0001819974-26-000009
SEC filingRevenue grew 29% to $442.1M driven by Fab 25 acquisition, but operating loss widened as Legacy SkyWater declined and acquisition costs weighed on profitability.
SkyWater Technology, Inc. describes itself as a U.S.-based, independent, pure-play semiconductor foundry providing foundational-node manufacturing, advanced technology development, and advanced packaging services through an integrated, multi-site operating model. The company operates exclusively within the United States, with fabrication and packaging facilities in Minnesota, Texas, and Florida. Its business model integrates production-scale manufacturing with advanced technology development, enabling customers to transition specialized semiconductor technologies from development to volume production. SkyWater supports applications where continuity of supply, manufacturability, and long-term availability are as critical as device performance.
SkyWater's operations are comprised of two reportable segments. Legacy SkyWater is a pure-play technology foundry that offers advanced semiconductor development and manufacturing services from its fabrication facility in Bloomington, Minnesota and advanced packaging services from its Kissimmee, Florida facility. It provides both Advanced Technology Services (ATS) and Wafer Services product offerings. SkyWater Texas is a high-volume manufacturer that offers manufacturing services from its fabrication facility in Austin, Texas, providing Wafer Services product offerings focused on 200 mm semiconductor fabrication, copper processing, high-voltage technology services, and 65 nm node infrastructure support. Revenue share percentages for each segment are not disclosed in this section.
SkyWater's product offerings are organized into two primary service categories. Advanced Technology Services (ATS) involves customer-funded development activities spanning materials, devices, process flows, and packaging architectures, conducted within production-oriented manufacturing environments. Wafer Services (WS) provides production manufacturing for both established platform technologies and customer-specific technologies that emerge from ATS programs. The company also offers advanced packaging solutions including fan-out wafer-level packaging, silicon interposers, and hybrid wafer bonding. Its wafer manufacturing services focus on analog, mixed-signal, MEMS, and specialty CMOS devices, primarily on 200 mm wafers at foundational technology nodes.
SkyWater's sales and marketing activities reflect the technical and consultative nature of its business. Customer engagements typically involve extended sales cycles that include technical evaluation, development, qualification, and production phases. The company focuses on building long-term customer relationships by embedding closely with customer programs. Infineon accounted for 43% of revenue for the fiscal year ended December 28, 2025. Two other customers each represented 21% and 10% of revenue in the same period. The company serves customers across aerospace and defense, quantum computing, automotive, bio-health, and industrial end markets.
No named competitors are disclosed in the Business section. The filing notes that SkyWater operates as a pure-play semiconductor foundry free of foreign ownership or control, which is increasingly important to customers and U.S. government programs seeking supply chain diversification and assured domestic manufacturing.
SkyWater's stated strategic priorities include operating and expanding a U.S.-based foundry platform dedicated to foundational-node wafer fabrication and advanced packaging; integrating wafer fabrication and advanced packaging across ATS and WS to enable customer differentiation within the process and integration stack; supporting long product life cycles and supply chain resilience for aerospace/defense, automotive, industrial, and medical end markets; leveraging the acquisition of Fab 25 to increase domestic manufacturing scale for foundational nodes; and maintaining a pure-play foundry model free of foreign ownership or control to serve sensitive government and commercial programs.
As of December 28, 2025, SkyWater had 1,551 employees, all residing in the United States. None of its employees or contractors are subject to a collective bargaining agreement. The company considers its employee relations to be good and has never experienced a work stoppage. SkyWater's human capital management objectives are to acquire, engage, develop, and retain top talent, and it offers an annual base salary and a comprehensive package of additional benefits, including potential equity awards to attract, reward, and retain key employees.
For fiscal year 2025, SkyWater reported revenue of $442.1M, a 29% increase from $342.3M in fiscal 2024, largely attributable to the acquisition of Fab 25 (SkyWater Texas) on June 30, 2025. Gross profit rose 25% to $86.9M, but gross margin declined to 19.7% from 20.3%, impacted by tool margin degradation (a $1.8M loss in 2025 versus a $3.8M gain in 2024) and incremental startup costs at the Florida facility. Operating income swung to a loss of $2.6M from a profit of $6.6M, driven by a 56% increase in SG&A expenses—primarily $10.1M in one-time transaction/integration costs and $3.8M in recurring integration costs. Net income attributable to SkyWater was $118.9M, compared to a net loss of $6.8M in the prior year, boosted by a $111.7M bargain purchase gain and a $23.2M tax benefit from the release of a valuation allowance on deferred tax assets.
The MD&A does not provide specific numerical guidance. Management highlighted ongoing macroeconomic uncertainties, U.S. government policy shifts, and the pending acquisition by IonQ (expected to close in H2 2026). Key strategic priorities include integrating Fab 25, optimizing the Florida packaging facility, and managing capital expenditures ($27.2M in 2025). The company maintains a revolving credit facility with $55.7M availability and expects sufficient liquidity for the next twelve months. The reversal of smaller reporting company status will increase disclosure requirements starting Q1 2026.
Cash and cash equivalents increased to $23.2M at December 28, 2025 from $18.8M at December 29, 2024. Total assets surged to $733.9M from $311.8M, driven primarily by the Fab 25 acquisition which added $215.4M in segment assets. Property and equipment, net rose to $511.7M (from $165.4M) reflecting the acquired Fab 25 machinery and buildings. The revolvable credit facility ballooned to $184.4M (net of issuance costs) to fund the acquisition, up from $27.7M. Long-term debt, including current maturities, stood at $38.9M. Shareholders' equity improved to $195.8M from $61.5M, aided by the $118.9M net income attributable to SkyWater.
The Company reported $2.9M in capital expenditure commitments outstanding as of December 28, 2025, primarily for tool purchases and installation. Additionally, a $120M off-market component of the Infineon supply agreement was recognized as a contract liability in purchase accounting, of which $17.9M was recognized as revenue through year-end, leaving $102.1M remaining. Separate contractual obligations include up to $15.0M termination payment under the Center for NeoVation lease agreement and a 20% matching share contribution of approximately $10.2M for the Build Back Better Grant, with $4.9M accrued as unpaid at year-end.
No share repurchases or dividends were disclosed. Capital expenditures totaled $24.3M for fiscal 2025, representing 5.5% of revenue. The Company drew $588.7M on its revolver and repayed $431.1M during the year, resulting in net debt issuance of $157.6M. A $10.1M cash outflow for debt issuance costs was recorded relating to the amended credit agreement. No other financing or capital allocation activities, such as new buyback authorizations, were mentioned in the notes.
Following the Fab 25 acquisition, the Company now reports two segments: Legacy SkyWater ($266.8M revenue, operating loss of $34.5M) and SkyWater Texas ($175.3M revenue, operating income of $31.9M). The bargain purchase gain of $111.7M was allocated entirely to SkyWater Texas. Geographic revenue was heavily U.S.-centric at $421.0M (95.2% of total), with Canada ($13.1M), Hong Kong ($1.2M), United Kingdom ($0.7M), and all others ($6.2M) comprising the remainder. Three customers represented 43%, 21%, and 10% of consolidated revenue, respectively.
A significant portion of the Risk Factors focuses on the proposed IonQ Mergers. Key risks include the possibility that closing conditions (stockholder approval, antitrust clearance, absence of legal prohibitions) are not satisfied, leading to termination and a potential $51.6M fee. The exchange ratio collar ties consideration value to IonQ's stock price, introducing market volatility. Pending merger uncertainties may distract management, affect employee retention, and disrupt customer/supplier relationships.
Customer concentration is a critical risk: Infineon comprised 43% of 2025 revenue, and two other customers represented 21% and 10%. Loss of any key customer would materially impact results. Operational risks include foundry damage (from fire, floods, etc.) with limited redundancy, manufacturing yield issues, and dependency on a small number of suppliers and customers. The company also relies on government contracts (fixed-price) that carry cost overrun risks and are cancellable for convenience.
As of December 2025, SkyWater had $236.1M total debt, including a $195.5M revolving credit facility at 8.2% interest. The loan agreement contains restrictive covenants limiting mergers, asset sales, and dividends. A material weakness in internal controls over revenue accounting and account reconciliations persists, posing a risk of financial misstatement. While the company believes current liquidity is sufficient, additional capital may be needed to support growth or if cash flows are insufficient.
Government contract exposure brings risks of audits, suspension/debarment, and compliance with ITAR, EAR, and the Federal Acquisition Regulation. Cybersecurity requirements under the DMEA Trust Accreditation and CMMC are particularly stringent given the company's Trusted Foundry status. Trade policy changes (tariffs, export controls) could increase costs or limit access to materials. The CHIPS Act funding is not guaranteed and may impose performance obligations.
The company lacks patent protection and relies on trade secrets and third-party licenses. Intellectual property litigation could be costly and disruptive. The semiconductor industry is highly cyclical and competitive; larger competitors with greater resources could outpace SkyWater in technology and capacity. Rapid technological change may render products obsolete if the company fails to innovate.
SkyWater's operating cash flow turned positive in fiscal 2025, reaching $49.1 million compared to a -$16.7 million outflow in the prior year. This improvement was driven by a $123.4 million net income (benefiting from a $111.7 million bargain purchase gain) offset by significant non-cash charges including $35.5 million in depreciation and amortization, $14.6 million in equity-based compensation, and $3.2 million in amortization of debt issuance costs. Working capital was a large use of cash, with accounts receivable increasing by $47.7 million and inventory by $10.1 million, partially offset by an increase in accrued expenses and contract liabilities.
Capital expenditures surged to $207.2 million (from $45.8 million in 2024), reflecting heavy investment in property and equipment to support capacity expansion. As a result, free cash flow after capex was negative $158.1 million. Financing activities provided $162.5 million, primarily from a $147.4 million net increase in short-term financing and issuance of common stock.
No share repurchases or dividends were paid. The company's cash position grew from $18.8 million to $23.2 million, supported by the financing activities.