8-K: SkyWater Technology Reports First Quarter 2025 Results: Revenue Declines Amidst Federal Budget Delays

SkyWater Technology's Q1 2025 results show a revenue decrease due to federal budget delays impacting ATS growth, though Wafer Services saw strong sequential growth.

Summary

• SkyWater Technology reported a 23% decrease in revenue for Q1 2025, totaling $61.3 million compared to $79.6 million in Q1 2024.
• ATS development revenue decreased by 14% to $52.5 million, while Wafer Services revenue decreased by 25% to $7.5 million.
• Tools revenue experienced a significant decline of 86%, reaching $1.2 million.
• GAAP net loss to shareholders was $7.3 million, or $(0.15) per diluted share, compared to a net loss of $5.7 million, or $(0.12) per diluted share, in Q1 2024.
• The company anticipates Q2 2025 revenue to be in the range of $55 million to $60 million, with a GAAP diluted net loss per share expected between $(0.20) and $(0.26).

Sentiment

Score: 5

Explanation: The sentiment is neutral. While the company highlights positive developments like the Wafer Services growth and the Fab 25 acquisition, the overall financial results show a decline in revenue and increased net loss, offset by increased gross profit margin.

Positives

• Wafer Services revenue experienced strong sequential growth, driven by the ThermaView platform.
• Gross profit margin increased to 23.3% from 16.3% in Q1 2024.
• SkyWater partner D-Wave demonstrated quantum supremacy, leveraging SkyWater's superconducting qubits.
• The company is making progress on the acquisition of Infineon's Fab 25, which is supported by a $1B+ supply agreement.
• Progress continues in Florida operations, supporting the Advanced Packaging platform in preparation for an expected 2H-2025 revenue ramp.

Negatives

• Total revenue decreased by 23% year-over-year.
• ATS development revenue decreased by 14% compared to Q1 2024.
• Tools revenue decreased significantly by 86% compared to Q1 2024.
• GAAP net loss to shareholders was $7.3 million, compared to a net loss of $5.7 million in Q1 2024.
• Federal budget delays are negatively impacting the anticipated growth of the ATS business.

Risks

• Federal budget delays could continue to impact ATS revenue growth.
• The company's ability to achieve year-over-year revenue growth in ATS and Wafer Services depends on the resolution of funding delays.
• The company's Q1 2025 results are preliminary, unaudited, and subject to finalization.
• The company's ability to complete the Fab 25 acquisition on anticipated timing and terms.
• The company's ability to integrate the operations of the Fab 25 facility with our operations and risks associated with operating the Fab 25 facility.

Future Outlook

SkyWater expects Q2 2025 revenue to be in the range of $55 million to $60 million, with a GAAP diluted net loss per share between $(0.20) and $(0.26).

Management Comments

• CEO Thomas Sonderman stated that the Q1 financial results reflected modest upside to expectations entering the year.
• Thomas Sonderman noted that federal budget delays are resulting in a near-term softening of the anticipated ATS growth trajectory.
• The company is confident in its ability to execute towards another record ATS revenue year in 2025, provided that the funding delays in Washington, DC are resolved soon.

Industry Context

SkyWater's focus on secure, U.S.-based manufacturing aligns with the broader industry trend of onshoring semiconductor production and increasing industrial resilience, particularly in response to supply chain vulnerabilities and national security concerns.

Comparison to Industry Standards

• SkyWater's revenue decline contrasts with the growth seen by some larger foundries like TSMC and Samsung, which have benefited from high demand for advanced node technologies.
• However, SkyWater's focus on specialized technologies and government contracts differentiates it from these high-volume manufacturers.
• The acquisition of Fab 25 is intended to provide SkyWater with increased capacity and capabilities to compete in the foundational semiconductor market, similar to how GlobalFoundries has expanded its offerings through strategic acquisitions.
• The company's partnership with D-Wave in quantum computing positions it alongside other companies like IBM and Google that are investing in this emerging field.

Stakeholder Impact

• Shareholders will be concerned about the decreased revenue and increased net loss.
• Employees in the ATS division may be affected by the federal budget delays.
• Customers of Wafer Services will benefit from the strong growth and the ThermaView platform.
• The acquisition of Fab 25 could impact suppliers and customers of both SkyWater and Infineon.

Next Steps

• The company anticipates closing the acquisition of Infineon's Fab 25 in mid-2025.
• SkyWater expects an Advanced Packaging platform revenue ramp in the second half of 2025.
• The company will continue to monitor and address federal budget delays affecting ATS revenue.

Key Dates

Keywords

SkyWater Technology, financial results, Q1 2025, revenue, ATS, Wafer Services, Fab 25, semiconductor, quantum computing, DOD, ThermaView