It’s no secret that supply chain problems and significant dependence on foreign supplies have put pressure on the American semiconductor industry. It’s also no secret that the United States aims to increase its local supply of semiconductors while reducing its reliance on foreign sources. In order to achieve this, SkyWater Technology, a U.S.-based company (NASDAQ:SKYT), has been collaborating with a variety of businesses to create solutions that will contribute to the expansion of the U.S. semiconductor sector.
The company’s distinctive business strategy does help to reduce some of the risk that many of its competitors experience in the industry, but the market as a whole doesn’t appear to completely get the what and why of it.
In this post, we’ll examine how the business sets itself apart and how it affects SKYT’s performance.
How SKYT sets itself apart
The narrative of SkyWater will continue to be the expansion of its Advanced Technology Services [ATS], which offers substantially greater margins and will be the engine to profitability in the future, despite the fact that SKYT’s Wafer Services dramatically improved year over year.
In its ATS business, SKYT is unusual in that it makes money off of its partners’ R&D expenses. SKYT often forms teams with its clients and uses their experience to look for methods to increase productivity and reduce expenses.
The business has found success with this approach, as revenue from the unit eclipsed that of its Wafer Services division in the third quarter, despite the latter is strong 36 percent year-over-year growth. On the other side, ATS had revenue growth of 57% during the same period, up 18% sequentially.
In the third quarter, ATS generated $52 million in revenue overall, of which $35.2 million came from ATS, up 57 percent year over year. Wafers generated $17.2 million in revenue, up 36 percent year over year but down somewhat sequentially. Even if Wafers keep expanding, its ATS sector should keep increasing its share of overall sales in the future.
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