SkyWater Technology (SKYT) Eyes Upside as Semiconductor Demand Resurges

SkyWater Technology (SKYT) is emerging as a focal point in the U.S. semiconductor revival, with a growing bull case anchored in tangible infrastructure and government support. The company operates a 200mm fabrication facility in Michigan and has received over $200 million in funding from the CHIPS and Science Act, positioning it as a key player in domestic semiconductor production. This investment supports a planned expansion to increase capacity by 30% by mid-2026, targeting high-reliability chips for aerospace, defense, and industrial applications. The company’s financial performance reflects early progress: revenue grew 18% year-over-year in Q4 2025, reaching $112 million, driven by demand from U.S. government contracts and partnerships with defense contractors. Gross margins improved to 34%, up from 29% in the prior year, signaling operational efficiency gains. These figures contrast with broader industry trends, where many pure-play foundries face margin pressure, highlighting SkyWater’s niche advantage. Market sentiment is shifting, with SKYT’s market cap reaching $1.8 billion as of February 28, 2026, up 45% from the previous 12 months. Analysts note that the stock remains undervalued relative to peers in the specialty semiconductor space, with a price-to-sales ratio of 2.1—below the sector median of 2.7. Institutional ownership has increased to 58% in Q1 2026, suggesting growing confidence among long-term investors. The broader implications extend beyond SKYT. As a domestic foundry with government backing, its success could accelerate the reshoring of critical chip production, reducing reliance on foreign supply chains. This dynamic is particularly relevant given recent regulatory shifts favoring U.S.-based manufacturing and increasing defense spending on advanced electronics.