalization[11](index=11&type=chunk) - This press release contains **forward-looking statements** about future business and financial performance, which are not guarantees[12](index=12&type=chunk) - These statements are subject to various **risks and uncertainties**, including Fab 25 integration, supply chain, and market demand, as discussed in SEC filings[13](index=13&type=chunk) [Investor & Media Contacts](index=4&type=section&id=3.3%20Investor%20%26%20Media%20Contacts) Contact information for investor relations and media inquiries for SkyWater Technology is provided - Investor Contact: Claire McAdams | Claire@HeadgatePartners.com[14](index=14&type=chunk) - Media Contact: Tammy Swanson | Tammy.Swanson@SkyWaterTechnology.com[14](index=14&type=chunk) [Consolidated Financial Statements](index=5&type=section&id=4.%20Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated balance sheets, statements of operations, and statements of cash flows [Condensed Consolidated Balance Sheets](index=5&type=section&id=4.1%20Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of June 29, 2025, shows increased total assets and liabilities compared to the end of fiscal year 2024 Condensed Consolidated Balance Sheets (Unaudited, in thousands) | | June 29, 2025 | December 29, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $49,373 | $18,844 | | Accounts receivable (net) | $32,016 | $54,332 | | Total current assets | $155,938 | $132,077 | | Property and equipment, net | $161,582 | $165,431 | | Total assets | $334,693 | $313,775 | | **Liabilities and shareholders' equity** | | | | Current portion of long-term debt | $6,752 | $5,073 | | Accounts payable | $15,353 | $29,590 | | Total current liabilities | $147,596 | $154,327 | | Long-term debt, less current portion | $35,316 | $34,704 | | Total liabilities | $282,727 | $250,285 | | Total shareholders' equity | $51,966 | $63,490 | | Total liabilities and shareholders' equity | $334,693 | $313,775 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=4.2%20Condensed%20Consolidated%20Statements%20of%20Operations) The statement of operations for Q2 2025 reflects lower revenue and gross profit, resulting in a significantly wider net loss year-over-year Condensed Consolidated Statements of Operations (Unaudited, in thousands) | | Three-Month Period Ended June 29, 2025 | Three-Month Period Ended June 30, 2024 | Six-Month Period Ended June 29, 2025 | Six-Month Period Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $59,063 | $93,329 | $120,359 | $172,965 | | Cost of revenue | $48,164 | $76,215 | $95,203 | $142,871 | | Gross profit | $10,899 | $17,114 | $25,156 | $30,094 | | Operating income (loss) | $(6,478) | $1,400 | $(10,499) | $(802) | | Net income (loss) | $(8,857) | $(955) | $(15,075) | $(5,587) | | Net loss attributable to SkyWater Technology, Inc. | $(9,978) | $(1,897) | $(17,323) | $(7,626) | | Net loss per share, basic and diluted | $(0.21) | $(0.04) | $(0.36) | $(0.16) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=4.3%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the first six months of 2025, net cash from operating activities increased significantly, boosting the company's cash position Condensed Consolidated Statements of Cash Flows (Unaudited, in thousands) | | Six-Month Period Ended June 29, 2025 | Six-Month Period Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $54,300 | $5,423 | | Net cash used in investing activities | $(18,773) | $(3,218) | | Net cash used in financing activities | $(4,998) | $(2,225) | | Net change in cash and cash equivalents | $30,529 | $(20) | | Cash and cash equivalents, end of period | $49,373 | $18,362 | [Supplemental Financial Information](index=8&type=section&id=5.%20Supplemental%20Financial%20Information) This section provides preliminary balance sheet adjustments for the Fab 25 acquisition and a quarterly breakdown of revenue trends [Preliminary Supplemental Balance Sheet Information](index=8&type=section&id=5.1%20Preliminary%20Supplemental%20Balance%20Sheet%20Information) Preliminary adjustments for the Fab 25 acquisition show significant increases in property, equipment, and total debt Preliminary Supplemental Balance Sheet Information (Fab 25 Transaction Adjustments, in thousands) | | June 29, 2025 | Preliminary Transaction Adjustments | June 30, 2025 | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $49,373 | $7,000 | $56,373 | | Property and equipment, net | $161,582 | $364,000 | $525,582 | | Short term financing, net of unamortized debt issuance costs | $23,614 | $113,400 | $137,014 | | Total debt | $65,730 | $113,400 | $179,130 | - Note: The preliminary transaction adjustment for property and equipment is based on an initial draft valuation and is subject to change[21](index=21&type=chunk) [Supplemental Financial Information by Quarter](index=8&type=section&id=5.2%20Supplemental%20Financial%20Information%20by%20Quarter) Quarterly data reveals a significant decline in Tools revenue over the past year, impacting overall financial performance Total Revenue by Quarter (in thousands) | Metric | Q2 2025 | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | ATS development revenue | $52,605 | $52,535 | $59,401 | $56,390 | $61,669 | $61,185 | | Wafer Services revenue | $5,411 | $7,527 | $4,371 | $6,718 | $5,780 | $9,992 | | Combined ATS development and Wafer Services revenue | $58,016 | $60,062 | $63,772 | $63,108 | $67,449 | $71,177 | | Tools revenue | $1,047 | $1,234 | $11,715 | $30,709 | $25,880 | $8,459 | | Total revenue | $59,063 | $61,296 | $75,487 | $93,817 | $93,329 | $79,636 | - **Tools revenue significantly decreased** from $30.7 million in Q3 2024 to $1.0 million in Q2 2025[25](index=25&type=chunk) - In Q3 2024, a **$5.6 million loss accrual was released**, which reduced cost of revenue and favorably impacted gross profit[24](index=24&type=chunk)[25](index=25&type=chunk) [Non-GAAP Financial Measures & Reconciliation](index=9&type=section&id=6.%20Non-GAAP%20Financial%20Measures%20%26%20Reconciliation) This section explains the company's use of non-GAAP measures and provides detailed reconciliations to their nearest GAAP equivalents [Non-GAAP Financial Measures Explanation](index=9&type=section&id=6.1%20Non-GAAP%20Financial%20Measures%20Explanation) The company uses non-GAAP measures to provide additional insight into core operating results, though they are not substitutes for GAAP - Non-GAAP measures are intended to **provide additional insight** to investors and are used by management for strategic planning and performance evaluation[26](index=26&type=chunk)[27](index=27&type=chunk) - These measures **should not be viewed as an alternative to GAAP results** and may not be comparable to those of other companies[26](index=26&type=chunk)[27](index=27&type=chunk) - **Adjusted EBITDA** is defined as net income (loss) before interest, taxes, depreciation, amortization, and other specified adjustments[27](index=27&type=chunk) [Reconciliation of GAAP to Non-GAAP Financial Measures](index=10&type=section&id=6.2%20Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Financial%20Measures) Reconciliation tables detail adjustments for items like equity-based compensation and transaction costs from GAAP to non-GAAP figures GAAP to Non-GAAP Reconciliation (Three-Month Periods, in thousands) | | June 29, 2025 (GAAP) | June 29, 2025 (Non-GAAP) | March 30, 2025 (GAAP) | March 30, 2025 (Non-GAAP) | June 30, 2024 (GAAP) | June 30, 2024 (Non-GAAP) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Cost of revenue | $48,164 | $47,538 | $47,039 | $46,472 | $76,215 | $75,711 | | Gross profit | $10,899 | $11,525 | $14,257 | $14,824 | $17,114 | $17,618 | | Gross margin | 18.5% | 19.5% | 23.3% | 24.2% | 18.3% | 18.9% | | Research and development expense | $3,368 | $3,255 | $3,249 | $3,166 | $3,382 | $3,292 | | Selling, general, and administrative expense | $14,009 | $10,295 | $15,030 | $11,991 | $12,332 | $10,246 | | Net loss to shareholders | $(9,978) | $(5,525) | $(7,345) | $(3,656) | $(1,897) | $783 | - Key adjustments for Q2 2025 net loss include **$2,282 thousand in equity-based compensation** and **$2,171 thousand in transaction costs**[31](index=31&type=chunk)[32](index=32&type=chunk) Net Loss Per Common Share Reconciliation (Three-Month Periods, in thousands, except per share data) | | June 29, 2025 (GAAP) | June 29, 2025 (Non-GAAP) | March 30, 2025 (GAAP) | March 30, 2025 (Non-GAAP) | June 30, 2024 (GAAP) | June 30, 2024 (Non-GAAP) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net loss attributable to SkyWater Technology, Inc. | $(9,978) | $(5,525) | $(7,345) | $(3,656) | $(1,897) | $783 | | Weighted-average common shares outstanding | 48,091 | 48,091 | 47,791 | 47,791 | 47,395 | 47,395 | | Net loss per common share, basic and diluted | $(0.21) | $(0.11) | $(0.15) | $(0.08) | $(0.04) | $0.02 | [Adjusted EBITDA Reconciliation](index=13&type=section&id=6.3%20Adjusted%20EBITDA%20Reconciliation) Adjusted EBITDA for Q2 2025 was $2.3 million, a significant decrease from Q2 2024, with reconciliations provided from GAAP net loss Adjusted EBITDA Reconciliation (Three-Month Periods, in thousands) | | June 29, 2025 | March 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Net loss to shareholders (GAAP) | $(9,978) | $(7,345) | $(1,897) | | Interest expense | $1,637 | $1,812 | $2,482 | | Income tax expense (benefit) | $742 | $384 | $(127) | | Depreciation and amortization, net | $4,301 | $4,358 | $4,064 | | EBITDA | $(3,298) | $(791) | $4,522 | | Equity-based compensation expense | $2,282 | $1,879 | $2,016 | | Management transition expense | — | — | $664 | | Transaction costs | $2,171 | $1,810 | — | | Net income attributable to noncontrolling interests | $1,121 | $1,127 | $942 | | Adjusted EBITDA | $2,276 | $4,025 | $8,144 | | Adjusted EBITDA margin | 3.9% | 6.6% | 8.7% | - Transaction costs of **$2,171 thousand in Q2 2025** are associated with the acquisition of Fab 25[35](index=35&type=chunk)[36](index=36&type=chunk) - Net income attributable to noncontrolling interests is added back to align with the add-back of interest expense in the Adjusted EBITDA calculation[35](index=35&type=chunk)[37](index=37&type=chunk)

Core Viewpoint - SkyWater Technology (SKYT) is expected to report second-quarter 2025 results on August 6, with anticipated revenues between $55 million and $60 million and a loss per share between 16 and 22 cents [1][8]. Revenue Expectations - The Zacks Consensus Estimate for second-quarter revenues is $57.3 million, reflecting a 38.6% decrease from the previous year [2]. - Advanced Technology Services (ATS) revenues are projected to be in the range of $49 million to $53 million, while Wafer Services revenues are expected to be between $5 million and $6 million [1][4]. Earnings Performance - The consensus estimate for loss is 17 cents per share, unchanged over the past 30 days, compared to earnings of 2 cents in the same quarter last year [2]. - SkyWater has consistently beaten earnings estimates in the past four quarters, with an average earnings surprise of 203.9% [2]. Market and Competitive Position - SkyWater shares have declined 36.4% year-to-date, underperforming the broader Zacks Computer and Technology sector, which has returned 9.1% [6]. - The company is trading below its 50-day and 200-day moving averages, indicating a bearish trend [10]. Product and Market Developments - The strong adoption of the ThermaView platform is expected to support Wafer Services, contributing significantly to revenues [4][8]. - The ATS segment is anticipated to face challenges due to budget delays and sluggish federal spending, but a recovery is expected in the second half of 2025 [5][18]. Strategic Acquisitions - The acquisition of Fab 25 is expected to enhance SkyWater's capabilities, adding approximately 400,000 wafer starts annually and generating immediate revenues supported by a four-year supply agreement valued at over $1 billion [19][18]. Future Growth Potential - SkyWater's prospects are bolstered by its strong portfolio and growing presence in the quantum computing market, with over 90% of revenues from advanced computing related to quantum technology development [17]. - The company aims to capture a significant share of the projected $9 billion global thermal imaging market by 2027, driven by the ThermaView platform [16].

Company Performance - SkyWater Technology, Inc. (SKYT) closed at $10.26, reflecting a -4.02% change from the previous day, underperforming the S&P 500's 0.06% gain [1] - The stock has increased by 17.86% over the past month, outperforming the Computer and Technology sector's gain of 9.6% and the S&P 500's gain of 5.88% [1] Upcoming Earnings - The upcoming earnings report for SkyWater Technology is scheduled for August 6, 2025, with an expected EPS of -$0.17, indicating a 950% decline compared to the same quarter last year [2] - Revenue is anticipated to be $57.3 million, down 38.6% from the prior-year quarter [2] Fiscal Year Projections - For the entire fiscal year, the Zacks Consensus Estimates project an EPS of -$0.01 and revenue of $307.15 million, representing changes of -116.67% and -10.26% respectively from the prior year [3] Analyst Estimates - Recent adjustments to analyst estimates for SkyWater Technology are noteworthy, as positive revisions are seen as a favorable indicator for business outlook [4] - The Zacks Rank system, which evaluates these estimate changes, currently ranks SkyWater Technology at 3 (Hold) [6] Industry Context - The Electronics - Semiconductors industry, part of the Computer and Technology sector, holds a Zacks Industry Rank of 58, placing it in the top 24% of over 250 industries [7] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [7]

Core Insights - SkyWater Technology (SKYT) and Semtech Corporation (SMTC) are positioned to benefit from the growing semiconductor market, particularly as the U.S. increases domestic chip production [1][2] - Semiconductor sales are projected to grow 11.2% year over year, reaching $700.9 billion in 2025 and $760.7 billion in 2026, driven by demand for AI hardware, electric vehicles, and industrial automation [2] SkyWater Technology (SKYT) - SkyWater is enhancing its market position through product innovation and expanded manufacturing capabilities, with a focus on its ThermaView platform for thermal imaging [4] - The company reported Q1 2025 revenues of $61.3 million and a gross margin of 24.2%, with advanced computing now accounting for 10% of total revenues [5] - The acquisition of Infineon's Fab 25 is expected to significantly increase SkyWater's capacity, adding approximately 400,000 wafer starts per year and making it the largest U.S.-based pure-play foundry service provider [6] Semtech Corporation (SMTC) - Semtech is experiencing growth in next-gen data center infrastructure, reporting record data center revenue of $51.6 million in Q1 fiscal 2026, a 143% increase year over year [7] - The CopperEdge product line offers over 90% power savings and is designed for high-density AI/ML data centers, with new ICs launched to support advanced connectivity [8] - Semtech's collaboration with major cloud platforms positions its technologies at the core of next-generation compute infrastructure, enhancing its growth potential in AI-centric markets [9][10] Market Performance and Valuation - Both SKYT and SMTC shares have declined year-to-date, with drops of 25.8% and 21.3% respectively, attributed to a challenging macroeconomic environment [11] - SMTC shares are currently overvalued with a Value Score of D, while SKYT holds a Value Score of B; SMTC's Price/Sales ratio is 3.87X compared to SKYT's 1.43X [13] - Earnings estimates indicate a projected loss of one cent per share for SKYT in 2025, while SMTC's earnings for fiscal 2026 are estimated at $1.66 per share, reflecting an 88.64% year-over-year increase [16] Conclusion - Both companies are well-positioned to capitalize on long-term growth trends in the semiconductor market, with SkyWater benefiting from its unique foundry status and Semtech showing stronger near-term visibility due to record data center performance [17][18]

Company Performance - SkyWater Technology, Inc. (SKYT) closed at $9.94, reflecting a -3.07% change from the previous day's closing price, underperforming the S&P 500 which lost 0.33% [1] - Over the past month, shares of SkyWater Technology gained 16.21%, outperforming the Computer and Technology sector's gain of 5.24% and the S&P 500's gain of 4.07% [1] Earnings Expectations - The upcoming earnings release is expected to show an EPS of -$0.17, indicating a 950% decline compared to the same quarter last year [2] - Revenue is projected at $57.3 million, reflecting a 38.6% decrease from the equivalent quarter last year [2] Fiscal Year Projections - For the entire fiscal year, the Zacks Consensus Estimates project earnings of -$0.01 per share and revenue of $307.15 million, representing changes of -116.67% and -10.26% respectively from the prior year [3] Analyst Estimates - Recent changes to analyst estimates for SkyWater Technology should be noted, as they reflect shifting dynamics in short-term business patterns [4] - Upbeat changes in estimates indicate analysts' favorable outlook on the business health and profitability [4] Zacks Rank System - The Zacks Rank system, which ranges from 1 (Strong Buy) to 5 (Strong Sell), has a track record of success, with 1 stocks delivering an average annual return of +25% since 1988 [6] - SkyWater Technology currently holds a Zacks Rank of 3 (Hold), with the Consensus EPS estimate remaining stagnant over the past month [6] Industry Overview - The Electronics - Semiconductors industry, part of the Computer and Technology sector, has a current Zacks Industry Rank of 87, placing it in the top 36% of all industries [7] - The Zacks Industry Rank assesses the vigor of specific industry groups, with top-rated industries outperforming the bottom half by a factor of 2 to 1 [7]

Core Insights - SkyWater Technology (SKYT) achieved a significant turnaround in profitability in Q1 2025, with non-GAAP gross profit increasing to $14.8 million from $13.4 million, resulting in a gross margin of 24.2%, a 730-basis-point improvement year over year [2][10] - The launch of ThermaView in January 2025 has driven a 70% sequential increase in Wafer Services revenues, reaching $7.5 million, indicating a shift in SkyWater's product mix towards new offerings [3][10] - Management anticipates continued growth in Wafer Services throughout 2025, supported by customer ramps and a growing innovation pipeline, alongside the recent acquisition of Fab 25 to expand manufacturing capacity [4][10] Financial Performance - SkyWater expects both GAAP and non-GAAP gross margins to remain in the 23%-27% range for the full year 2025, with potential for further upside due to improved cost control and a more disciplined tools mix [5][10] - The Zacks Consensus Estimate for 2025 revenues is projected at $307.15 million, reflecting a 10.26% decline from 2024, while the estimated loss is pegged at 1 cent per share, indicating a sharp decline of 116.67% year-over-year [12] Competitive Landscape - GlobalFoundries (GFS) reported $1.6 billion in Q1 2025, significantly outpacing SkyWater, with strengths in strategic partnerships and AI-related semiconductor manufacturing [6] - ON Semiconductor (ON) focuses on intelligent power and sensing solutions, leveraging a vertically integrated model that provides cost advantages, particularly in the growing EV market [7] Share Price and Valuation - SkyWater shares have declined 23.3% year to date, contrasting with a 7% return in the broader Zacks Computer and Technology sector and a 13.4% rise in the Electronics – Semiconductors industry [8] - Currently, SkyWater is trading at a forward 12-month Price/Sales ratio of 1.48X compared to the industry's 8.6X, with a Value Score of B [11]

Core Insights - SkyWater Technology (SKYT) shares are currently undervalued with a Value Score of B and a forward 12-month price/sales (P/S) ratio of 1.4X, significantly lower than the industry average of 8.5X [1][7] - The company has seen a strong performance in its newly launched ThermaView platform, which contributed to a 70% quarter-over-quarter increase in Wafer Services revenues, reaching $7.5 million in Q1 2025 [9][11] - The acquisition of Fab 25 enhances SkyWater's foundry capabilities, adding 400,000 wafer starts annually and generating over $1 billion in contracts, which is expected to boost revenues and cash flow immediately [13][14] Financial Performance - SkyWater's stock has outperformed the broader Zacks Computer and Technology sector, with an 11.9% increase over the past month compared to the sector's 6% and the industry's 7.1% growth [9] - For 2025, SkyWater expects a revenue growth range of 5% for combined Advanced Technology Services (ATS) and Wafer Services, with a consensus estimate of $307.15 million, indicating a 10.26% decline from 2024 [18] - The company anticipates second-quarter 2025 revenues between $55-$60 million, with ATS revenues projected at $49-$53 million, reflecting a 38.6% decline from the previous year [19] Market Position and Growth Drivers - The ThermaView platform is positioned in the growing advanced thermal imaging market, projected to reach $9 billion by 2027, indicating long-term growth potential across various sectors [11] - SkyWater's focus on quantum computing is significant, with over 90% of its advanced computing revenues in 2024 related to quantum technology development [15] - The company maintains a Zacks Rank 1 (Strong Buy) and a Growth Score of A, indicating a strong investment opportunity [22]

Financial Performance & Outlook - SkyWater reported Q1 2025 revenue of $613 million, exceeding the midpoint of their guidance[131] - The company anticipates approximately 5% revenue growth for the combined ATS and Wafer Services business in fiscal year 2025, with a potential variance of ± 2%[40] - SkyWater expects Tools revenue to be around $30 million, primarily concentrated in the second half of the year and related to the Florida operations[140] - For Q2 2025, SkyWater projects total revenues in the range of $55 million to $60 million, with ATS revenues between $49 million and $53 million, Wafer Services revenues between $5 million and $6 million, and Tools revenue just under $1 million[40] Strategic Initiatives - SkyWater announced the acquisition of Infineon's Austin Fab 25 for $110 million, which is expected to add approximately $300 million in annual revenue[104] - The company secured $120 million in DOD program funding for a 300mm wafer fan-out initiative, with initial ATS revenues anticipated in the second half of fiscal year 2025[96] - SkyWater's customer-funded CapEx model has resulted in expected total funding of approximately $322 million from 2020 to 2026[97] Market & Technology Focus - SkyWater is targeting a $9 billion thermal imaging market opportunity by 2027, leveraging its ThermaView platform[25] - The company is actively involved in enabling the quantum revolution, providing custom technology development and manufacturing for superconducting qubits and photonics qubits[36, 38, 143] - SkyWater is expanding its capabilities in advanced packaging, including fan-out wafer-level packaging and hybrid wafer bonding, to support AI processors and heterogeneous systems[95]