GCTS: Major Customer Orders Delayed One More Quarter
By Lisa Thompson
NYSE: GCTS
READ THE FULL GCTS RESEARCH REPORT
Q3 came in as expected for GCT Semiconductor (NYSE:GCTS) , as revenues were spot on and losses were slightly less. We had hoped for the revenue ramp to start in Q4, but again it looks like Q4 will be similar to Q3 or slightly better, with the ramp coming in the first half of 2027 due to customer timelines. There have been both regulatory issues and technical approval issues for its customers, some of which have been resolved and give us greater confidence in the first-half ramp. In the third quarter, it shipped 3,200 5G chipsets, bringing the year-to-date number to 11,300. It also fulfilled 18% of a $1.4 million government order for wireless LTE tablets, with 20% to be shipped in Q4 and the rest in Q1. It is still working on prospects for the converged gateway with MaxLinear, and hopes to announce progress, perhaps at CES in January.
On August 26, 2026, GCT announced a strategic partnership and license agreement with a current customer. Together, they are developing next-generation drone control and communication technologies. The collaboration combines GCT’s advanced cellular and NTN expertise with the provider’s industrial-grade wireless innovation and includes the integration of GCT’s GDM7243i connectivity solution and IoT module. Some samples were shipped in Q3, and the two are working on a supply agreement. This customer has been demoing its product to the defense industry, and we hope to see announcements once it lands some contracts.
The company announced it has added a new 5G customer developing terrestrial-based 3D geolocation solutions to augment or replace GPS indoors and in urban canyons. This customer received the majority of GCT’s Q3 5G shipments for proof-of-concept testing. These chips could go into standalone products or augment other devices. It could be of particular interest to first responders and delivery services who need more specific locations when in areas where GPS doesn’t work well due to spotty coverage, or when they need to go into a building.
We are lowering estimates as orders push out. We look to new customer announcements and production orders in the next few months, showing continued traction. Although this is disappointing, the customers are real and can provide large revenue as soon as they can launch their products. In particular, we look to the satellite service that has now passed regulatory approval and needs to start ordering products, and to CPE suppliers to the Verizon network. We believe the stock is worth at least $2.30 based on $50 million in revenues in 2027 and $180 million in 2028.
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