SkyWater Technology Inc

SkyWater Technology, Inc. (NASDAQ: SKYT) is an independent, pure-play technology foundry that offers advanced semiconductor development and manufacturing services. The Company’s Technology-as-a-Service (TaaS) model leverages a foundation of proprietary technology, engineering know-how capabilities, and microelectronics manufacturing capacity to co-develop process technology intellectual property (IP) with its customers that enable disruptive concepts through its Advanced Technology Services (ATS) for diverse microelectronics (integrated circuits (ICs)) and related micro- and nanotechnology applications.

Recent Business and Financial Updates

• Overview of Q1 2025 Performance: SkyWater Technology, Inc. reported total revenue of USD 61.3 million, a 23% decrease year-over-year, primarily due to a 14% decline in Advanced Technology Services (ATS) development revenue to USD 52.5 million, a 25% drop in Wafer Services revenue to USD 7.5 million, and an 86% reduction in tools revenue to USD 1.2 million. Despite the revenue decline, the company achieved a GAAP gross profit of USD 14.3 million (23.3% margin), up 10% from USD 13.0 million (16.3% margin) in Q1 2024, driven by strong sequential growth in Wafer Services, though ATS growth was tempered by federal budget delays impacting Department of Defense (DOD) program funding, with CEO Thomas Sonderman expressing confidence in achieving record ATS revenues in 2025 if funding issues are resolved promptly.
• Strategic Business Achievements: SkyWater highlighted significant progress in its Wafer Services segment, with a 70% sequential revenue increase driven by robust demand for its newly launched ThermaView℠ platform, adopted by two leading defense prime customers since its January 2025 debut, marking a milestone as SkyWater’s first proprietary product platform. Additionally, the company played a pivotal role in a quantum computing breakthrough with partner D-Wave, demonstrating quantum supremacy in simulation using SkyWater’s superconducting qubits, reinforcing its leadership in secure, U.S.-based quantum innovation. SkyWater also advanced its Florida operations to support its Advanced Packaging platform, anticipating a revenue ramp in the second half of 2025, while continuing to support critical DOD programs, positioning it for ATS growth contingent on resolution of federal funding delays.
• Progress on Strategic Acquisition: SkyWater is making steady progress toward acquiring Infineon’s Fab 25 in Austin, Texas, with an expected closure in mid-2025, a move backed by a USD 1 billion+ supply agreement aimed at enhancing secure, domestic foundry capacity for foundational semiconductor nodes. Fab 25 is strategically positioned to deliver the scale, quality, and flexibility required to meet the demands of foundational semiconductor markets, aligning with SkyWater’s mission to bolster America’s semiconductor onshoring and industrial resilience strategy. This acquisition is expected to strengthen SkyWater’s role as a key enabler in the U.S. semiconductor supply chain, addressing evolving market needs while prioritizing national security and supply chain stability.
• Financial Metrics and Challenges: SkyWater’s Q1 2025 financials showed a GAAP net loss to shareholders of USD 7.3 million, or USD 0.15 per diluted share, compared to a USD 5.7 million loss (USD 0.12 per share) in Q1 2024, while non-GAAP net loss remained steady at USD 3.7 million (USD 0.08 per share), with Adjusted EBITDA at USD 4.0 million (6.6% margin), down 18% from USD 4.9 million (6.2% margin) in Q1 2024. Operating expenses increased to USD 18.3 million on a GAAP basis from USD 15.2 million in Q1 2024, reflecting investments in growth initiatives, while the company anticipates year-over-year revenue growth in both ATS and Wafer Services, gross margin expansion, strong Adjusted EBITDA, and non-GAAP positive EPS for fiscal 2025, assuming resolution of DOD funding delays.
• Q2 2025 Financial Outlook: Looking ahead to Q2 2025, SkyWater projects total revenue between USD 55 million and USD 60 million, with tools revenue expected to be less than USD 1 million, alongside a GAAP diluted net loss per share of USD 0.20 to USD 0.26 and a non-GAAP diluted net loss per share of USD 0.16 to USD 0.22, excluding approximately USD 2 million in equity-based compensation expense. The company remains optimistic about its long-term growth trajectory, driven by strategic initiatives like the Fab 25 acquisition and advancements in its ThermaView platform, while continuing to navigate near-term challenges posed by federal funding delays, with a focus on delivering value to shareholders through innovation and operational resilience.

Technical Observation (on the daily chart):

The 14-day Relative Strength Index (RSI) is currently at 67.47, currently upward trending crossing 60 levels indicating bullishness with decent momentum, with the expectations of consolidation or upward momentum if the USD 8.00-USD 8.50 support holds. In addition, the current price is above both the 50-day Simple Moving Averages (SMAs) and 200-day SMA, which may work as medium to long term support levels.

SkyWater Technology, Inc. (NASDAQ: SKYT) showcased a promising outlook in its Q1 2025 results announced on May 7, 2025, with a 70% sequential increase in Wafer Services revenue driven by strong demand for its innovative ThermaView℠ platform, a 10% rise in GAAP gross profit to USD 14.3 million (23.3% margin), and a pivotal role in quantum computing advancements through its partnership with D-Wave, achieving quantum supremacy in simulation, all while progressing toward the strategic acquisition of Infineon’s Fab 25 to bolster U.S.-based semiconductor production, positioning SkyWater as a key player in domestic foundry capacity and national security with anticipated revenue growth, margin expansion, and positive non-GAAP EPS for fiscal 2025. 

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Speculative Buy’ rating has been given SkyWater Technology, Inc. (NASDAQ: SKYT) at the closing price of USD 9.48, as of May 27, 2025.

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is May 27, 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the New York Stock Exchange (NYSE), NASDAQ Capital Markets (NASDAQ), and or REFINITIV. Typically, all sources (NYSE, NASDAQ, or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.