GCT Semiconductor (NYSE:GCTS) reported higher first-quarter revenue and said its 5G chipset commercialization efforts continued to gain traction, with management pointing to increased shipments, broader customer engagement and progress across fixed wireless access, Internet of Things and non-terrestrial network markets.
Chief Executive Officer John Schlaefer said on the company’s earnings call that GCT delivered 3,000 5G chipsets in the first quarter of 2026, up 58% sequentially from the fourth quarter. He described the volume as still modest relative to the long-term opportunity but said it reflected customers moving through late-stage testing and into initial deployments.
“Customer confidence in the performance, reliability, and integration of our 5G chipset is building, and we expect 5G chipset shipments to continue trending upward as customers advance their programs,” Schlaefer said.
Revenue Rises on Product and Service Growth
Chief Financial Officer Edmond Cheng said first-quarter net revenue rose to $1.9 million from $0.5 million in the same period a year earlier, an increase of $1.4 million, or 287%. The increase included $0.4 million of higher product sales and $1 million of higher service revenue.
Cheng said product sales growth was driven by both 4G and 5G products, while the increase in service revenue was tied to 5G operations. That was partially offset by lower LTE service revenue as GCT shifts its portfolio toward 5G.
Cost of net revenue increased to $1 million from $0.4 million a year earlier, reflecting higher costs from increased unit volume. Gross margin improved to 49% from 18% in the prior-year period, which Cheng attributed largely to revenue mix, including higher-margin service offerings and a greater share of 5G and product sales.
- Net revenue: $1.9 million, up from $0.5 million a year earlier
- Gross margin: 49%, up from 18% a year earlier
- 5G chipset shipments: 3,000 units, up 58% sequentially
- Cash and cash equivalents: $7.2 million at quarter-end
Management Says Service Revenue Boosted Margin
During the question-and-answer session, Schlaefer said service revenue represented a larger portion of quarterly sales in the first quarter, but he emphasized that GCT’s growth strategy is centered on chipset sales rather than services.
“As the chipset sales increase, the chipset sales and product revenue will far outpace that service revenue,” Schlaefer said. “That is our growth. We’re not in the service business.”
Asked about the sustainability of the 49% gross margin, Schlaefer said the quarter’s margin was higher than the company would expect once product revenue dominates the mix. He said GCT continues to expect product-related gross margins to begin around 35% and grow into the low 40% range over time. The company also said gross margin could normalize to the high-30% to low-40% range as chipset sales become more significant.
In response to a question from Lisa Thompson of Zacks Investment Research, management said the first quarter included licensing revenue that would be considered one-time recognition. Future service revenue will depend on contract milestones, and Schlaefer said it is difficult to predict timing in advance.
Satellite Communications Agreement Expands 5G Opportunity
Schlaefer highlighted an expanded engagement with what he described as one of the world’s largest satellite communication providers. Under a reference platform agreement, GCT will provide a reference design based on its 4G and 5G chipsets to help accelerate development of the partner’s next-generation user equipment.
The platform is intended to support high-bandwidth and high-speed communications across satellite and terrestrial networks. Schlaefer said the agreement reinforces GCT’s role in enabling connectivity across terrestrial and non-terrestrial networks and creates a “multi-phase opportunity” for adoption as next-generation user equipment platforms are introduced.
Initial 5G chipset shipments to that partner remain on track to begin in the second half of 2026, according to Schlaefer.
Customer Base Broadens as Commercial Ramp Continues
Schlaefer said GCT is supporting programs across fixed wireless access, IoT and non-terrestrial network verticals, with customers moving through integration, certification and deployment planning. He said engagements are increasingly extending beyond traditional licensing into platform-level collaboration.
In the Q&A session, Schlaefer said product revenue in the quarter came from at least five customers and potentially as many as seven, noting that some sales move through distribution and may involve multiple end customers. He said early product revenue can be “bursty,” with one customer contributing more in a given quarter before another customer picks up later, but he expects a broader spread of revenue across customers over time.
Expenses and Liquidity
Research and development expenses declined to $3.2 million from $4.1 million a year earlier, a decrease of $0.9 million, or 23%. Cheng said the decrease was driven by a $0.5 million reduction in project-specific intellectual property expenses and a $0.4 million reduction in professional services tied to completion of a 5G chipset design last year.
Sales and marketing expenses were relatively steady at $1.2 million, compared with $1.1 million a year earlier. General and administrative expenses were also relatively flat, rising to $2.7 million from $2.6 million.
GCT ended the quarter with $7.2 million in cash and cash equivalents, $2.4 million in net accounts receivable and $1.6 million in net inventory. Cheng said the company has access to an at-the-market equity program of up to $75 million and remaining capacity under its $200 million shelf registration statement.
Management said operating expenses are expected to rise in the second half of the year as R&D spending increases to support the product roadmap. The company said quarterly operating expenses are expected to run at about $8 million beginning in the third quarter.
Schlaefer said GCT remains focused on strengthening its supply chain and operational infrastructure to support higher 5G chipset volumes. He said the company expects sequential growth in 5G chipset shipments as commercialization scales through 2026, while noting that deployment timing can vary as customers finalize rollout plans.
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.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
Where Should You Invest $1,000 Right Now?
Before you make your next trade, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis.
Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and none of the big name stocks were on the list.
They believe these five stocks are the five best companies for investors to buy now...
The article "GCT Semiconductor Q1 Earnings Call Highlights" first appeared on MarketBeat.
