SkyWater Soars on Fab 25 Acquisition, Posts $130M Net Income

TL;DR

**SkyWater's Fab 25 acquisition is a game-changer, but the debt-fueled growth demands careful watch.**

AI Summary

SkyWater Technology, Inc. reported a significant financial turnaround for the nine-month period ended September 28, 2025, achieving a net income of $130.077 million compared to a net loss of $2.960 million in the prior year. This was largely driven by a substantial bargain purchase gain of $110.790 million. Revenue saw a modest increase to $271.100 million from $266.782 million year-over-year. Gross profit improved to $61.377 million from $50.329 million. The company's total assets surged to $787.029 million from $311.805 million at December 29, 2024, primarily due to the acquisition of Fab 25, which also led to a significant increase in property and equipment, net, to $517.484 million from $165.431 million. Current liabilities more than doubled to $355.874 million from $154.327 million, largely due to increased short-term financing and contract liabilities. The acquisition of Fab 25, financed through debt, introduced new operational segments and increased indebtedness, posing a key risk. Cash and cash equivalents increased to $30.895 million from $18.844 million at the beginning of the period.

Why It Matters

This filing reveals SkyWater's strategic pivot through the Fab 25 acquisition, significantly expanding its manufacturing capabilities and market reach, particularly in the 200mm fab space. For investors, the bargain purchase gain and substantial increase in net income are positive, but the surge in liabilities and debt financing for the acquisition warrant close scrutiny. Employees at the newly acquired Fab 25 facility gain stability under SkyWater's ownership. Customers benefit from increased capacity and diversified technology offerings, potentially reducing lead times and fostering innovation. In the broader market, this move intensifies competition in the semiconductor foundry sector, especially for specialized microelectronics, and highlights the ongoing consolidation trend in the industry.

Risk Assessment

Risk Level: medium — The risk level is medium due to the significant increase in indebtedness and liabilities following the Fab 25 acquisition. Short-term financing, net of unamortized debt issuance costs, jumped from $27.669 million at December 29, 2024, to $143.367 million at September 28, 2025. Total liabilities increased from $250.285 million to $587.281 million over the same period, indicating substantial financial leverage. While the bargain purchase gain is positive, the operational integration and increased debt servicing costs present ongoing risks.

Analyst Insight

Investors should closely monitor SkyWater's integration of the Fab 25 facility and its ability to generate sustained operational cash flow to manage the increased debt burden. While the bargain purchase gain is a one-time boost, future profitability will depend on successful execution of the expanded business model. Consider the long-term implications of the increased leverage on the company's financial flexibility and growth prospects.

Financial Highlights

debt To Equity

3.05

revenue

$271.100M

operating Margin

-1.0%

total Assets

$787.029M

total Debt

$40.441M

net Income

$130.077M

eps

N/A

gross Margin

22.6%

cash Position

$30.895M

revenue Growth

1.6%

Key Numbers

• $130.077M — Net income (for the nine-month period ended September 28, 2025, a significant turnaround from a $2.960M net loss in the prior year.)
• $110.790M — Bargain purchase gain (recorded in the nine-month period ended September 28, 2025, contributing significantly to net income.)
• $271.100M — Revenue (for the nine-month period ended September 28, 2025, up from $266.782M in the prior year.)
• $787.029M — Total assets (as of September 28, 2025, a substantial increase from $311.805M at December 29, 2024, primarily due to the Fab 25 acquisition.)
• $517.484M — Property and equipment, net (as of September 28, 2025, significantly higher than $165.431M at December 29, 2024, reflecting the Fab 25 acquisition.)
• $355.874M — Total current liabilities (as of September 28, 2025, more than double the $154.327M at December 29, 2024.)
• $143.367M — Short-term financing, net (as of September 28, 2025, a significant increase from $27.669M at December 29, 2024, indicating increased leverage.)
• $30.895M — Cash and cash equivalents (as of September 28, 2025, up from $18.844M at the beginning of the period.)
• $86.466M — Cash paid to acquire a business (for the nine-month period ended September 28, 2025, related to the Fab 25 acquisition.)
• 48,508,000 — Shares of common stock outstanding (as of November 10, 2025.)

Key Players & Entities

• SkyWater Technology, Inc. (company) — registrant
• Spansion LLC (company) — seller of Fab 25
• Infineon Technologies AG (company) — affiliate of Spansion
• Fab 25 (company) — acquired 200mm fab in Austin, Texas
• Nasdaq Stock Market LLC (regulator) — exchange where SKYT is traded
• U.S. Securities and Exchange Commission (regulator) — filing recipient
• Private Securities Litigation Reform Act of 1995 (regulator) — governing forward-looking statements
• Jumpstart Our Business Startups Act of 2012 (regulator) — defines emerging growth company

FAQ

Risk Factors

• Increased Indebtedness from Acquisition [high — financial]: The acquisition of Fab 25 was financed through debt, leading to a significant increase in total liabilities to $587.281 million from $250.285 million. This increased indebtedness, coupled with a more than doubling of current liabilities to $355.874 million, raises financial risk.
• Integration of Fab 25 Facility [medium — operational]: Integrating the newly acquired Fab 25 facility presents operational challenges. Risks include the ability to integrate its operations smoothly with existing ones and potential disruptions during this process.
• Customer Dependence and Market Demand [medium — market]: The company faces risks related to dependence on its largest customers and the overall demand in its customers' end markets. Diversifying the customer base and developing new market relationships are crucial for mitigating this risk.
• Technological Adaptation [medium — operational]: SkyWater must be able to respond to rapidly changing technologies in a timely and cost-effective manner. Failure to do so could impact its competitive position and ability to meet customer needs.
• Capital Raising Needs [medium — financial]: The company's ability to raise additional capital or financing is a key factor for its future growth and operations. Dependence on external funding introduces financial risk.

Industry Context

SkyWater operates in the semiconductor manufacturing industry, a sector characterized by high capital intensity, rapid technological advancements, and intense global competition. The industry is experiencing strong demand driven by digitalization, AI, and IoT, but also faces supply chain challenges and geopolitical risks. Companies like SkyWater focus on specialized manufacturing processes and advanced packaging to differentiate themselves.

Regulatory Implications

As a US-based semiconductor manufacturer, SkyWater may be subject to export controls and trade regulations, particularly concerning advanced technologies and international sales. Compliance with environmental regulations related to manufacturing processes is also a standard requirement in this industry.

What Investors Should Do

1. Monitor integration of Fab 25
2. Analyze debt levels and repayment capacity
3. Evaluate revenue diversification and customer concentration
4. Assess profitability excluding bargain purchase gain

Key Dates

• 2025-09-28: Nine-month period ended — Reported significant financial turnaround with net income of $130.077M, driven by a $110.790M bargain purchase gain. Total assets increased substantially to $787.029M due to Fab 25 acquisition.
• 2024-12-29: Year-end balance sheet date — Total assets were $311.805M, with property and equipment at $165.431M. Total current liabilities were $154.327M.
• 2025-11-10: Shares of common stock outstanding reported — 48,508,000 shares outstanding, indicating a slight increase from the prior period.

Glossary

Bargain purchase gain

Occurs when an acquired company is purchased for less than its fair value. The difference is recognized as a gain in the income statement. (This gain of $110.790 million significantly boosted SkyWater's net income for the period, masking underlying operational performance.)

Contract assets

Represents a company's right to consideration in exchange for goods or services that have been transferred to a customer. It arises when revenue is recognized before the unconditional right to payment exists. (An increase in contract assets to $51.326 million from $20.890 million suggests growing revenue recognition tied to ongoing contracts.)

Contract liabilities

Represents a company's obligation to transfer goods or services to a customer for which the company has received consideration from the customer. (The substantial increase in contract liabilities to $92.278 million (current) and $163.563 million (long-term) indicates significant future revenue commitments from customer prepayments or deferred revenue.)

Short-term financing, net

Represents funds borrowed for short-term operational needs, net of unamortized debt issuance costs. (The sharp rise to $143.367 million from $27.669 million indicates increased reliance on short-term debt, likely to fund the acquisition and operations.)

Accumulated deficit

The cumulative net losses of a company since its inception, less any net income. (The reduction of the accumulated deficit from $(133.966) million to $(7.276) million is a positive sign, largely due to the bargain purchase gain.)

Year-Over-Year Comparison

SkyWater Technology has shown a dramatic financial improvement, with net income swinging from a $2.960 million loss to a $130.077 million profit, largely due to a $110.790 million bargain purchase gain from the Fab 25 acquisition. Revenue saw a modest increase of 1.6% to $271.100 million. However, this growth came with a significant increase in total liabilities to $587.281 million and current liabilities more than doubling to $355.874 million, driven by increased short-term financing and contract liabilities, indicating higher financial leverage and new operational risks associated with the acquisition.

Key Financial Figures

• $0.01 — ich Registered Common stock, par value $0.01 per share SKYT The Nasdaq Stock Market

Filing Documents

• skyt-20250928.htm (10-Q) — 1687KB
• skyt-20250928xex21.htm (EX-2.1) — 710KB
• skyt-20250928xex101.htm (EX-10.1) — 20KB
• skyt-20250928xex311.htm (EX-31.1) — 9KB
• skyt-20250928xex312.htm (EX-31.2) — 9KB
• skyt-20250928xex321.htm (EX-32.1) — 4KB
• skyt-20250928xex322.htm (EX-32.2) — 4KB
• skyt-20250928_g1.jpg (GRAPHIC) — 13KB
• 0001819974-25-000052.txt ( ) — 10066KB
• skyt-20250928.xsd (EX-101.SCH) — 54KB
• skyt-20250928_cal.xml (EX-101.CAL) — 122KB
• skyt-20250928_def.xml (EX-101.DEF) — 239KB
• skyt-20250928_lab.xml (EX-101.LAB) — 675KB
• skyt-20250928_pre.xml (EX-101.PRE) — 481KB
• skyt-20250928_htm.xml (XML) — 1654KB

Forward-Looking Statements

Forward-Looking Statements 3

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION 4 Item 1.

Financial Statements

Financial Statements 4 Condensed Consolidated Balance Sheets 4 Condensed Consolidated Statements of Operations 5 Condensed Consolidated Statements of Shareholders' Equity 6 Condensed Consolidated Statements of Cash Flows 8 Notes to Condensed Consolidated Financial Statements 10 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 34 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 51 Item 4.

Controls and Procedures

Controls and Procedures 52

OTHER INFORMATION

PART II. OTHER INFORMATION 54 Item 1.

Legal Proceedings

Legal Proceedings 54 Item 1A.

Risk Factors

Risk Factors 54 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 56 Item 3. Defaults Upon Senior Securities 56 Item 4. Mine Safety Disclosures 56 Item 5. Other Information 56 Item 6. Exhibits 57 2 Table of Contents SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q contains statements that SkyWater Technology, Inc. ("SkyWater," the "Company," "we," "us," or "our") believes to be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q, including, without limitation, our expectations regarding our business, results of operations, financial condition and prospects, are forward-looking statements. When used in this Quarterly Report on Form 10-Q, words such as "may," "expect," "anticipate," "estimate," "intend," "plan," "target," "seek," "potential," "believe," "will," "could," "should," "would," and "project" or the negative thereof or variations thereon or similar words or expressions that convey the uncertainty of future events or outcomes are generally intended to identify forward-looking statements. Our forward-looking statements are subject to a number of risks, uncertainties, and assumptions. Key factors that may affect our results include, among others, the following: our goals and strategies; our future business development, financial condition, and results of operations; our ability to continue operating our fabrication facilities at full capacity; our ability to appropriately respond to changing technologies on a timely and cost-effective basis; our customer relationships and our ability to retain and expand our customer relationships; our ability to accurately predict our future revenues for the purpose of appropriately budgeting and adjusting our expenses; our expectations regarding dependence on our largest customers; o

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements SKYWATER TECHNOLOGY, INC. Condensed Consolidated Balance Sheets (Unaudited) September 28, 2025 December 29, 2024 (in thousands, except per share data) Assets Current assets Cash and cash equivalents $ 30,895 $ 18,844 Accounts receivable (net of allowance for credit losses of $ 68 and 398 , respectively) 85,056 52,362 Contract assets (net of allowance for credit losses of $ 18 and $ 42 , respectively) 51,326 20,890 Inventory 20,304 14,535 Prepaid expenses and other current assets 51,044 23,476 Total current assets 238,625 130,107 Property and equipment, net 517,484 165,431 Intangible assets, net 8,967 7,779 Other assets 21,953 8,488 Total assets $ 787,029 $ 311,805 Liabilities and shareholders' equity Current liabilities Current portion of long-term debt $ 6,179 $ 5,073 Accounts payable 51,335 29,590 Accrued expenses 62,715 36,829 Short-term financing, net of unamortized debt issuance costs 143,367 27,669 Contract liabilities 92,278 55,166 Total current liabilities 355,874 154,327 Long-term liabilities Long-term debt, less current portion and net of unamortized debt issuance costs 34,262 34,704 Long-term contract liabilities 163,563 51,901 Deferred income tax liability, net 7,903 632 Other long-term liabilities 25,679 8,721 Total long-term liabilities 231,407 95,958 Total liabilities 587,281 250,285 Commitments and contingencies (Note 10) Shareholders' equity Preferred stock, $ 0.01 par value per share ( 80,000 shares authorized; zero shares issued and outstanding as of September 28, 2025 and December 29, 2024) — — Common stock, $ 0.01 par value per share ( 200,000 shares authorized; 48,508 and 47,704 shares issued and outstanding as of September 28, 2025 and December 29, 2024, respectively) 489 478 Additional paid-in capital 199,592 189,132 Accumulated deficit ( 7,276 ) ( 133,966 ) Total shareholders' equity, SkyWater Technology, Inc. 192,805 55,644 Noncontrolling interests 6,943 5,876 T

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