SkyWater Technology Reports Strong Q2 2024 Earnings
SkyWater Technology has announced its financial results for the second quarter of 2024, showcasing a record $93 million in revenue. This milestone marks the first time the company has achieved positive non-GAAP EPS, largely driven by the aerospace and defense sectors.
Aerospace and Defense Drive Growth
The record revenue was significantly influenced by the company's Aerospace and Defense (A&D) programs. SkyWater reported $62 million in Advanced Technology Services (ATS) development revenue, highlighting a robust 18% growth compared to the previous year. The demand in these sectors was bolstered by multiple program pull-ins, improved fab cycle times, and agile engineering execution.
Wafer Services and Tool Revenues
Despite a challenging environment, Wafer Services revenue reached nearly $6 million, slightly exceeding expectations. However, it remains below previous levels due to broader industrial segment weaknesses. Conversely, Tool revenues surpassed forecasts, hitting $26 million. This success is attributed to enhanced equipment lead times and substantial customer-funded tool installations, demonstrating strong client commitment to expanding capabilities within SkyWater's fabrication facilities.
Investment in Future Capabilities
SkyWater is poised for a multiyear phase of elevated customer co-investment, focusing on adding critical new capabilities to its fabs. The company's capex-light model is expected to enhance gross margins significantly, supporting profitable outcomes in the years ahead. This model benefits from minimal SkyWater-funded capital expenditures, relying instead on customer funding.
Strategic Developments and Partnerships
The quarter also marked successful customer transitions, such as QuantumPsi moving from ATS to wafer services, leveraging SkyWater's unique service model for advanced biomedical technology development. Additionally, SkyWater has introduced the first high productivity multi-beam e-beam lithography system in its Minnesota fab, enhancing the company's Technology-as-a-Service (TaaS) business model.
Outlook and Future Projections
Looking ahead, SkyWater anticipates continued growth in its ATS business, with expectations of a 10% to 20% increase over 2023 levels. While wafer services may remain soft in the near term, the company is optimistic about future growth, driven by advancements in thermal imaging and medical diagnostics. Tool revenue for the year is projected to reach approximately $80 million, reflecting ongoing customer-funded capital investments.
SkyWater's strategic focus and operational efficiency are setting the stage for incremental growth and profitability, with a clear roadmap for expanding its advanced packaging capabilities and securing its position as a trusted domestic semiconductor technology provider.
