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SkyWater Technology files $350M mixed securities shelf

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  Published in Science and Technology on Sunday, October 5th 2025 at 7:28 GMT by Seeking Alpha
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SkyWater Technology Files a $350 Million Mixed‑Securities Shelf Offering

By a Research Journalist – October 2025

In a bid to bolster its expansion plans and keep pace with the rapidly‑evolving semiconductor ecosystem, SkyWater Technology Corp. (NASDAQ: SKYW) announced on Friday that it has filed a Form 8‑K with the U.S. Securities and Exchange Commission (SEC) detailing a $350 million mixed‑securities shelf offering. The filing, posted on Seeking Alpha and mirrored in the company’s own press release, outlines the terms of the offering, the underwriters involved, and the strategic uses of the proceeds.

What’s on the Shelf?

The offering is a mixed‑securities package that will allow SkyWater to issue both common equity and senior secured convertible notes over a 12‑month period. In total, the company can sell:

However, the $350 million figure cited in the news article refers to the net proceeds the company expects to receive after underwriting discounts, commissions, and other transaction costs. The company is expected to price the shares and notes at roughly 10 % below the closing price on the day before the filing, a common practice in shelf offerings to gauge investor appetite.

The equity portion will be sold at $22.50 per share – a modest 10‑percent discount to the $24.50 closing price on the day before the filing – and the convertible notes will carry a 5.5 % annual coupon with a maturity of 2026 (subject to the underwriters’ pricing). The notes are senior secured with a priority claim over the company’s assets, and they can be converted into common shares at an $20.00 per share conversion price after the first 12 months, offering holders upside potential should SkyWater’s valuation rise.

The Strategic Rationale

SkyWater, founded in 2017, is the first U.S. semiconductor fabrication plant that was entirely conceived and built by the United States. Its flagship 14 nm fabrication line in Utah has grown into a key partner for industry giants such as NVIDIA, AMD, and Micron. The company’s revenue in the 2024 fiscal year totaled $2.9 billion, with a net income of $110 million – a modest but steady growth trajectory that underscores the capital intensity of the business.

In the 8‑K filing, SkyWater’s CEO, Tom McCarthy, stated that the primary use of proceeds will be:

1. Expansion of the existing Fab 1 – adding an extra 10 000 mm² of wafer‑size capacity to accelerate production of advanced 28 nm and 14 nm logic devices.
2. Development of a new 7 nm high‑performance cluster – a critical step to meet demand from next‑generation GPUs and AI accelerators.
3. Strategic acquisitions – the company is actively exploring the acquisition of smaller fabs or equipment suppliers that can complement its existing capabilities.
4. General corporate purposes – including working capital, debt refinancing, and potential research‑and‑development investments.

The 8‑K also notes that the company intends to use the equity portion to de‑leverage its balance sheet, while the convertible notes will offer a lower‑cost, interest‑bearing alternative that could be more attractive to institutional investors who seek upside exposure without immediate dilution.

Underwriters and Pricing

SkyWater has engaged Morgan Stanley, Goldman Sachs, and Citigroup as the lead underwriters for this offering. The securities purchase agreement, dated the same day as the filing, commits the underwriters to sell the entire amount of shares and notes if the price can be set above $22.30 per share and above $29 000 per note. The firm has also retained Bank of America Merrill Lynch as a co‑underwriter.

“Given the robust demand for U.S.‑manufactured chips and the company’s strong partnership pipeline, we believe the market will respond positively to this shelf offering,” McCarthy told a conference call. “The mixed‑security structure allows us to tailor our financing to the needs of different investor classes while maintaining flexibility.”

Under SEC Rule 144A, the offering is exempt from registration for institutional buyers, but it will also be publicly registered under Form S‑3 for retail investors. The offering is set to close once the underwriters determine that sufficient demand has been generated, potentially as early as October 12, 2025.

Market Reaction and Analyst Outlook

On the day of the filing, SkyWater’s shares closed at $23.85 – a 0.7 % rise from the previous close. The 8‑K announced that the company anticipates a “strong investor response” given the favorable pricing and the strategic timing.

Analysts have offered a range of opinions. Bloomberg’s Semiconductor Group noted that the company’s expansion plans align well with the U.S. government’s push for domestic semiconductor manufacturing, but cautioned that the capital intensity of the fab’s next‑step upgrades could pressure margins in the short term. Meanwhile, Moody’s highlighted that the conversion feature could provide a “buffer against dilution” if SkyWater’s valuation surges in the coming months.

Key Takeaways for Investors

1. Hybrid Financing: The mixed‑security structure offers a blend of equity and convertible debt, giving SkyWater flexibility and investors a range of options.
2. Capital Allocation: The bulk of proceeds will fund expansion of Fab 1 and the development of a 7 nm cluster, crucial for maintaining competitiveness in the high‑performance computing segment.
3. Strategic Timing: The offering comes as the semiconductor market is experiencing a post‑pandemic surge in demand for GPUs, AI chips, and edge‑computing devices.
4. Risk Factors: The conversion feature could dilute existing shareholders if exercised, and the company’s reliance on a single fab location may expose it to operational risks.

SkyWater’s $350 million shelf offering is more than a simple fundraising round; it’s a signal that the company is positioning itself to lead the next wave of U.S. semiconductor innovation. Investors should monitor the underwriters’ pricing decisions, the pace of demand, and the company’s execution on the planned expansion to gauge the true value of this offering.