Good day. Thank you for standing by and welcome to SkyWater Technology's Second Quarter Fiscal Year 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised, that today's conference is being recorded. [Operator Instructions] Thank you. I would now like to hand the conference over to your speaker today, Ms. Heather Davis. Ma'am, please go ahead.

Good morning, and welcome to SkyWater's second quarter fiscal 2021 conference call. With me on the call today from SkyWater are Thomas Sonderman, President and Chief Executive Officer; and Steve Manko, Chief Financial Officer. I'd like to remind you that our call is being webcast live on SkyWater's Investor Relations website at ir.skywatertechnology.com. The webcast will be available for replay shortly after the call concludes. During the call, any statements made about our future financial results and business are forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ materially. For a discussion of these risks and uncertainties, please refer to our filings with the Securities and Exchange Commission, including our earnings release filed on Form 8-K yesterday and our prospective filed April 22, 2021. All forward-looking statements are made as of today and we assume no obligation to update any such statements. During this call, we will discuss non-GAAP financial measures. You can find a reconciliation of these non-GAAP financial measures to GAAP financial measures in our earnings release, which is available on our Investor Relations website. Unless noted, all comparables referenced today are versus the prior year or second quarter of fiscal 2020. With that, let me turn the call over to Tom.

Thank you, Heather. And good morning to everyone on the call. Today I'll briefly cover last quarter's financial results and then have a broader review of our exciting growth strategy. I'll also start providing a deeper dive into a specific area of our business to up further your knowledge of SkyWater's disruptive capabilities. This quarter, I'll focus on SkyWater, Florida, and our new advanced packaging fab. Steve will then go into further details on our financials. In the second quarter, net sales grew 34% to $41.2 million compared to last year, driven by solid increases in both Advanced Technology Services and Wafer Services. Gross margin was 4.4%. Net loss attributable to shareholders was $7 million and adjusted EBITDA was negative $800,000. SkyWater made solid progress executing on multiple fronts during the quarter, but also experienced some revenue recognition delays. This included US government funding tied to existing programs that we expect to occur, but the timing remains difficult to forecast. We also experienced a delay in the recognition of the majority of the revenue for wafers produced and put in inventory for a temperature monitoring wearable for early COVID-19 detection due to the market dynamics tied to the rapid introduction of new vaccines. These wafers are now being repurposed for an alternative health related wearable application. Lastly, an ATS program that generated significant revenue for the company in 2020 and was forecasted for 2021, is being restructured with the customer. We expect it to resume in 2022. I am very pleased with SkyWater's year-over-year top line performance and remain confident in our long-term revenue growth target of approximately 25% for 2021 and beyond. Our vision at SkyWater is to improve the world by revolutionizing technology realization because we're impatient, waiting for the promise of tomorrow. So we're focused on making…

Thank you, Tom. SkyWater accomplished much in the second quarter, including our initial public offering. This achievement is a great testament to our team members, customers and partners, as we co-create the next-generation of technology through our Technology as a Service model. We continue to execute our strategy during the second quarter and grew our net sales. Net sales for the second quarter were $41.2 million, an increase of 34% versus second quarter of 2020. Advanced Technology Service grew 35% to $26.9 million and Wafer Services increased 31% to $14.3 million. ATS growth was driven by continued program expansion with existing customers and new program additions. ATS sales in the second quarter contains $2.3 million of customer-funded tools compared to zero in the second quarter of last year. Q2 ATS sales of $26.9 million compares to $38.1 million in Q1 this year. Excluding $2.3 million and $15.4 million of customer-funded tool revenue in the respective quarters, the ATS business delivered 8% sequential growth. As anticipated, Wafer Services increased from 2020 levels, driven primarily by strong demand from the IoT and automotive sectors. Cost of sales were $39.4 million, an increase of 56% year-over-year. Gross profit was $1.8 million, decreasing from $5.5 million in Q2 last year. Gross margin of 4.4% declined versus the prior year up 17.8%. Non-GAAP gross profit was $3 million compared to $5.6 million in Q2 last year. Non-GAAP gross margin was 7.2% and 18.1% respectively. Both GAAP and non-GAAP gross profit and margin declined due to increased cost of goods. Cost of sales increases were driven by labor increases as we ramp our Minnesota and Florida facilities. The labor market for skilled manufacturing remains tight as the country restarts the economy post pandemic and we've increased our average starting wage in our fabs to attract the…

Thank you, Steve. SkyWater will be presenting at the Jefferies Semiconductor, IT Hardware and Communications, Infrastructure Summit on August 31, 2021. Please visit the Investor Relations section of our website for other upcoming presentations. Operator, please open the line for questions.

[Operator Instructions] Your first question comes from the line of Raji Gill of Needham & Company. Your line is open.

Yes, thank you. And I appreciate the additional insight on the OpEx going forward. Steve and Tom, I'm wondering if you could give me a sense of the gross margin trajectory as we progress throughout the year. So the margins dropped to about 7.2% on a non-GAAP basis. This is due, as you mentioned, to labor increases and your investments in rad-hard and the AP in Florida. Wondering how to think about the margins on a go-forward basis. When do we think those investments will start to kind of pay off and how do we think about a longer term margin target?

Yes. Good morning, Raji. This is Steve. And thank you for your question. Gross margin is a metric that we focus on. We have a long-term plan to get to a gross margin of roughly 40% to 45%, and that's what we're targeting. What we'll see first is revenue growth will lead the way, and then gross margin expansion will follow. As we look out how we're going to build our gross margins from where they are today to our long-term model, there are various phases of doing that. I would say over the course of the next 12 to 24 months, the items that we'll focus on first are, number one, having scale, increasing scale and keeping our fab highly utilized. The second would be transitioning to a higher, richer Wafer Services mix from average sales prices, and you'll see that with some of the MEMS technology that we're looking to bring into production in the next 12 to 24 months. And then also growing our Advanced Technology Services business. Through that, we believe we can grow ATS, not only with our current customers and programs, but also growing ATS through advanced packaging in Florida. Those would be the near term elements that we're looking at and targeting to grow our gross margin, and we hope that that would expand to our long-term rate of 40% to 45%.

Okay. Thanks. And in terms of the 25% growth rate that you talked about in 2021 and beyond, I'm wondering if you could give us a little more color on some of the growth drivers within that. So for example, how do we think about existing customers ramping versus new customer additions? How are we thinking about wafer versus ATS growth? And then as we look beyond 2021, how are we thinking about the Florida facility as part of that overall growth rate? How much revenue are we building in for Florida? Is that part of the 25% or is that in addition to it? Thank you.

Yes, thanks. Good morning, Raji. This is Tom. Yes, great question. I think the way to lay it out is what I just discussed in my opening remarks. There is really multiple drivers for growth in the company pipeline. Obviously, the immediate is the transition of ATS customers into Wafer Services. That again will not only drive growth on the top line, but also in gross margins, as we get a richer mix inside the fab. We're also making great progress on our rad-hard technology. Of course, we're building capability today over the next couple of years. These capabilities will be turned into products that we'll be manufacturing, again as a sole source provider. And then we have our expansion that we talked about. We believe, with both the expansion here in Minnesota, the 40% increase in capacity coupled with our Florida fab, that we can double our output collectively over the next 18 to 24 months. This, of course, will drive again both top and bottom line growth. And then, of course, related to AP specifically, we inherited the facility back in February. We spent the last quarter getting the fab started up, really preparing to run the existing programs, which are now being executed. And at the same time, we're beginning to expand our relationships, as I mentioned, with Rockley, one other customer we're not mentioning yet. But there is multiple others within our existing customer base that we're continuing to engage with in terms of how to leverage Florida. And then, of course, we have a strong pipeline for both ATS tied to AP and other platforms that we have. And then we're also getting a lot of design wins from not only the traditional kind of MPW driven, download the PDK, put your IP on our platform and then launch those products into the market kind of a traditional foundry model. Now that continues to grow well. But we're also getting a lot of traction with our Google sponsored open source initiative. We have a shuttle going to the fab now. That will be coming out later this quarter. And then we already have the next shuttle prepared and this is driving an expansion in our reach to a whole new set of customers that we believe ought to be a long-term driver for us.

Your next question comes from the line of Mark Lipacis of Jefferies. Your line is open,

Hi. Thanks for taking my question. First question on the - I appreciate you're not going to give guidance for the next quarter. But I guess, Tom, when you express confidence in the 25% growth for this year, I think that's going to assume like second half is above the first half. So should we think about this in like a linear trajectory? Is it a hockey stick kind of more back-end loaded? Is there any color that you can give us on the linearity of the growth that you're looking out this year?

Yes, I'll start and then Steve can add additional color. Obviously, we've projected with the 25% long-term growth model. That is going to apply to this year as well. I would say it's not linear, but it's essentially - I'm hearing some background noise. The basic way to think of it is I would just say consistent growth compared to last year. And then the ability to continue to execute on programs that are already secured, so think of it as PO is already within SkyWater that we're executing against. We're obviously continuing to go after new business and we believe that there's good opportunities. The market is obviously very robust. But I think at this point in time, as Steve alluded to, we have a lumpy business. We're going through the transitions of ATS to Wafer Services. That creates a J-curve effect that we're learning how to model. We believe that 25% is a consistent number for us.

Great. And then a follow-up, if I may, and I apologize for the background noise here. You talked about qualifying -- making progress qualifying the rad-hard. You talked GaN, again you talked about some new customers in Florida. Can you give us a sense of when you think that revenues from those efforts start to hit your top line?

Yes. Great question again Mark. The way to think of it is that - and this is the unique part with our Technology as a Service model - is that we will begin to initiate ATS revenue in Florida this year. That is going on as we speak. As we get into next year, those programs will grow. Eventually, they'll move out of R&D into scaled manufacturing. So we think of it, as far as it relates to Florida, primarily ATS driven next year as we go into 2023, that will transition to Wafer Services. We also have a lot of clean room capacity that we expect to leverage jointly with our customers using our fab light - I mean our capacity light model through co-investment. The ability to get rad-hard online is making, again, really good traction. We're qualifying the technology today. So everything we've done has basically been expanding the fab, bringing in tools, getting them qualified, standing up the process. We're now working with CAES and another company called Trusted Semi to create the design ecosystem. We have our first shuttle going through the fab as we speak. This has got multiple customers on it already through our early access program. As those customers begin to validate their IP on our technology, will begin starting next year to start getting into what I would call the design cycle as well as the qualification cycle. This is what we refer to as rad-hard testing. And then as '22 unfolds and we get into '23, you'll really begin to start seeing the rad-hard revenue ramp up. So from my perspective, all these exciting new programs that we have been working on for multiple years are beginning to come to fruition. And then I'll also mention the biomed space. We're seeing great traction with our MEMS-based technology to serve many different types of solutions in the bio-medical market that we believe we can get not only through ATS, but into Wafer Services within the next 12 to 18 months. So we feel very confident about everything we put in place. And of course, the backdrop of chips funding, the commitment from our nation to really begin to invest in semiconductor technologies also gives us a lot of confidence, especially as we position ourselves as America's foundry.

Your next question comes from the line of Harsh Kumar of Piper Sandler. Your line is open.

Hey, guys. Hand handful of questions. I want to go back to, I think, the first question on - or the question before this on the 25% growth rate. I just want to make sure that that business - the 25% organic growth rate assumes basically organic business and you're not assuming either any government subsidy or you don't need a whole lot of new orders. In other words, should I assume that this is a business that's in the bag that's already peeled? And then as that business hits and you start to grow sort of meaningfully in the back half of this year, how should we think about gross margins progression for this year?

Yes. So I'll start and then Steve can amplify on the gross margins. Yes. So the way you outlined is a good way to think about it. We have secured the business for the projection, the 25% that we're talking about. And of course, we're continuing to win new business. The assumption of the 25% does not include anything tied to chips funding. The delay in government funding is for all the existing programs. These are not at all tied to, again, assumptions based on new initiatives that are going through congress. The idea of executing on the business that we booked is the focus for the growth rate we're talking about. Of course, we believe there is up side to that. But again, the timing for when these deals occur, there's a lumpiness to ATS in terms of how we monetize R&D, how the R&D programs get configured. That make it a little difficult to get the traditional quarter-to-quarter projections. But we believe the business is beating stronger. We'll continue to be a major driver in our industry for the types of technologies we're bringing to market and again we're very confident now with the 25% number we talked about. Steve?

Yes, can we amplify really quickly. Like we talked about previously, the revenue will come first, and then we will see - we can see gross margin expansion. I outlined what our near-term strategy is to expand those gross margins. Keep in mind, the indicator will be the revenue growth that you would see while also realizing, as we talked about, that we still have a drag on gross margin as we're making investments in 2021 in the rad-hard technology and the advanced packaging platform that will be a drag on gross margin for 2021 as we start generating significant revenues from both of those businesses.

Understood. And for my follow-up, Tom. Maybe it's a multipart question, but I wanted to understand some of the services the ATS worked that got pushed out into 2022. I just wanted to understand your confidence level on that business coming back. Maybe you could give us like to the extent that you can share some logistics around how that process will work and when that business might hit, and maybe some clarity around is it one customer, is it multiple customers, was it a technology that went sour for you or got pushed out? Just any color. And then to a similar wane on the temperature sensing wafers, should I assume that the basic function still remains the same for temperature sensing and that the customer will be able to pick this up without meaningful modifications and just deploy it in some of the applications? Is that - so the business hasn't really gone away like you're saying and it's relatively not any different for you to do this, but just push it out to a different application later.

Yes, great question. I'll go in reverse. So regarding the temperature sensor, basically what it is, is a differential temperature monitoring structure that we created in partnership with our design entities. And it's a wearable device that is essentially being moved from early COVID detection to things like chemotherapy patients, looking again to sensitive temperature variations that could be indicative of reactions when cancer cases are basically being treated with those type of chemicals. So the idea of the wafers, they've been fabricated. They're in inventory. It will be software and packaging design that will potentially change to accommodate the new trajectory for the end customers. But yes, there's really nothing we have to do to ultimately recognize the revenue. We just needed to find a new target application again because of the rapid - and it's good news for all of us, the rapid introduction of the COVID-19 vaccines. Related to the ATS program that we referenced, it was a single program. The customer was extremely pleased with our performance, was meeting and exceeding expectations and milestones. And what we wanted to do - because, again, this is how technology works. As we began to look at the next phase of development, we felt it was important to really go to more of a multi-year trajectory versus an annual renewal for this type of program because of the type of technology that we are developing. The customer also wanted to reconfigure it along those lines. And so we're confident that the program will start in 2022 and we're literally working through the details as we speak in terms of what it will look like. Again the timing is hard to project. So we're talking 2022 for the start date, but I certainly am very confident in not only how the customer views what we're doing, but the criticality of the technology, and that it will continue to be an important program for SkyWater.

Your next question comes from the line of Krish Sankar of Cowen & Company. Your line is open.

Hi. Thanks for taking my question. I had two of them. The first one, Tom or Steve. I'm curious on gross margins, clearly, 7.2% in gross margin in Q2. I understand the arguments you made about increasing the loading in Minnesota and then increased labor costs. It seems like some of those things like labor cost increase are probably not transitory. So I'm curious, is the path to a 40% gross margin really realistic and what kind of time frame are we talking about? And along the same path, what is the gross margin for the tool phase? And then I have a follow-up.

Yes. This is Steve. I'll take that question. Again the time line that we're looking at is about a 5 year horizon to get to our target of 40% to 45%. Keep in mind, right, a lot of the steps to get there would be increased scale and increased growth. We are investing for the future with more personnel and more cost coming into our organization, just to build out that core foundation for the growth that we expect to be coming in 2022 and beyond. In addition to those technology investments that we continue to make in the rad-hard technology and the advanced packaging technology. So we're investing and building for the future. But revenue will come first and we believe gross margin expansion will follow.

Just the second part of my first question, Steve, what is the [Technical Difficulty] with tool revenues? And then I have a follow-up.

Sorry, you said what were the tool revenues? Is that the question?

What is the gross margin for tools?

Yes, there is margin on the tool revenue. The revenue comes through ATS. So the reason that we talk about that is there is margin on that tool revenue. However, it's not at the similar margin that we see from the other services that we offer in ATS. So while there is a margin on the tool sales, it is not at the equivalent level as other services that we offer in ATS.

And we have a follow-up question coming from the line of Raji Gill of Needham & Company. Your line is open.

Thanks, for the follow up. Just on the $56 million of strategic capital investment to expand capacity of Minnesota fab, what is the expected payback period of that $56 million? In other words, what's the time frame of when that capacity will turn into production and into revenue?

Yes. I'll start and Steve you can add additional color. The expectation is that we're talking about is 40% increase in capacity. We will be obviously ordering tools over the near term. That's the first phase of this. And then the time line for when it ultimately turns into increased wafer output is going to be obviously materialized, I would say, as we exit next year and go into 2023. \ The other thing to point out is that the $56 million isn't just for the capacity increase in Minnesota, a portion of that is also tied to our GaN investment, which will again be another technology platform. We're obviously very focused on the power management space. We're bringing our silicon-based power management platform which has got some differentiated transistor architectures to the market in the second half. And then our long-term strategy has always been to move into the GaN space because we believe that is the future of power management. And so again a portion of the $56 million will be tied to standing up that capability. Steve, any further comments?

Okay.

Yes, thank you. And just one more, if I can, just for a point of clarification. So the tool revenue looks like it's on track. It generated about $17.8 million of revenue for Q1 and Q2 of this year. Last year, it was $8.4 million according to your press release. Wondering how we're thinking about the total revenue for the rest of 2021, if there's any insight there? And when we're thinking about that business over the course of time, is this a business that you're opportunistically looking at to add in a service for your large customers or is it something that there is a concerted strategy to say, yes, let's try to expand that part of the business to other customers. We have expertise in accruing tools, qualifying tools. Let's expand that service to other customers although it might be lumpy, but this is something that we want to offer. I'm trying to get a sense both financially, quantitatively, the lumpiness of the tool revenue and then qualitatively how you're thinking about it strategically? Thank you.

Yes, sure. And that's why we provided additional color for what the tool revenue was for each quarter going back to 2020, which was the first year when we really started generating any sort of tool revenue. So you can see the lumpiness as we articulated. We tried to stress that, especially in the Q1 earnings call from 2021, given the significant amount of the revenue that came through. We also mentioned at that time that through the first quarter and second quarter of 2021, that is when we anticipate the majority of the tool revenues for 2021 to come through. From the aspect of the business, really, what we do is it's co-investment and co-development with our customers. That's what we stress. We see this as a co-investment with our customers. Our customers come to SkyWater especially on the ATS side because they don't have a fab and we do. With that comes our expertise in having the relationships with the tool vendors, knowing how to procure that tooling, install it, qualify it and then get that up and running for R&D, and then later into production. So we're always looking at opportunities to co-invest with our customers. And this is one that will remain. It will be a lumpy part of the business, but we think it's a good indication of our customers being committed to long-term programs with SkyWater.

And your next question comes from the line of Mark Lipacis at Jefferies. Your line is open.

Hi. Thanks for taking my follow up. So another question on the $56 million strategic investment. So I just want to make sure I'm clear on this. So is this going to show up in your CapEx line or - and what are the cash flow implications of this? So I guess my question is, is this a co-invest, is - are you co-investing with customers, is this part of your CapEx-light position or is this a one-off strategic investment or you see an opportunity to add capacity, so you're going to go for it, and you're bearing the cash flow implications of that? And if it's the latter, can you help us understand how that ramps through the cash flow statement, that $56 million? And then when do you start depreciating that and when does that hit your income statement? Thank you.

Yes. I'd be happy to clarify that. So this would be an investment that SkyWater would be making. This would not be tool revenue like we talked about previously, on the previous question. I think it still does support our CapEx-light model. If you go back to the facilities and tools that we obtained earlier this year from SkyWater, Florida, the Department of Defense investment that we announced quite some time ago for the rad-hard technology as well as the tool revenue and the investments being made by our customers, I think that still does support our CapEx-light model. However, this will accelerate and build a good baseline for growth in the organization, not only for Wafer Services, but also for additional ATS moves and ATS customers that we believe will move to Wafer Services. With that investment that we will be making, or plan to make, we would really see this investment taking place over the course of four to six quarters on a quarterly basis. That will be dependent on tool availability and lead times, but it will be something that we will be looking to execute on in the near term, what will be quarterly investments made over the next four to six quarters.

And when do you start depreciating those assets? Do you have to qualify it before you depreciate or does that start depreciating and hitting your gross margin as soon as it hits your P&E?

Sure. Typically, that's on a tool by tool basis, and typically, the depreciation starts once the tool has been qualified in our manufacturing facility.

And can you give us a sense, like roughly, how long does it take to qualify a tool once it gets bolted down in the factory?

Yes. A ballpark estimate would be six to nine months.

Great. Thank you.

Your follow-up question coming from the line of Harsh Kumar, Piper Sandler. Your line is open.

Yes. Hey, guys. Tom, I was curious if you could provide us some perspective on the government subsidy angle. U.S. government seems to want to get money to semiconductor companies. I think you guys are in a very good position to get it. I'm curious, when you have your conversations, what kind of commitments do you have to make in return? Is it tied to a number of jobs, certain number of jobs in a state, or what is involved in terms of getting some of that money and how are you suited for that?

Yes. Again, another great question. Obviously, SkyWater is very involved with these conversations, not only with the White House directly, but with the Department of Congress, obviously Department of Defense. The Department of Commerce will be the one facilitating the deployment of those dollars if Congress approves the Chips Act. So what we anticipate is there's going to be two angles for SkyWater. One, as it ties to not only the Chips Act but also the Endless Frontiers initiative. There will be R&D dollars flowing into various entities, R&D facilities that are creating new technologies. A lot of the focus isn't just replicating capabilities that are traditional Moore's law platforms, but really looking at differentiation, which was what SkyWater is all about, new emerging technologies like carbon nano tube, superconducting, et cetera. So we expect to be able to leverage R&D investments. We become the corridor as they - as technologies lead incubation and come in the technology validation, demonstration and ultimately commercialization. The other piece will be adding capabilities. So one of the things that we're pushing is that to solve some of the immediate crisis with demand -- high chip demand, it's basically adding equipment to existing facilities. That's one of the things we're doing here in Minnesota. Automotive qualifications take multiple years. So the best way to really resolve some of this is by adding capacity. We're, of course, getting ahead of the game to enable that. But we expect there will be continued joint investment opportunities with the state governments as well as with the federal government, which is why we're very focused on engaging, as I mentioned in my remarks, with Minnesota, Florida and Indiana. Indiana, of course, is where Navy Crane is. This is tied to our rad-hard program, and we expect that combination of state and federal plus SkyWater's commitment to - as you alluded, to great jobs, create capability, and more important, create a corridor so that the IP that is invested in by Americans can stay in the United States. That is a unique capability that SkyWater brings. We're a pure play, contract manufacturer foundry, and we believe that we are in a very unique position to not only leverage the R&D dollars, but then ultimately the dollars associated with adding scale.

Thank you, Tom. Operator And your last question coming from the line of Krish Sankar of Cowen & Company. Your line is open.

Thanks for taking my follow up. Tom, just wanted to quickly touch on it. You said the $56 million CapEx as to the vast majority is going to existing silicon infrastructure. How much is doing for GaN and what time frame are you talking about? And it seems like that could transfer into just a few hundred basis cards for GaN. Is that the right way to think about it?

Yes. So I'll start, and Steve, you can add color. The - we're not breaking out how much is going for the capacity expansion versus GaN. But the GaN focus is really again to position SkyWater to be the right option of our 200 millimeter GaN here in the United States. Everything on GaN today is at 6 inch, the - certainly within products that are tied to the power market, which is our initial focus, but we see great opportunities with GaN in RF and other application sensors, et cetera. So our goal is to accelerate the adoption of GaN technology. It's always been part of our strategy to get into the power management market. We believe differentiation will occur again, as I alluded too, with our silicon platform coming out later this year. And then we're going to begin to do development on our GaN-based technology. It is clearly the future of power management, in my opinion. And I believe that the 100x switching speed improvement, the 40% more efficient power consumption, are the attributes that will really drive this adoption. And again, as I've mentioned, the White House specifically called out the need for a 200 millimeter GaN fab in the United States and we certainly expect to take advantage of that. So we're accelerating our pushing again and that's why we're investing in it today.

Yes. I would just highlight on that. As we look to make investments in our facility, often times we look at where bottlenecks occur in our typical process flows. A lot of our flows can be used for a lot of the services that we offer, both in Wafer Services and ATS. So with this investment, we can break through some of the bottlenecks that we would forecast with the growth that we expect. So it's very exciting to see this investment into our facility. On top of that, with the GaN investment, keep in mind with our business model that typically what's going to take place with the GaN, that revenue would come through from an ATS perspective first and then go into Wafer Services at a later point in time. So as we typically do with most of our technologies and platforms, we look at capabilities first and that's what we're investing for the GaN capability in the near term.

Thank you.

And we have reached the end of our Q&A session. I would like to turn it back to our CEO, Tom Sonderman, for the closing remarks.

I couldn't be more excited about SkyWater's future as we continue to win new business, aggressively ramp our fabs, secure key supply agreements, and bring new capabilities like rad-hard and advanced packaging in the market. I thank you for listening to our call today and look forward to talking to all of you again in the future.

Ladies and gentlemen, thank you for participating in today's conference. You may now disconnect.