SkyWater Banks on ThermaView Platform to Revive Wafer Services Growth

SkyWater Technology’s SKYT Wafer Services revenues saw a year-over-year decline of 25% in the first quarter of fiscal 2025 due to reduced demand from key automotive customers. However, the launch of its proprietary ThermaView platform had an immediate impact, reversing the trend with a strong sequential rebound. Wafer Services revenues surged 70% sequentially to $7.5 million, with ThermaView emerging as a major growth catalyst.

ThermaView, SkyWater’s first internally developed product platform, is designed for thermal imaging applications and built on a 90 nm CMOS and MEMS process. Two leading U.S. defense primes are already deploying it, validating its relevance in mission-critical systems.

SkyWater expects the platform to remain a cornerstone of Wafer Services’ growth through fiscal 2025, despite some anticipated quarterly fluctuations. Addressing a $9 billion market opportunity projected by 2027, SkyWater is well-positioned to scale ThermaView across defense and industrial markets. For the second quarter of 2025, the company expects Wafer Services revenues between $5 million and $6 million, reflecting the platform's sustained demand.

ThermaView’s growing traction is set to drive expansion across SkyWater’s Wafer Services and ATS segments in 2025. As thermal imaging becomes integral to next-gen defense, industrial and automotive sectors, ThermaView is expected to play a defining role in driving revenue expansion and improving operational scale.

SKYT Faces Stiff Competition in the Semiconductor Space

GlobalFoundries GFS is a major player in the semiconductor foundry space, offering scale and a wide range of process technologies across 200 mm and 300 mm wafers. GFS serves diverse markets like automotive, aerospace and communications infrastructure. GFS competes with SkyWater in specialty and defense-aligned production, but it holds a clear advantage in scale, capacity and customer base, making it a formidable rival in high-volume and government-backed contracts.

Tower Semiconductor TSEM focuses on analog, RF and MEMS technologies, targeting high-value niches in medical, automotive and industrial markets. With decades of expertise in specialty analog technologies, Tower offers precise, customizable solutions for complex chip designs. Compared to SkyWater, Tower’s deeper analog expertise and global scale make it a preferred partner for complex analog projects needing flexibility and reliability beyond the United States.

SKYT’s Price Performance, Valuation & Estimates

Shares of SkyWater have lost 40.6% year to date against the Zacks Electronics – Semiconductors industry’s return of 3.9%.

From a valuation standpoint, SKYT currently trades at a forward 12-month price-to-sales ratio of 1.17, which is at a significant discount compared to the industry’s average of 8X. As investors are paying significantly less for each dollar of SKYT's sales compared to the industry, this stock is a great pick for a value investor. SKYT carries a Value Score of B.

The Zacks Consensus Estimate for SKYT’s 2025 loss is currently pegged at 1 cent per share, which has narrowed by 85.7% over the past 60 days. The estimate suggests a year-over-year decline of 116.67%.

SKYT stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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