Skywater Technology expanding with big acquisition even as it struggles with federal funding delays

 Skywater Technology closed its second quarter with a major acquisition expected to double annual revenue, even as it deals with federal defense funding delays that contributed to a sales decline in the spring months.

The $93 million deal for Fab 25, a semiconductor plant in Austin, Texas, increases Skywater’s U.S. semiconductor capacity as the U.S. looks to increase homegrown semiconductor manufacturing and lessen dependence on foreign sources.

The Bloomington-based company’s stock was up 40% in midday trading Thursday.

“Fab 25 adds a strategic sweet spot in capabilities,” and will be transformative for the company, Skywater Chief Executive Thomas Sonderman said on an analysts call Wednesday.

Skywater bought Fab 25 from Germany-based Infineon Technologies, one of the 10 largest semiconductor companies. The deal, which closed June 30, comes with a multi-year supply agreement with Infineon worth more than $1 billion.

But Sonderman told analysts there will be capacity to add new customers as well.

Tom Sonderman, CEO of SkyWater Technology, speaks as U.S. Sen. Amy Klobucharstands by his side when the company received $16 million in CHIPS Act funding. (Ayrton Breckenridge/The Minnesota Star Tribune)

Meanwhile, the company continues to deal with Department of Defense funding delays because the 2025 federal budget remains under resolution.

Sonderman told analysts he believed the funding delays were temporary and were not affecting its partnership with the defense department.

“We are developing multiple new products and platforms that are of high strategic value for the U.S. government,” Sonderman said.

Skywater won $16 million in CHIPS Act passed under the Biden administration, plus about $19 million from the state’s Minnesota Forward Fund, to upgrade and expand its capabilities.

The company also said it expects to add another $320 million in funding from customer funded co-investments over the next few years.

Skywater’s losses widened in the second quarter, which ended June 30, but on the high end of its expectations. This year, its quarterly loss was $10 million, or 21 cents a share; it was $1.9 million, or 4 cents a share.

Revenue was $58 million, down 14% from the same period in 2024.

Highlights for the quarter including installation of new tooling at Skywater’s Florida facility and gains in the quantum computing market after adding capabilities in that growth area.

The addition of Fab25 means Skywater now expects 2026 revenue to be $600 million, up from $342 million.

The company’s shares hit their 52-week high of $16.06 a share in December after receiving the CHIPS Act funding.

https://www.startribune.com/skywater-technology-semiconductor-chips-acquisition-federal-funding-delays/601450960