A U.S.-based pure-play semiconductor foundry, SkyWater makes chips that other companies design, running wafer factories in Minnesota and Austin that serve aerospace, defense, and quantum-computing customers. It was founded in 2017 when the firm Oxbow Industries bought a Minnesota fab from Cypress Semiconductor, a facility tracing back to a 1991 spinoff from Control Data. SkyWater has also helped fabricate qubits for quantum computers, and in 2026 agreed to be acquired by the quantum firm IonQ.
Fab 25 acquisition doubles revenue but legacy A&D work drops $20.5M on government stop-work orders.
The Fab 25 acquisition reshaped the quarter, but the legacy business lost ground in aerospace and defense. rose 165% to $156.4 million and widened 4.1 points to 22.5%, driven entirely by $87.4 million in wafer services from the acquired Austin fab, while legacy ATS development revenue grew 20% on a $30 million increase in advanced compute that was partly offset by a $20.5 million decline in A&D. The company is now a larger, more leveraged entity with a pending acquisition by IonQ hanging over it.
Key takeaways
rose 165% to $156.4 million, almost entirely because the newly acquired SkyWater Texas (Fab 25) contributed $87.4 million in wafer services revenue.
Legacy SkyWater ATS development grew 20% to $63.2 million, as a $30.0 million increase in advanced compute programs was partially offset by a $20.5 million decline in aerospace and defense, which management attributed to government program stop-work orders.
widened 4.1 points to 22.5%, aided by the higher-margin Fab 25 contribution and lower supplier pricing in the legacy .
Section summaries
Management's Discussion and Analysis
Revenue surged 165% to $156.4M in Q2 2026, driven by the Fab 25 acquisition, while net loss narrowed 42% to $5.2M.
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Consolidated Q2 2026 rose 165% to $156.4M, primarily from $87.4M in Wafer Services contributed by the newly acquired SkyWater Texas (Fab 25) .
SG&A expense nearly doubled to $27.6 million, including $5.5 million in Fab 25 operating costs, $2.5 million in legal costs, and $1.1 million in contract breakage fees tied to the pending IonQ acquisition.
rose 331% to $7.0 million due to higher borrowings under the expanded , which carried $192.3 million drawn at 8.0%, and a new $36.0 million tool financing loan.
was a $14.3 million outflow, down from a $54.3 million inflow a year ago, as a $24.2 million decrease in reflected the recognition of previously billed tool and ATS without a comparable new prepayment.
What changed
The delayed aerospace and defense contracts flagged in prior quarters did not resume; instead, A&D ATS development fell a further $20.5 million due to government program stop-work orders, deepening the decline from the $9.3 million drop reported in Q2 2025.
The large customer prepayment that boosted in the first half of 2025 did not recur, and fell $24.2 million as that was recognized, swinging operating cash flow to a $14.3 million outflow.
Legacy SkyWater , which fell to 18% in Q1 2026 on tool-related losses and Florida facility startup costs, showed improvement this quarter as lower supplier pricing provided a partial offset, though the exact legacy margin was not separately reported.
The IonQ merger, announced in January 2026, remains pending and now carries visible costs: $2.5 million in legal costs and $1.1 million in contract breakage fees hit SG&A this quarter.
What to watch
Whether the $20.5 million decline in aerospace and defense ATS development represents a permanent reset from government stop-work orders, or whether those programs resume in the second half of 2026.
The trajectory of , with $192.3 million drawn on the at 8.0% and a new $36.0 million tool financing loan; a 100-basis-point rate increase would add $1.9 million annually.
Whether the IonQ merger closes as proposed, and on what terms, given the $51.6 million termination fee if the deal fails and the company's cash position of $12.6 million at quarter-end.
Whether the $12.5 million Oxbow support letter, which expired in March 2026, has been extended or replaced, given only $12.6 million in cash and the increased debt load.
Legacy SkyWater ATS development grew 20% to $63.2M, driven by a $30.0M increase in advanced compute, partially offset by a $20.5M decline in aerospace and defense due to government program stop-work orders.
increased 223% to $35.2M, with improving from 18% to 23%, aided by the Fab 25 contribution and lower supplier pricing in the Legacy .
SG&A expense nearly doubled to $27.6M, including $5.5M from Fab 25, $2.5M in legal costs, and $1.1M in contract breakage fees related to the pending IonQ acquisition.
rose 331% to $7.0M due to higher borrowings under the expanded and a new $36.0M tool financing loan.
fell to $13.6M from $54.3M, largely due to a $24.2M decrease in as previously billed tool and ATS was recognized.
Quantitative and Qualitative Disclosures About Market Risk
Market risk is the risk of loss arising from adverse changes in market rates and prices. as of June 28, 2026, our market risks relate to potential changes in the fair value of our debt due to fluctuations in applicable market interest rates. In the future, our market risk exposu…
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Market risk is the risk of loss arising from adverse changes in market rates and prices. as of June 28, 2026, our market risks relate to potential changes in the fair value of our debt due to fluctuations in applicable market interest rates. In the future, our market risk exposure generally will be limited to those risks that arise in the normal course of business, as we do not engage in speculative, non-operating transactions, nor do we utilize financial instruments or derivative instruments for trading purposes.
Credit Risk
Financial instruments that potentially subject us to credit risk are cash and cash equivalents, accounts receivable, and contract assets. Cash balances are maintained in financial institutions, which at times exceed federally insured limits. We monitor the financial condition of the financial institutions in which our accounts are maintained and have not experienced any losses in such accounts. We perform ongoing credit evaluations as to the financial condition of our customers with respect to trade receivables and contract assets. Generally, no collateral is required as a condition of sale. Our consideration of the need for an allowance for credit losses is based upon current market conditions and other factors.
Interest Rate Risk
At June 28, 2026, the outstanding balance of our Revolver was $192.3 million, which bore interest at a variable rate. At June 28, 2026, the rate in effect was 8.0%. Based on the outstanding balance of our Revolver at June 28, 2026, a 100 basis point increase in the interest rate would have increased interest expense by $1.9 million annually.
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We are not presently a party to any litigation the outcome of which, we believe, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, cash flows or financial condition.
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We are not presently a party to any litigation the outcome of which, we believe, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, cash flows or financial condition.
This Quarterly Report on Form 10-Q should be read in conjunction with the risk factors included in Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 28, 2025. There have been no material changes to the risk factors disclosed under the heading…
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This Quarterly Report on Form 10-Q should be read in conjunction with the risk factors included in Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 28, 2025. There have been no material changes to the risk factors disclosed under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 28, 2025.