GCT Semiconductor NYSE: GCTS reported second-quarter 2026 revenue of $1 million, down 18% from $1.2 million a year earlier, as the company continued its transition from 5G chipset development to commercialization. Management said customer deployment schedules shifted during the quarter, but it maintained that engagement and long-term demand for its technology remain intact.
Chief Executive Officer John Schlaefer said the company’s commercialization pipeline has broadened across three areas: terrestrial broadband, satellite and non-terrestrial connectivity, and industrial IoT and specialized networking applications. He said the company is seeking to reduce its dependence on any individual customer deployment by pursuing opportunities across multiple end markets.
“The primary variable today is deployment timing rather than customer interest,” Schlaefer said, adding that customer production schedules may shift as certification activities are completed and deployment plans are finalized.
Chipset Shipments Rise Sequentially
GCT shipped more than 5,100 5G chipsets during the second quarter, a sequential increase of about 71% from the first quarter. Schlaefer said the shipments went primarily to four customers across four applications: fixed wireless access, aviation, mobile hotspots and push-to-talk phones.
During the question-and-answer session, Schlaefer said customer program delays were meaningful enough that the company had expected “significantly higher revenue” in the quarter. He attributed the timing changes to customers’ corporate restructuring and refocusing efforts in some cases, as well as external factors affecting launch schedules in others. He said the affected programs remain active and viable, with expected activity later in the year.
For the second half of 2026, GCT expects chipset shipments to exceed first-half levels, both in the quantity of chips shipped and the number of customers receiving them. However, management declined to provide specific shipment forecasts through the first quarter of 2027, citing variability in customer ramp schedules.
Focus on Broadband and Satellite Opportunities
Schlaefer said the company sees the largest near-term revenue potential in terrestrial broadband and satellite and non-terrestrial connectivity, where it has been working on fixed wireless access and satellite programs for some time. He said these segments have substantial activity that has not yet ramped.
IoT and specialized networking represent the broadest set of potential applications, according to Schlaefer, including industrial, positioning, aviation and defense-related uses. He noted that average selling prices in IoT could be lower than in the fixed wireless and satellite markets.
After the quarter ended, GCT signed a customer in the unmanned aerial vehicle market, with potential consumer and defense applications. Schlaefer said the company’s technology can support control and telemetry functions. The customer has not yet announced its product, and GCT did not disclose its name due to confidentiality provisions.
Management also said it expects to disclose the identity of a satellite communications provider once that partner provides approval. Schlaefer said that could occur in the fourth quarter or the first quarter, depending on the customer’s launch plans.
Loss Widens on Warrant Liability Revaluation
Second-quarter cost of net revenues rose 49% to $1.2 million from $800,000 a year earlier, largely due to higher unit volumes. The company reported a negative gross margin for the period, which Chief Financial Officer Edmond Cheng said was not representative of management’s expectations for future profitability. Cheng said margins are expected to improve as 5G product sales become a more significant portion of revenue.
- Research and development expense fell to $3.3 million from $3.5 million, reflecting completion of a 5G chip design project and lower professional-services and stock-based compensation costs, partly offset by higher payroll-related expenses.
- Sales and marketing expense was $1 million, compared with $1.1 million a year earlier.
- General and administrative expense declined to $2.8 million from $3.4 million, primarily due to a lower loss related to changes in the allowance for credit losses on accounts receivable.
Net loss widened to $20.4 million from $13.5 million in the prior-year quarter. Cheng said the latest result included a $12.3 million loss from changes in the fair value of common-stock warrant liabilities, driven by increases in the company’s common stock price and the market price of its publicly traded warrants.
Beginning this quarter, GCT is introducing adjusted EBITDA as a supplemental metric. Adjusted EBITDA loss improved slightly to $6.6 million from $6.7 million a year earlier. Cheng said the metric is intended to provide a view of operating performance excluding significant non-cash fair-value adjustments tied to warrant liabilities.
Liquidity and Production Capacity
GCT ended the quarter with $30.2 million in cash and cash equivalents, along with $1.1 million of net accounts receivable and $1.5 million of net inventory. The company said it has secured wafer-production capacity for the remainder of 2026 and through the first quarter of 2027 in anticipation of expected chip demand.
Schlaefer said the wafer commitments are important in a tight foundry environment, but added that the company believes its capacity is appropriately sized. Because the wafers can support multiple product SKUs, he said a delay in customer ramps would not create a perishable inventory issue and the company could slow future purchases if needed.
Cheng said second-quarter cash burn was elevated by roughly $7 million to $7.5 million because the company prepaid supply-chain costs through year-end. Looking ahead, he said GCT anticipates quarterly cash burn of approximately $9 million to $9.5 million amid tight supply conditions, compared with an estimated $8 million to $8.5 million per quarter absent those conditions.
The company also amended its at-the-market equity program during the quarter, increasing maximum aggregate gross proceeds available under the program to $120 million from $75 million. The total share registration capacity remains $200 million.
About GCT Semiconductor (NYSE:GCTS)
GCT Semiconductor Holding, Inc, operates as a fabless semiconductor company, designs, develops, and markets integrated circuits for the wireless semiconductor industry. The company provides RF and modem chipsets based on 4G LTE technology, including 4G LTE, 4.5G LTE Advanced, and 4.75G LTE Advanced-Pro. It also develops and sells cellular IoT chipsets for low-speed mobile networks such as eMTC/NB-IOT/Sigfox, and other network protocols; and 5G solutions. Its products and solutions are used in smartphones, tablets, hotspots, CPEs, USB dongles, routers, and M2M applications.
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