SkyWater Technology: Accelerating Growth in Advanced Technology Services
2023-08-10
SkyWater, a semiconductor company, held its earning call meeting to discuss its focus on accelerating growth in Advanced Technology Services (ATS) while maintaining wafer services output. The CEO, Tom Sonderman, expressed confidence in the company's ability to achieve long-term growth and profitability objectives.
During the meeting, the company highlighted its efforts to bring in modernized capabilities such as automation, software, and new metrology capabilities to improve efficiency. This indicates that SkyWater is actively investing in technology and innovation to streamline operations and reduce costs. The company aims to increase the percentage of activities they run inside their fab, which suggests a desire for more control over manufacturing processes and increased value for customers.
To capture efficiencies and institutionalize business processes, SkyWater is running multiple programs in parallel. This proactive approach demonstrates their commitment to optimizing operations and ensuring long-term sustainability. By positioning themselves for the next upcycle in semiconductors, the company aims to capitalize on the expected increase in demand and drive growth. However, they also emphasize the importance of building a strong foundation for sustained success, rather than relying solely on the upcycle.
The company's focus on efficiency gains and business transformation reflects their commitment to continuous improvement and adaptability in the dynamic semiconductor industry. By investing in modernized capabilities, increasing in-house manufacturing activities, and capturing efficiencies, SkyWater aims to enhance competitiveness and capture momentum in the market.
SkyWater Technology has reported strong financial results, with record-breaking quarterly revenues and consistent gross margin performance. Their growth rate over the previous 12-month period stands at an impressive 50%. The company's momentum in multiple ATS programs indicates growing demand from customers. Overall, SkyWater Technology is expected to continue its growth and maintain positive financial performance in the market.
The key drivers of the business are the growth and demand for their ATS services, particularly their DOD programs. The company is prioritizing the expansion of ATS to take advantage of the recovery in the semiconductor industry and scale the volume portion of the business. They also aim to maintain a consistent level of wafer services output while focusing on the growth of ATS.
Looking ahead, SkyWater expects sequential revenue growth in the upcoming quarter (Q4). Research and development expenses are projected to remain in the range of $2.2 million to $2.5 million per quarter, excluding stock-based compensation. Ongoing selling, general, and administrative expenses are expected to be in the range of $11 million to $12 million per quarter, excluding stock-based compensation. The company also anticipates incurring third-party consulting fees in the range of $2.5 million to $4 million specifically for the third quarter (Q3). Depreciation and amortization expenses are estimated to range between $7.2 million and $7.5 million per quarter until the first quarter of 2024.
Despite a soft market for semiconductors, SkyWater has made progress on its strategic initiatives, particularly in its ATS division and DOD programs. The company has maintained consistent output in wafer services and is investing with outside help to capitalize on opportunities. The CEO remains confident in the company's ability to execute towards long-term growth and profitability objectives, building confidence in its performance.
The participants of the call included Claire McAdams - Investor Relations, Tom Sonderman - President and Chief Executive Officer, Steve Manko - Chief Financial Officer, an unknown speaker from TD Cowen - Analyst, Nick Doyle from Needham and Company - Analyst, Natalia Winkler from Jefferies - Analyst, and Richard Shannon from Craig-Hallum Capital Group - Analyst.
In conclusion, the earning call meeting showcased SkyWater's commitment to accelerating growth in ATS services while maintaining wafer services output. The company's focus on efficiency gains, business transformation, and investment in modernized capabilities positions them for success in the dynamic semiconductor industry. With strong financial results and growing demand for their ATS services, SkyWater Technology is poised for continued growth and positive financial performance in the market.