By Lisa Thompson
NASDAQ: GCTS
READ THE FULL GCTS RESEARCH REPORT
GCT Semiconductor (NASDAQ: GCTS) missed second quarter expectations as customer orders slipped. Its 5G chipset shipments increased by 71% sequentially to over 5,100. Most of the product shipments were to four customers this quarter; the volumes were small, with three taking only about 1,500 5G chips each. Each of these customers is using these chipsets for a different application: fixed wireless access (FWA), aviation, mobile hotspot, and a push-to-talk phone.
We did not get the sequential revenue ramp we were expecting, but expect that next quarter will be better than this, but not by a lot. During the quarter, GCT had to prepay $7 million for wafer capacity at its foundries to ensure delivery of what it expected to sell in 2026. Going forward, it is expected to replenish that prepayment on a six-month rolling basis.
In June, GCT attended Computex Taipei and demonstrated a jointly developed converged gateway in MaxLinear’s booth. A converged gateway is a high-end FWA product that incorporates multiple inputs to deliver high-speed internet connectivity for enterprise customers. The product had high interest from four large customers: two in the US, one in Japan, and one in Europe. One in particular has a high probability of closing, and we could see a press release in Q3 or Q4. Having these first adopters will be beneficial in marketing to others in their industries.
During the call, management announced it had signed a new customer in the Unmanned Aerial Vehicle (UAV) space that provides products to consumers and defense companies. We expect a press release on this deal in the near future.
We are lowering 2026 estimates as orders push out, but have no reason to lower 2027 and 2028 numbers yet. We look to improving sequential results, new customer announcements, and new orders in the next few months, showing continued traction. We believe the stock is worth at least $3.40 based on $95 million in revenues in 2027.
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