SkyWater Technology, Inc. (SKYT): what the price requires
At today's price, SkyWater Technology, Inc. (SKYT) is priced for 7.9% operating margins for ~22 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-11 · Source: https://boothcheck.com/report/SKYT
Headline
| Field | Value |
|---|---|
| Ticker | SKYT |
| Company | SkyWater Technology, Inc. |
| Sector / Industry | Technology |
| Current price | $32.52/sh |
| Composition | ATS development 48% / Tools 7% / Wafer Services - Legacy SkyWater 6% / Wafer Services - SkyWater Texas 40% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | revenue-multiple |
| EV / sales paid | 4.2x |
| Steady-state operating margin assumed | 7.9% |
| Must persist for | 22.0y |
The company earns no operating profit yet; the inversion runs on the revenue multiple and an assumed steady-state margin.
Solve inputs: computed at a 14% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~3.2 years.
Reconcile: at the x-ray's 9.3% required return this reads ~10.4 years; the models below use their own rates.
How unusual the bet is: elevated
| Reference | Value |
|---|---|
| vs own history | -0.15σ |
| sustained it ~10 years at this level | 15% |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by asset-based and earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.03x | 4 | expensive |
| Earnings | 0.86x | 2 | justifies |
| Relative | 0.83x | 5 | justifies |
| Growth | 0.69x | 1 | justifies |
Families that justify the price: Asset, Earnings, Relative, Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.4%); the inversion above states its own rate.
Per-Model Detail (n=12)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $0.00 | — | no | Negative/zero FCF — equity value floored at $0 |
| DCF Exit Multiple | Growth | $0.00 | — | no | Negative/zero FCF or EBITDA — equity value floored at $0 |
| Relative Valuation | Relative | $39.10 | 0.83x | yes | P/E 22x (sector median), scenarios: 17.6x / 22.0x / 26.4x (bear / base = sector held flat / bull), EV/EBITDA 24.01x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $25.26 | 1.29x | yes | BV/sh $3.69, ROE (TTM) 63.2%, ke 9.3% |
| Two-Stage Excess Return | Asset | $92.38 | 0.35x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $47.19 | 0.69x | yes | Rev $0.5B, growth 30% (input: historical growth; tapered), Terminal P/S: 2.3x / 2.9x / 3.5x (bear / base = today's held flat / bull, cap 12x) |
| Peter Lynch Fair Value | Relative | $28.08 | 1.16x | yes | EPS $2.34, growth 2% (input: historical EPS growth), PEG=6.96 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | — | — | no | — |
| Residual Income | Asset | $41.62 | 0.78x | yes | BV $3.69 + 5yr PV of (ROE (TTM) 63.2% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $13.95 | 2.33x | yes | √(22.5 × EPS $2.34 × BVPS $3.69) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $9.78 | 3.33x | yes | EBITDA $0.04B × sector EV/EBITDA 16.0x |
| FCF Yield | Earnings | — | — | no | — |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | $75.50 | 0.43x | yes | EPS $2.34 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | $55.51 | 0.59x | yes | Revenue $0.54B × sector P/S 5.0x |
| PEG Fair Value | Relative | $87.75 | 0.37x | yes | EPS $2.34 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $25.30 | 1.29x | yes | EPS $2.34 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $216.1m |
| Interest coverage | -0.2x |
| Share count CAGR (dilution) | 5.2% |
| Burning cash | yes |
Operating profit is negative or near zero and the company has no demonstrated through-cycle (mid-cycle) operating margin to normalize against, so years-to-repay cannot be computed honestly.
| Operating income basis | Trailing value |
|---|---|
| Inversion record (pg-bars) | $34.0m |
| EDGAR quarterly TTM | -$3.8m |
| Divergence | 986.5% |
The inversion header prices the record basis trailing operating income; this strip reads the EDGAR quarterly TTM, and the two diverge by more than 10 percent here. Treat them as different measurement bases, both labeled, neither silently substituted.
Bullet Takeaways
- SkyWater is a US pure-play foundry that scaled revenue to $160.7 million in the March quarter (nearly triple a year earlier) on the Fab 25 acquisition from Infineon, whose supply agreement made Infineon 43% of fiscal 2025 revenue per the 10-K (accession 0001819974-26-000009), and it is under a signed $35.00 per-share cash-and-stock acquisition by IonQ.
- The biggest risk is the deal: the FTC issued a Second Request in April 2026, and a break would reprice the stock on standalone economics of cash burn, about $216 million of net debt, and trailing profits that rest on a one-time $111.7 million accounting gain rather than operating income.
- Watch FTC compliance milestones and the stated Q2-Q3 2026 closing window, plus IonQ's share price, since $20.00 of the $35.00 consideration is IonQ stock inside a collar.
Bull Case
SkyWater is a growth-stage business, and every number it prints should be read that way: revenue is scaling fast, profits are still in the investment phase, and the balance sheet is carrying the build-out. The March quarter made the scaling visible. Revenue nearly tripled to $160.7 million, with $86.3 million coming from the newly acquired SkyWater Texas fab. The Fab 25 purchase from Infineon closed June 30, 2025 for roughly $93 million and came bundled with a multi-year supply agreement; the 10-K states that "the bargain purchase gain resulted from Infineon's strategic decision to divest Fab 25 in exchange for the favorable wafer production pricing included in the Supply Agreement" (FY2025 10-K, accession 0001819974-26-000009). In plain terms, SkyWater bought a running 200mm fab below its accounting value because the seller wanted guaranteed output, and that guarantee now anchors the revenue base: "Infineon accounted for 43% and 7% of our revenue for fiscal years ended December 28, 2025 and December 29, 2024, respectively" (accession 0001819974-26-000009).
The underlying business model is rarer than the foundry label suggests. SkyWater is a US-owned, US-based pure-play foundry whose development arm lets customers build new chip technology inside a production environment, "enabling customers to co-develop technology directly with the foundry while addressing manufacturability, yield, and scalability early in the development" (accession 0001819974-26-000009). That model feeds a defense and secure-supply niche the big offshore foundries cannot serve; the filing describes the company as "a neutral manufacturing partner for secure programs that require technical rigor and supply chain integrity" (accession 0001819974-26-000009). Domestic reshoring policy and government demand for onshore capacity run directly through this positioning, and the quantum-computing work in the development pipeline is what drew the eventual acquirer.
Which is the third leg of the bull case: IonQ agreed in January 2026 to buy SkyWater for $35.00 per share in cash and stock ($15.00 cash plus $20.00 in IonQ shares, subject to a collar), an equity value near $1.8 billion. At $32.52 (July 2026) the stock trades below the headline deal value, so a holder today is being paid to wait on a transaction both boards have signed and SkyWater shareholders were asked to approve at a May 8 special meeting. If the deal closes on its stated Q2-Q3 2026 timeline, the return is the spread plus the IonQ stock component; if it breaks, the holder still owns the domestic foundry whose strategic scarcity attracted a buyer in the first place.
Bear Case
The single variable with the most leverage on this stock is a regulator, not a customer. On April 24, 2026 the Federal Trade Commission issued a Second Request on the IonQ merger, extending the antitrust waiting period until 30 days after both companies substantially comply. Second Requests add months of uncertainty, and the stock's current price embeds a nearly completed deal: at $32.52 against a $35.00 headline that is part cash, part IonQ stock inside a collar, the market is pricing high odds of close. A deal break would leave the stock trading on standalone fundamentals, and the standalone fundamentals are the problem.
Strip out the deal and the trailing profits, and what remains is a business still burning cash with a newly leveraged balance sheet. The trailing earnings that make SkyWater look profitable rest on a one-time accounting gain: the Fab 25 purchase produced a bargain purchase gain of $111.7 million (accession 0001819974-26-000009), which flows through net income without a dollar of operating profit behind it. On the EDGAR quarterly tally, trailing operating income is slightly negative, the March quarter's net loss widened to $12.3 million from $7.3 million a year earlier, and the company carries about $216 million of net debt against roughly $22 million of liquid assets. The debt is new and the filing is candid about it, warning that the loan agreement borrowings "materially increased our indebtedness" and carry covenants that "limit or restrict our ability to: merge with another entity; acquire assets; enter into transactions outside the ordinary course; sell assets; make loans or investments; incur indebtedness; create liens" (accession 0001819974-26-000009). Share count has also grown about 5% a year over the past four years, so the equity base is diluting while the business burns.
The concentration risk compounds the leverage risk. Infineon alone was 43% of fiscal 2025 revenue, and the 10-K's own risk language notes that "Our customers may cancel their orders, change production quantities, or delay production, and if we fail to forecast demand accurately, we may incur supply shortages or lose revenue" (accession 0001819974-26-000009). Meanwhile the price, read against sales at about 4.2 times revenue, assumes the business eventually earns operating margins near 8% and grows at the fastest pace it can self-fund for a very long horizon; historically only about 15% of comparable fast-growers sustained that kind of pace even ten years. Without the deal, the bet is a levered, cash-burning, customer-concentrated fab roll-up priced for decades of execution. The bear case is simply that the FTC turns the deal price back into that standalone price.
Valuation
Today's price has two possible owners, and the arithmetic differs for each. For the merger investor, $32.52 (July 2026) sits below the $35.00 per-share headline of the IonQ agreement, which pays $15.00 in cash and $20.00 in IonQ stock subject to a collar; the discount reflects time and the FTC's Second Request, and the stock component means the realized value floats with IonQ's shares inside the collar band. For the fundamental investor, the price is a claim on the business itself, and that claim is demanding: trailing operating profit sits below the steady-state level the price assumes, so the price reads against sales at about 4.2 times revenue, which embeds an eventual operating margin around 8% and revenue growth held near the company's self-funding ceiling for on the order of two decades. Only about 15% of comparable fast-growers sustained that pace even ten years.
The method families look supportive on the surface, and the surface needs decomposing. Peer multiples and sales-based reads land above the price, and the earnings-based approaches nearly reach it. But the trailing earnings those methods capitalize include the $111.7 million bargain purchase gain from the Fab 25 acquisition (accession 0001819974-26-000009), an accounting recognition of buying the fab below book value, not operating profit. Two measurement bases coexist here and should be named once: the pricing framework carries trailing operating income of about $34 million on its record basis, while the EDGAR quarterly TTM reads slightly negative at about negative $4 million; the gap is mostly the acquisition's accounting effects landing in different buckets. Read on cash economics rather than reported net income, the business does not yet earn its cost of capital, and the sales-multiple lens above is the honest one. Revenue itself, at least, is filing-sourced and real: the 10-K reports Infineon at 43% of fiscal 2025 revenue under the supply agreement (accession 0001819974-26-000009), and the March quarter ran $160.7 million.
Solvency is where the standalone case tightens. Net debt of about $216 million, liquid assets near $22 million, ongoing cash burn, and interest expense the current operations do not cover mean the balance sheet is financing the scale-up on faith in the Fab 25 ramp and, implicitly, on the deal closing. Share count rising about 5% a year adds a second cost of waiting. The decisive fact at today's price: this is a stock trading within sight of a signed acquisition price, and nearly everything below that price depends on whether the acquisition arrives.
Catalysts
The calendar on this stock is the merger's calendar. IonQ agreed on January 25, 2026 to acquire SkyWater at $35.00 per share, split $15.00 in cash and $20.00 in IonQ common stock subject to a collar, roughly $1.8 billion of equity value. SkyWater's board unanimously recommended the deal and put it to a special shareholder meeting on May 8, 2026. The complication arrived April 24, 2026, when both companies received a Second Request from the FTC, which extends the antitrust waiting period until 30 days after substantial compliance. The companies have maintained their expectation of closing in the second or third quarter of 2026, which makes the next few months the decisive window: substantial compliance, waiting-period expiry, and close, or an extended fight that widens the discount.
Under the deal clock, the operating story still moves. The March quarter tripled revenue to $160.7 million on the first full quarters of SkyWater Texas, while the net loss widened to $12.3 million from $7.3 million a year earlier on higher interest expense and operating costs. Fab 25's contribution has run ahead of the company's original expectations, with $175.6 million of revenue recorded in the second half of fiscal 2025. The next quarterly report, on the usual August cadence, shows whether the Texas ramp is holding and how fast the cash burn narrows; if the merger closes first, that print may arrive under IonQ's roof.
Two prices to watch rather than one: SkyWater's own, for the discount to deal terms, and IonQ's, because $20.00 of the consideration is stock whose delivered value moves inside the collar. A sharp fall in IonQ shares compresses what SkyWater holders actually receive; a rise does the opposite. For a holder, the practical catalysts in order are FTC substantial compliance, any FTC action or settlement terms, and the closing itself within the guided Q2-Q3 2026 window.
Peer Cohorts (Per Segment, With Filing Citations)
Legacy SkyWater / SkyWater Texas (reported)
- TSEM (TOWER SEMICONDUCTOR LTD.)
- (no filing in the citation store)
- UMC (United Microelectronics Corporation)
- FY2025 20-F: …sustainable volume levels. Maintain Scale and Capacity Capabilities to Meet Customer Requirements, with a Focus on 12-inch Wafer Facilities for Future Expansion . We believe that maintaining our foundry capacity with advanced technology and facilities is critical to maintaining our industry leadership. Our production…
- FY2025 20-F: …designs have created new markets in 5G communications, AIoT and automotive applications, as well as increased silicon content per device. We collaborate closely with our customers as well as partners throughout the entire supply chain, including equipment, electronic design automation tool and IP vendors, to work…
- GFS (GLOBALFOUNDRIES Inc.)
- (no filing in the citation store)
- AMKR (AMKOR TECHNOLOGY, INC.)
- FY2025 10-K: …Receipt. The terms of the purchase agreement from our Nanium acquisition in May 2017 required us to remit any insolvency payments received to the selling shareholders, less certain costs, including tax costs, incurred by us. In 2025, we remitted $ 40.4 million to the selling shareholders. Such amounts were recorded…
- FY2025 10-K: …0001047127 2025 FY FALSE TRUE FALSE http://fasb.org/us-gaap/2025#OtherAssetsCurrent http://fasb.org/us-gaap/2025#OtherAssetsNoncurrent http://fasb.org/us-gaap/2025#OtherAssetsNoncurrent http://fasb.org/us-gaap/2025#OtherLiabilitiesNoncurrent http://fasb.org/us-gaap/2025#OtherLiabilitiesNoncurrent…
- ASX (ASE Technology Holding Co., Ltd.)
- FY2025 20-F: …asx:MainBuildingsMember ifrs-full:TopOfRangeMember 2025-01-01 2025-12-31 0001122411 asx:BuildingsAndImprovementsMember asx:CleanRoomsMember ifrs-full:BottomOfRangeMember 2025-01-01 2025-12-31 0001122411 asx:BuildingsAndImprovementsMember asx:CleanRoomsMember ifrs-full:TopOfRangeMember 2025-01-01 2025-12-31 0001122411…
- FY2025 20-F: …2025-01-01 2025-12-31 0001122411 asx:USISHOptionPlansMember 2025-01-01 2025-12-31 0001122411 asx:AmpiMember 2025-01-01 2025-12-31 0001122411 asx:UsishEmployeeStockOwnershipPlanRestrictedSharesTwoThousandAndTwentyFourMember asx:TrinomialTreeModelMember 2025-01-01 2025-12-31 0001122411 asx:OperatingCostsMember…
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Q1 FY2026 10-Q, May 2026 · merger agreement announcement, January 26, 2026 · merger proxy materials, April 2026 · SKYT 8-K, April 24, 2026 · company merger communications, May-June 2026 · company disclosures on Fab 25 results, 2026