GCT Semiconductor NYSE: GCTS expects its 5G shipment ramp to extend into the first half of 2027 as customers take longer than anticipated to integrate its chipsets into their products, executives said on the company’s third-quarter earnings call.
The company shipped more than 3,200 5G chipsets during the third quarter, bringing year-to-date shipments to more than 11,300 units. Chief Executive Officer John Schlaefer said most third-quarter shipments supported new customers’ proof-of-concept work, while existing terrestrial and satellite customers also received chips.
Schlaefer said the company has not lost any customers, but their integration and commercialization schedules have lengthened the path to purchase orders. He expects fourth-quarter revenue to be flat to up, with more significant growth occurring in the first half of 2027.
Customer Launches and New Applications
During the question-and-answer session, Schlaefer said one customer had launched, as announced in the fourth quarter of the prior year. The other programs he discussed were in preproduction or sampling, with four launches expected in the first half of 2027. He said the 5G units shipped so far this year were for preproduction samples and similar purposes to help customers prepare their products.
The CEO said GCT’s terrestrial broadband work includes fixed wireless access and customer-premises equipment programs moving through engineering, integration and certification. The company also delivered additional chipsets for an ongoing program with a global telecom supplier.
In satellite connectivity, GCT continues to work with a large satellite communications provider developing user equipment for high-bandwidth communications across satellite and terrestrial networks. Schlaefer said the company is also engaged with partners working on direct-to-device and hybrid satellite-cellular solutions.
GCT added an unnamed 5G customer developing terrestrial geolocation services intended to augment or replace satellite-based positioning. The proposed service is designed to provide three-dimensional location information, including vertical positioning, in places where GPS signals can struggle, such as indoors or in dense urban areas.
That customer remains at the proof-of-concept stage, Schlaefer said. He does not expect further product shipments for the program in the near term, though he said more could come toward the end of 2027 depending on the customer’s schedule.
Separately, GCT received an order for 150,000 units of a 4G product for a private-network wireless tablet application. It shipped 18% of the order during the third quarter, with the balance planned for the fourth quarter and later periods.
Revenue Rises as Loss Narrows
Third-quarter net revenue rose 149% year over year to $1.1 million from $0.4 million, Chief Financial Officer Edmond Cheng said. Product sales increased by $0.4 million, split evenly between higher 5G and 4G sales. Service revenue increased by $0.3 million as growth in 5G services more than offset a decline in LTE services.
The company’s gross loss narrowed to $0.1 million from $1.1 million a year earlier, although gross margin remained negative. Cheng cautioned that the latest quarter’s margin was not representative of GCT’s expectations for future profitability and said the company expects margins to improve as 5G product sales become a larger share of revenue.
Net loss narrowed to $7.4 million from $13.8 million. The latest result included a $6.2 million gain from changes in the fair value of common-stock warrant liabilities and a $5.4 million foreign-currency transaction loss related to Korean won-denominated term loans. Adjusted EBITDA loss decreased to $6.5 million from $7 million a year earlier.
Cash and Production Capacity
GCT ended the quarter with $17.2 million in cash and equivalents and $3.3 million in net inventory. Net cash used in operating activities fell to $8.5 million from $16.6 million in the second quarter. Cheng said the company extended the maturities of $26.5 million in loans by one year.
The IRS also abated a previously assessed excise tax, releasing a $3.6 million liability and providing a refund of approximately $216,000, including interest, Cheng said.
Schlaefer said inventory reflected preparations for larger shipments that had been planned for the third and fourth quarters, as well as work in process. Cheng said GCT paid $7 million at the end of the second quarter to preserve wafer capacity with its foundry supplier. Schlaefer said existing inventory and wafers in process would cover the company through the first half of 2027, but not the full year.
About GCT Semiconductor (NYSE:GCTS)
GCT Semiconductor is a fabless semiconductor company that develops wireless connectivity chips and related solutions. Its products are designed for cellular applications, including 4G LTE, 5G and the Internet of Things. The company's offerings include modem and radio-frequency technologies used in devices such as mobile broadband equipment, routers and connected products. GCT works with customers and partners that incorporate its chipsets into wireless devices and systems. Founded in 1998, GCT serves customers in the global wireless communications market.
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