What happened

On a day when the S&P 500 and Dow Jones Industrial Average have risen moderately, shares of SkyWater Technology (SKYT -4.97%) are downright soaring. The semiconductor manufacturer's stock is up 25.8% as of 11:49 a.m. EDT.

Announcing today an expanded deal regarding wearable health sensors, SkyWater Technology is giving investors a lot to celebrate after what has been a somewhat uninspiring summer, with shares plummeting 28% up to yesterday.

A chalkboard illustration of a rocket lifting off.

Image source: Getty Images.

So what

Beginning with SkyWater and its Advanced Technology Services for help with the development of its spectrophotometer-on-a-chip health monitoring solution, Rockley Photonics (RKLY) will now also use SkyWater for wafer back-end-of-line processing. Rockley believes that its infrared spectrophotometers are able to detect and monitor more biomarkers than the common light-emitting diodes used in health wearables today, including core body temperature, blood pressure, hydration, alcohol level, lactate and glucose levels, and more.

Thomas Sonderman, SkyWater's president and CEO, lauded the partnership with Rockley, stating that "Rockley's innovative silicon photonics platform is an important breakthrough in the fast-growing health wearables market and aligns with SkyWater's market strategy, extending our value chain for this application space."

Investors are hailing news of the expanded partnership after SkyWater reported disappointing preliminary Q2 2021 earnings a few weeks ago. Things continued to sour for investors shortly thereafter when Jeffries downgraded the stock to hold from buy and cut its price target to $23 from $27, according to TheFly.com.

Now what

It's no surprise that SkyWater's investors are celebrating news of the expanded partnership with Rockley since it validates the quality of SkyWater's semiconductor manufacturing capability. In addition, it raises the hope that other companies will also -- as Rockley has done -- turn to SkyWater for its technology-as-a-service model, which combines process research and development, wafer fabrication, and advanced packaging technology services.