SkyWater Technology: Quantum Picks And Shovels
A US Semiconductor Foundry Pure Play Set Up For An Interesting 2026
Company Overview
I’m going to get right into it this week, but this is one of the more interesting rocks I have turned over in the last month or so. SkyWater Technology (SKYT) is a US based pure play semiconductor foundry with operations in Minnesota, Florida, and after an acquisition earlier this year, Texas. Instead of designing and selling their own chips, they partner with customers to design and produce those chips. They aren’t focused on consumer products like phones or computers, but they partner with everyone from government agencies for aerospace and defense, to companies in the automotive, medical, and industrial sectors. They call it “Technology as a Service” (everything has to be ‘as a service’ these days), but basically they work with clients to design and manufacture specialized chips for a variety of purposes. I took a flier on the company after the Q3 earnings last week.
One of the newer areas of focus for the company has been quantum computing (the word ‘quantum’ was used 52 times on the recent earnings call). A lot of investors hear the word quantum and think science projects with little or no revenue that also happen to be meme stocks, but SkyWater has added four new quantum computing customers since Q2, for a total of seven customers. While quantum is a relatively new piece of the business and “modest” chunk of revenue today for the company, they expect it to be their fastest growing category, and plan to highlight it at the analyst day in March. I have made jokes about some of the quantum meme stocks in the past and their valuations, but I do find the technology interesting (even if understanding it is way out of my wheelhouse).
We will have to see what comes of some of these science project companies, but I think we will continue to see companies pursuing and developing quantum computing. The point is that SkyWater is an actual company, with actual revenues and PP&E, and it happens to have some exposure to quantum computing. Perhaps more important than customers in quantum computing is the connection to the federal government. Bringing semiconductor manufacturing back to the US has been a priority of the federal government in recent years (especially for anything related to the military), and SkyWater is a DMEA-accredited Category 1A Trusted Foundry. In plain English, they meet the standards of the DOD (now Department of War I guess) to manufacture chips for systems regarding national security.