Skywater Technology Inc (SKYT)

Skywater Technology Inc.: A Comprehensive Overview

Company Profile:

Detailed history and background:

Founded in 1999, Skywater Technology Inc. (NASDAQ: SKYT) is a leading developer and manufacturer of silicon carbide and gallium nitride semiconductors and advanced packaging solutions. The company has a rich history of innovation, pioneering the production of silicon carbide wafers in the US. Skywater's facilities are primarily in Bloomington, Minnesota (headquarters) and Chandler, Arizona, with operations in the United States and Asia.

Core business areas:

• Silicon Carbide (SiC): Production and development of SiC substrates, epitaxy, devices, and modules for power electronics applications such as electric vehicles, solar inverters, and industrial drives.
• Gallium Nitride (GaN): Manufacturing of GaN-on-silicon wafers and devices used in power amplifiers for wireless infrastructure.
• Advanced Packaging Solutions: Expertise in heterogeneous integration services, providing customized solutions that combine different types of semiconductors and technologies.

Leadership and corporate structure:

• Thomas M. Sonderman: President & CEO
• Mark D. Edelstone: Chief Financial Officer and Principal Accounting Officer
• Arif M. Khan: Chief Technology Officer
• Kevin Callahan: Senior Vice President, Business Development and Corporate Relations
• Board of Directors: Experienced individuals representing diverse expertise in technology, finance, and law.

Top Products and Market Share:

Top Products:

• SiC Materials & Devices: 6-inch SiC substrates are the core product, offered with various surface qualities and dopant types. The company also develops SiC power and RF devices.
• GaN-on-Silicon: 4-inch and 6-inch GaN-on-Silicon wafers for power amplifier applications, especially 5G mobile infrastructure.
• Heterogeneous Integrated Modules: Customized packaging solutions with high performance and miniaturization, targeting diverse applications.

Market Share:

Global: Skywater has a small share (<2%) of the total silicon carbide wafer market dominated by Wolfspeed and Cree respectively. However, the market for specific SiC products and applications has the potential for higher share growth. The company has a dominant position in thin wafer applications. US: In the US silicon carbide wafer segment, Skywater holds an estimated share of 20-25%, positioning itself as the clear competitor to Wolfspeed's dominant share.

Total Addressable Market:

The global market for SiC wafers, devices, and modules is projected to reach USD 3.3 billion by 2026, growing at a CAGR of 20%. The total addressable market for GaN-on-Silicon wafers and power electronics is also substantial, expected to reach **over **US$5 billion within the next five years. The market share within these segments, including the potential for specific product applications and strategic alliances, defines a significant potential addressable market for Skywater.

Financial Performance:

Financial Statements (Recent): Skywater's revenue growth has been impressive. In Q3 FY2023, they reported revenue of US$125M, up 482% YoY. However, the company remains unprofitable due to ongoing research and development investments in new technologies like GaN and heterogeneous integrations. The company also reported significant cash flows from operations in Q3.

Financial Comparison: Revenue has consistently grown year-over-year, demonstrating rising sales and order intake. Net income remains negative but is steadily improving as the company scales and increases efficiency.

Cash Flow & Balance Sheet: Cash and equivalents remain healthy at US$129M in Q3 FY2023. Operating activities generated significant cash, indicating efficient operational processes. Debt levels are low, indicating strong fiscal standing.

Dividends and Shareholder Returns:

The company currently does not pay out dividends as it reinvests profits into development and growth strategies. The total shareh