SkyWater to Acquire Infineon’s Austin Fab and Establish Strategic Partnership to Expand U.S. Foundry Capacity for Foundational Chips

Rhea-AI Summary

SkyWater Technology (SKYT) has agreed to acquire Infineon Technologies' 200mm fab (Fab 25) in Austin, Texas, along with establishing a long-term supply agreement. The facility will operate as a foundry, producing critical chips for industrial, automotive, and defense applications on 130nm to 65nm nodes.

The acquisition will significantly expand SkyWater's foundry capabilities, adding 65nm infrastructure, enhanced copper processing, and high-voltage BCD technology. The deal includes transferring nearly 1,000 Fab 25 employees to SkyWater and maintains Infineon's strong U.S. manufacturing presence.

The facility currently produces up to one billion semiconductor chips annually. This strategic partnership aims to strengthen the U.S. domestic semiconductor supply chain and enhance manufacturing capacity for foundational chips. The transaction, pending regulatory approval, will transition Fab 25's business model from Integrated Device Manufacturer (IDM) to foundry, serving a broader customer base.

Positive

• Acquisition adds 1 billion chip annual production capacity
• Gains advanced 65nm manufacturing capabilities
• Secures long-term supply agreement with Infineon
• Adds nearly 1,000 skilled employees
• Expands U.S. domestic semiconductor production capacity
• Strengthens position in defense and industrial markets

Negative

• Regulatory approval pending
• Complex transition from IDM to foundry model required
• Integration costs and risks with large-scale acquisition

Insights

Financial Analyst

SkyWater Technology's acquisition of Infineon's Austin-based Fab 25 represents a transformative expansion for the relatively small U.S. foundry (current market cap: $441M). This transaction significantly increases SkyWater's manufacturing scale and technological capabilities in several critical dimensions:

The acquisition brings valuable 65nm node technology to SkyWater's portfolio, advancing its technology roadmap beyond its current 90nm capabilities. This technology node remains in high demand for industrial, automotive and defense applications where reliability and longevity outweigh the benefits of cutting-edge processes.

The facility's production volume is substantial – currently manufacturing up to one billion semiconductor chips annually. This represents a step-change increase to SkyWater's revenue potential once the transition is complete, though integration will require careful execution.

The planned business model conversion from IDM to foundry operations aligns with broader semiconductor industry trends toward specialization. This transition will take time as SkyWater must develop customer relationships beyond Infineon while maintaining operational excellence during the changeover.

From Infineon's perspective, this strategic divestiture follows the industry pattern of IDMs outsourcing mature node manufacturing while maintaining access through supply agreements. The transaction allows Infineon to optimize its manufacturing footprint while ensuring continued U.S. production capability.

The timing aligns perfectly with increased government focus on domestic semiconductor manufacturing. As a Trusted supplier to the Department of Defense, SkyWater is well-positioned to leverage potential CHIPS Act funding for the planned facility expansions, potentially reducing the capital burden of this acquisition.

The most significant execution risk lies in SkyWater's ability to diversify the customer base beyond Infineon while maintaining operational efficiency during the transition. The company will need to demonstrate it can successfully integrate a facility with approximately 1,000 employees – nearly doubling its workforce – while expanding its market reach.

Semiconductor Industry Expert

This acquisition represents a strategic repositioning in the U.S. semiconductor manufacturing landscape, particularly for the mature technology nodes (130nm-65nm) that remain critical infrastructure for industrial, automotive, and defense applications. While these nodes aren't headline-grabbing like 3nm processes, they form the backbone of systems where reliability, longevity, and qualification cycles outweigh raw performance advantages.

The addition of 65nm capabilities to SkyWater's technology portfolio is particularly significant as it represents a meaningful advancement from their current 90nm platform. This node hits the sweet spot for many analog/mixed-signal applications and enables higher integration of digital functions alongside power management and sensor interfaces.

The high-voltage BCD technology acquisition is especially valuable, as these process technologies command premium pricing in the foundry market due to their specialized nature and high barriers to entry. BCD enables single-chip solutions for power management ICs, motor drivers, and automotive systems where handling different voltage domains efficiently is critical.

Converting an IDM fab to a foundry model presents significant technical challenges beyond simply changing ownership. SkyWater must develop standardized process design kits (PDKs), qualify third-party IP, implement multi-project wafer services, and build customer support infrastructure. This transition typically takes 12-18 months before reaching full operational capability as a foundry.

This acquisition positions SkyWater as a more substantial player in the U.S. foundry landscape, though still specialized compared to GlobalFoundries. The timing aligns perfectly with CHIPS Act funding priorities, which specifically target mature nodes that have seen capacity constraints. SkyWater's status as a U.S.-owned, DoD-trusted foundry makes it particularly well-positioned to receive government support for the planned expansions.

The semiconductor industry has seen significant reshoring efforts, but this transaction is unique in converting existing IDM capacity to foundry services rather than building new facilities. This approach dramatically accelerates time-to-market compared to greenfield construction, which typically requires 3+ years before production.

• Transaction strengthens U.S.-based production of essential chips for industrial, automotive and defense applications
• SkyWater plans to expand 200 mm capacity, technology offerings and capabilities while supporting U.S.-based dual-sourcing strategies in critical industries
• Long-term supply agreement ensures Infineon a continued high-volume manufacturing base in the U.S.

BLOOMINGTON, Minn. & MUNICH, Germany--(BUSINESS WIRE)-- SkyWater Technology (Nasdaq: SKYT) has entered into an agreement with Infineon Technologies AG (FSE: IFX / OTCQX: IFNNY) for SkyWater to purchase Infineon’s 200 mm fab in Austin, Texas (“Fab 25”) and a corresponding long-term supply agreement. SkyWater will operate the fab as a foundry, increasing available capacity in the U.S. for foundational chips on nodes from 130 nanometers down to 65 nanometers that are critical for many industrial, automotive and defense applications. Fab 25 will also substantially increase SkyWater’s scale as a foundry and provide additional capabilities such as 65 nm infrastructure, expanded copper processing scale and high-voltage Bipolar-CMOS-DMOS (BCD) technology. The long-term supply agreement will enable Infineon to maintain a strong, efficient and scalable manufacturing footprint in the United States.

Infineon and SkyWater believe that this strategic partnership will enhance the long-term viability and utilization of Fab 25. The transaction also affirms the long-term perspective for nearly 1,000 manufacturing jobs at Fab 25, since all current Fab 25 employees will become SkyWater employees as part of the agreement.

SkyWater is a U.S.-based company with access to a broad customer base and a Trusted supplier of the U.S. Department of Defense. SkyWater believes the transaction will allow it to realize significant economies of scale, bring high-value manufacturing services to SkyWater’s customers and support dual sourcing strategies for critical industries. Furthermore, SkyWater plans to transition the Fab 25 business model from Integrated Device Manufacturer (IDM) to foundry to bring substantial manufacturing capacity to a broad base of new customers over time. Foundational semiconductors are of strategic importance for several U.S. industries, including the defense sector. The partnership will strengthen the industrial base and domestic semiconductor supply chain in the U.S. as well as the resilience for critical foundational semiconductor technology. The closing of the transaction is subject to regulatory approval in the U.S. and is expected in the coming months.

"The transaction fully aligns with Infineon's manufacturing strategy to create synergies with strategic foundry partners when in-house manufacturing does not offer competitive advantages,” said Alexander Gorski, Executive Vice President and Head of Frontend Operations at Infineon. “The partnership with SkyWater creates mutual benefits and synergies, supports our profitable growth and provides us with a strong and trusted foundry partner, thereby safeguarding our long-term supply base in the U.S. We commend the contributions the Fab 25 team has made to our operations and thank the Austin community and our local and federal partners for their support and collaboration."

“This milestone expands our partnership with Infineon and significantly increases our U.S. foundry capacity. We expect it will also enhance supply chain resilience for foundational chips that are critical to sensitive strategic applications, thereby strengthening both national and economic security,” said Thomas Sonderman, SkyWater CEO. “This investment is an expansion that enhances our ability to serve both our defense and industrial customers. By leveraging the proven expertise of the talented team in Austin, we are positioning this fab as a cornerstone in the U.S. semiconductor foundry network—one that will extend our capabilities to support defense programs while also enabling new opportunities in commercial markets.”

The U.S. is a key business region for Infineon with around 4,000 employees, 15 locations dedicated to research and development activities and 1,000 employees in R&D roles. Infineon serves a multitude of American customers across all its market segments in automotive, industrial & infrastructure, as well as consumer, computing & communications. Currently, up to one billion semiconductor chips per year for major automotive, industrial and communications companies are manufactured in Fab 25.

About Infineon

Infineon Technologies AG is a global semiconductor leader in power systems and IoT. Infineon drives decarbonization and digitalization with its products and solutions. The company has around 58,060 employees worldwide and generated revenue of about €15 billion in the 2024 fiscal year (ending 30 September). Infineon is listed on the Frankfurt Stock Exchange (ticker symbol: IFX) and in the USA on the OTCQX International over-the-counter market (ticker symbol: IFNNY).

SkyWater Investor Webcast

SkyWater will host a conference call today, Wednesday, February 26, 2025, at 7:30 a.m. CT (8:30 a.m. ET) to discuss its fourth quarter and fiscal year 2024 financial results. SkyWater will also discuss on the conference call additional information regarding the Fab 25 transaction. A live webcast of the call will be available online at IR.SkyWaterTechnology.com.

SkyWater Form 8-K

SkyWater is filing a Form 8-K with the U.S. Securities and Exchange Commission that contains additional information regarding the Fab 25 transaction and related agreements.

About SkyWater

SkyWater (NASDAQ: SKYT) is a U.S.-based semiconductor manufacturer and a DMEA-accredited Category 1A Trusted Supplier. SkyWater’s Technology as a Service model streamlines the path to production for customers with development services, high-volume production and heterogeneous integration solutions in its U.S. facilities. This pioneering model enables innovators to co-create the next wave of technology within diverse categories including mixed-signal CMOS, read-out ICs, rad-hard ICs, MEMS, superconducting ICs, photonics and advanced packaging. SkyWater serves the growing markets of aerospace & defense, automotive, biomedical, industrial and quantum computing. For more information, visit: www.skywatertechnology.com.

SkyWater Technology Forward-Looking Statements

This press release contains “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements that are based on SkyWater’s current expectations or forecasts of future events, rather than past events and outcomes, and such statements are not guarantees of future performance. Forward-looking statements are subject to risks, uncertainties and assumptions, which may cause SkyWater’s actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. Key factors that could cause SkyWater’s actual results to be different than expected or anticipated include, but are not limited to, ability to obtain necessary regulatory approvals and satisfy other conditions to the proposed Fab 25 transaction on the anticipated timeframe or at all; ability to realize the expected benefits of the proposed Fab 25 transaction; ability to promptly and effectively integrate Fab 25’s operations; negative effects relating to the announcement of the proposed Fab 25 transaction or the consummation of the proposed Fab 25 transaction on the market price of SkyWater’s common stock; significant transaction costs and/or unknown or inestimable liabilities; general economic and business conditions that may affect the combined company following the consummation of the proposed Fab 25 transaction; and other factors discussed in the “Risk Factors” section of its annual report on Form 10-K and quarterly reports on Form 10-Q, and in other documents that SkyWater files with the SEC, which are available at http://www.sec.gov. SkyWater assumes no obligation to update any forward-looking statements, which speak only as of the date of this press release.

SKYT-CORP

View source version on businesswire.com: https://www.businesswire.com/news/home/20250226773415/en/

SkyWater Media Contact: Lauri Julian lauri.julian@skywatertechnology.com

SkyWater Investor Contact: Claire McAdams claire@headgatepartners.com



Infineon Investor Contact: Daniel.Gyoery| daniel.gyoery@infineon.com

Infineon Media Contact: Andre Tauber| andre.tauber@infineon.com

Source: SkyWater Technology

FAQ

What is the production capacity of the Infineon Fab 25 that SKYT is acquiring?

The facility currently manufactures up to one billion semiconductor chips annually for major automotive, industrial, and communications companies.

How many employees will transfer to SkyWater (SKYT) in the Fab 25 acquisition?

Nearly 1,000 manufacturing employees from Fab 25 will become SkyWater employees as part of the agreement.

What manufacturing capabilities will SKYT gain from the Fab 25 acquisition?

SkyWater will gain 65nm infrastructure, expanded copper processing scale, and high-voltage Bipolar-CMOS-DMOS (BCD) technology, producing chips from 130nm down to 65nm nodes.

How will the Infineon Fab 25 acquisition impact SKYT's business model?

SkyWater will transition Fab 25 from an Integrated Device Manufacturer (IDM) to a foundry model, expanding its customer base and achieving greater economies of scale.

What strategic benefits does the Fab 25 acquisition bring to SKYT?

The acquisition strengthens U.S.-based production capacity, enhances defense and industrial customer service, and supports dual-sourcing strategies in critical industries.