By Lisa Thompson
NYSE:GCTS
READ THE FULL GCTS RESEARCH REPORT
GCT Semiconductor (NYSE:GCTS) is a fabless semiconductor provider to the telecom and IoT markets for 4G and 5G devices, excluding most smartphones. Qualcomm dominates the market, and GCT is one of the few, and in some cases the only, possible secondary provider. The company is at an inflection point in revenues, where demand for 4G chipsets is trailing off and is about to ramp up for 5G. Going forward, revenues are expected to be almost exclusively from 5G products. The company expects revenues to begin growing sequentially in Q1 2026. Due to a steep production ramp, it is expected that GCT could be breakeven by Q4 2026, when revenues are expected to surge to over $25 million.
As revenues from its legacy 4G technology-based chipsets approach zero and are rapidly overtaken by 5G product sales, GCT Semiconductor will become a pure play in 5G. However, because it has 4G functionality in the 5G chipset, it can address virtually all network operators worldwide.
Since virtually all of its hardware is off-the-shelf, GCT has now started to build 5G chipset inventory in anticipation of orders. While much of what it sells is off-the-shelf, GCT does provide bespoke software and device design assistance as a way of building customer success and loyalty.
The company has development contracts, MOUs, and/or LOIs with a number of companies that are expected to result in orders for 5G products. These companies include: Verizon, Airspan, Ligado, Kyocera, Orbic, Aramaco Digital, and a European tier-one telecom supplier.
In late December, Gogo announced a successful launch of its 5G air-to-ground (ATG) network, which is based on GCT’s chipset. This is the first network launch using the GCT 5G chipset, for which there will be more in 2026.
In early January, GCT announced the launch of its first commercial shipments of 5G chipsets. We anticipate that the company will receive additional production orders from its development partners in the first quarter of 2026.
The stock currently trades at a fully diluted enterprise value of $124 million. The global market for the products GCT sells is estimated to be $23 billion in 2025. If GCT can secure even a small portion of that market, its valuation should far exceed its current price. We believe the stock is worth $4.50 based on $95 million in revenues in 2027 at 3.7x EV to Sales. This is conservative, using only half the valuation of its peers.
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