Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.

This discussion and analysis of our financial condition and results of operations should be read together with our unaudited condensed consolidated financial statements as of and for the three and six months ended June 30, 2026 and related notes appearing elsewhere in this quarterly report on Form 10-Q ("Quarterly Report") and our audited consolidated financial statements as of and for the years ended December 31, 2025 and 2024 and related notes included in our Form 10-K ("Annual Report"), filed with the Securities and Exchange Commission ("SEC") on March 25, 2026.

This discussion may contain forward-looking statements including, but not limited to, our expectations or predictions of future financial or business performance or conditions. Forward-looking statements are inherently subject to risks, uncertainties, and assumptions. You should read the sections in this Quarterly Report titled "Risk Factors" and "Special Note of Forward-Looking Statements" for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by these forward-looking statements. Unless otherwise indicated, the terms "GCT," "the Company," "we," "us," or "our" refer to GCT Semiconductor Holding Inc., a Delaware corporation, together with our consolidated subsidiaries.

Overview

We are a fabless semiconductor company that specializes in the design, manufacturing, and sale of communication semiconductors, including high-speed wireless communication technologies such as 5G/4.75G/4.5G/4G transceivers ("RF") and modems, which are essential for a wide variety of industrial, business-to-business ("B2B") and consumer applications. We have successfully developed and supplied communication semiconductor chipsets and modules to leading wireless operators worldwide, as well as to original design manufacturers ("ODMs") and original equipment manufacturers ("OEMs") for portable wireless routers (e.g., Mobile Router ("MiFi")), indoor and outdoor fixed wireless routers (e.g., customer premise equipment ("CPE")), industrial machine-to-machine ("M2M") applications and smartphones.

We oversee sales, marketing, and accounting operations from our headquarters in San Jose, California. The Company conducts product design, development, and customer support through our wholly owned subsidiaries located in South Korea, one of which serves as our research and development center. In addition, we utilize separate sales offices for local technical support and sales in Taiwan, China, and Japan.

Our current product portfolio includes RF and modem chipsets based on 4th generation ("4G"), known as Long Term Evolution ("LTE"), technology offering a variety of chipsets differentiated by speed and functionality. These include 4G LTE, 4.5G LTE Advanced (twice the speed of LTE), and 4.75G LTE Advanced-Pro (four times the speed of LTE) chipsets. The Company also develops and sells cellular Internet of Things ("IoT") chipsets for low-speed mobile networks such as eMTC/NB-IOT/Sigfox, and other network protocols. 5G chipset was added to our portfolio recently, with commercial shipments in the fourth fiscal quarter of 2025.

Even as more and more applications are deployed on 5G networks, we believe that demand for our existing 4G LTE product lineup (4.75G/4.5G/4G, etc.) will continue, because 4G products are expected to coexist in the market with 5G products at lower price points for some time in the same way that 3rd generation ("3G") products coexisted with 4G products when 4G networks were first deployed. We commenced our first production shipments of our 5G products in the last quarter of 2025. We also expect the average sales prices for our 5G chipset to be approximately four times that of our 4G chipset, resulting in a significant increase in revenue and gross margins. We plan to continuously expand our product lineup to support 5G chipsets for future applications such as vehicle-to-everything standard (e.g., C-V2X), 5G-based satellite communication (e.g., Non-Terrestrial Network), and 5G-based IoT standard (e.g., RedCap). Our current chipset products are used in a wide variety of applications, including fixed wireless subscriber terminals (e.g., CPE), mobile wireless routers (e.g., Mobile Router/MiFi), various communication modules and devices, and industrial products.

Since inception, we have financed our operations primarily through cash receipts from customers, the issuance of convertible promissory notes, borrowings, and the issuance of capital stock.

Key Factors Affecting Our Performance

We believe that our future success and financial performance depend on a number of factors that present significant opportunities for our business but also pose risks and challenges, including those described in the section titled "Risk Factors" of our Annual Report on Form 10-K filed with the SEC on March 25, 2026.

Commercial Deployment of 4G LTE and 5G Market

Our business depends upon the continued commercial deployment of 4G and 5G wireless communications equipment, products, and services based on GCT's technology. Deployment of new networks by wireless carriers requires significant capital expenditures well in advance of any revenue from such networks. If the rate of deployment of new networks by wireless carriers is slower than our expectation, this will reduce the sales of products for use on these networks by OEMs and ODMs that use GCT technology. This would harm our revenues and our financial results. The worldwide commercial deployment and adoption of the narrowband LTE variants, Cat M and Cat NB, are expected to further expand the markets for IoT devices. If deployments of the Cat M or Cat NB standards are delayed or if competing standards for IoT devices become favored by wireless carriers, we may not be able to successfully increase sales of our Cat M and Cat NB products, which would harm our revenues and financial results. 5G RedCap and eRedCap appear to be of great interest to wireless carriers, although adoption is limited at this early stage. If an alternative were to appear in the short-to-mid-term this could result in reduced long-term demand for our RedCap and eRedCap chipsets. It should also be noted that RedCap and eRedCap are expected to be replacements for CatM, Cat1bis and some Cat4 thus eventually reducing demand for the LTE IoT chipsets.

Development of New Products

The markets in which our customers and we compete or plan to compete are characterized by rapidly changing technologies, industry standards, and technological obsolescence. Our ability to compete successfully depends on our ability to design, develop, market, and support new products and enhancements on a timely and cost-effective basis. A fundamental shift in technologies in any of our target markets, such as the 5G wireless communications markets, could harm our competitive position within these markets. Our failure to anticipate these shifts, develop new technologies, or react to changes in existing technologies could delay our development of new products, which could result in product obsolescence, decreased revenue, and loss of design wins.

The success of our new products will depend on accurate forecasts of long-term market demand, customer and consumer requirements, and future technological developments, as well as a variety of specific implementation factors, including:

If we fail to introduce new products that meet the demands of our customers or our target markets, or if we fail to penetrate new markets, our revenue will likely decrease over time, and our financial condition could suffer.

Semiconductor and Communications Industry

The semiconductor industry has historically exhibited a pattern of cyclicality, which at various times has included significant downturns in customer demand. Cyclical downturns can result in substantial declines in semiconductor demand, production overcapacity, high inventory levels, and accelerated erosion of average selling prices. Such downturns result from a variety of market forces, including constant and rapid technological change, quick product obsolescence, price erosion, evolving standards, short product life cycles, and wide fluctuations in product supply and demand.

Recent downturns in the semiconductor industry have been attributed to a variety of factors, including global macroeconomic uncertainty, trade and geopolitical tensions, including tariffs, weakness in end-market demand, and pricing across semiconductor applications. In recent periods, portions of the semiconductor industry have experienced downturns driven by inventory corrections and reduced demand in certain end markets, while other segments have experienced increased investment and growth. These mixed industry conditions have impacted our business, as well as our suppliers, distributors, and end customers.

Because a significant portion of our expenses are fixed in the near term or are incurred in advance of anticipated sales, we may not be able to reduce our expenses rapidly enough to offset any unanticipated shortfall in revenue. If this situation were to occur, it could adversely affect our operating results, cash flow, and financial condition. In addition, the semiconductor industry has periodically

experienced increased demand and production constraints. As a fabless semiconductor company, we rely exclusively on third-party foundries, including certain major semiconductor foundries such as United Microelectronics Corporation, Samsung and Taiwan Semiconductor Manufacturing Corporation, for the manufacturing and supply of our wafers and products. We do not have any formal foundry agreements that guarantee a minimum level of manufacturing capacity. In times of significantly increasing demand for capacity, these foundries may experience production shortages and may not allocate sufficient manufacturing capacity to us. If this happens, we may not be able to produce sufficient quantities of our products to meet the increased demand. Any disruption in our supply chain can make it more difficult for us to obtain sufficient wafer, assembly, and test resources from our subcontract manufacturers. Any factor adversely affecting the semiconductor industry in general, or the particular segments of the industry that our products target, may adversely affect our ability to generate revenue and impact our operating results.

In addition, a shortage of manufacturing capacity can also impact the product development strategies of our major customers, which may, in turn, affect our business operations. For example, in 2022, the supply shortage caused our largest customer to change its priority on product development from 4G to the next generation of 5G products (at a time when our 5G product was not available), which resulted in the reduction of 4G activity and a decline in demand for our products.

In the past, the wireless communications industry has experienced pronounced downturns, and these cycles may continue in the future. A future decline in global economic conditions could have adverse, wide-ranging effects on demand for our products and for the products of our customers, particularly wireless communications equipment manufacturers or other members of the wireless industry, such as wireless network operators. Inflation, deflation, and economic recessions that adversely affect the global economy and capital markets also adversely affect our customers and our end consumers. For example, our customers' ability to purchase or pay for our products and services, obtain financing, and upgrade wireless networks could be adversely affected, which may lead to many networking equipment providers slowing their research and development activities, canceling, or delaying new product development, reducing their inventories, and taking a cautious approach to acquiring our products, which would have a significant negative impact on our business. If this situation were to occur, it could adversely affect our operating results, cash flow, and financial condition. In the future, any of these trends may also cause our operating results to fluctuate significantly from year to year, which may increase the volatility of our stock price.

Key Components of Results of Operations

Net Revenues

The timing of revenue recognition and the amount of revenue recognized in each case depends on various factors, including the specific terms of each arrangement and the nature of the underlying performance obligations. Our net revenues are comprised of product and service revenues.

Product Revenues

Our product sales are generated from the sale of mobile semiconductor products. Product revenues are recognized at a point in time once control has been transferred to a customer, which is generally at the time of shipment.

Service Revenues

Our service revenues are generated from the sale of mobile semiconductor platform solutions aimed at the 4G LTE and 5G industries, development services, technical advice, and maintenance services. Service revenues are generally recognized over time as the customer obtains control of the promised services. Service revenue may include licensing fees, which are recognized upon delivery of the license, generally at a point in time.

Cost of Net Revenues

Our cost of net revenues consists of product and service costs. The cost of product net revenues consists of direct and indirect costs related to the manufacturing of our products. Direct costs include wafer costs and costs of assembly and testing performed by third-party contract manufacturers. Indirect costs consist of provisions for excess, slow-moving and obsolete inventory, royalties, allocated overhead for employee costs and facility costs, warranty, and the amortization of our production mask sets and certain intangible assets. Shipping and handling costs incurred for inventory purchases related to the units sold and costs of product shipments are also recorded in the cost of net product revenues. Service costs consist of non-recurring engineering costs for service projects.

Operating Expenses

Research and Development Expenses

Our research and development ("R&D") expenses consist of costs incurred to develop our products and services. These expenses consist of personnel costs, including salaries, employee benefit costs, and stock-based compensation for employees engaged in R&D activities, software costs, computing costs, hardware and experimental supplies, and expenses for outside engineering consultants. We expense all R&D costs in the periods in which they are incurred.

Sales and Marketing Expenses

Our sales and marketing ("S&M") expenses consist of employee-related expenses, including salaries, commissions, employee benefits costs, and stock-based compensation for all marketing, sales, and sales support employees. S&M expenses also include local and centralized advertising costs and the infrastructure required to support our marketing efforts. We expense S&M costs in the periods in which they are incurred.

General and Administrative Expenses

Our general and administrative ("G&A") expenses consist of various components not related to R&D or S&M, such as personnel costs, regulatory fees, costs associated with maintaining and filing intellectual property, meals and entertainment expenses, travel expenses, insurance expenses, and other expenditures related to external professional services including legal, engineering, marketing, human resources, audit, and accounting services. Personnel costs include salaries, benefits, and stock-based compensation. As we continue to grow and expand our workforce and operations, and considering the increased costs associated with operating as a public company, we anticipate that our G&A expenses will increase for the foreseeable future.

Other Income (Expense)

Interest Expense

Interest expense primarily consists of interest and amortization of related debt issuance costs related to our borrowings and penalties incurred on our borrowings that are past their maturity dates.

Gain (loss) on foreign currency transactions, net

Gain (loss) on foreign currency transactions consists of gains or losses, presented on a net basis, from transactions denominated in other currencies, primarily South Korean won.

Change in fair value of common stock warrant liabilities

Common stock warrants are classified as liabilities if they do not meet equity classification requirements based on their settlement mechanism upon a change of control and similar transactions. The corresponding liability is remeasured at fair value while the common stock warrants remain outstanding.

Change in fair value of convertible promissory notes

Change in fair value of convertible promissory notes includes measurement gains and losses related to the outstanding convertible promissory notes that are accounted for under the fair value option.

Results of Operations

This section discusses the results of our operations for the periods indicated. The period-to-period comparison of financial results is not necessarily indicative of future results.

For the Three Months Ended June 30, 2026 and 2025

The following table sets forth our historical results for the periods indicated and the changes between periods (in thousands):

Net Revenues

Net revenues decreased by $0.2 million, from $1.2 million for the three months ended June 30, 2025 to $1.0 million for the three months ended June 30, 2026. This change was due to a decrease of $0.2 million in service revenues.

Product sales remained consistent at $0.4 million for each of the three months ended June 30, 2026 and 2025. A $0.3 million decrease in 4G product sales was offset by a $0.3 million increase in 5G product sales, reflecting the continued transition of certain customers from 4G to 5G products.

Service revenues decreased by $0.2 million, from $0.8 million for the three months ended June 30, 2025 to $0.6 million for the three months ended June 30, 2026. The decrease was primarily due to a $0.8 million decrease in LTE service revenue as our service project portfolio shifted to 5G service offerings, partially offset by a $0.6 million increase in 5G service revenue.

Cost of Net Revenues

Cost of net revenues increased by $0.4 million, from $0.8 million for the three months ended June 30, 2025 to $1.2 million for the three months ended June 30, 2026.

Product costs increased by $0.5 million, from $0.6 million for the three months ended June 30, 2025 to $1.0 million for the three months ended June 30, 2026. The increase was primarily attributable to a $0.4 million increase in manufacturing costs driven by the ramp-up of 5G production and related reduced production yields, as well as a $0.2 million increase in depreciation related to 5G mask sets.

Changes in service costs were not material.

Our gross margin was 32% for the three months ended June 30, 2025. Our gross margin for the three months ended June 30, 2026 is negative and not representative of our expectations regarding profitability of our products and services in future reporting periods.

Research and Development Expenses

Research and development expenses decreased by $0.2 million, from $3.5 million for the three months ended June 30, 2025 to $3.3 million for the three months ended June 30, 2026. The decrease was primarily driven by a $0.5 million reduction in professional services provided by Alpha for the design of 5G chip products after the completion of this development project in the second quarter of 2025, and a $0.1 million decrease in stock-based compensation expense. These decreases were partially offset by a $0.4 million increase in payroll-related costs.

Sales and Marketing Expenses

Sales and marketing expenses remained consistent at $1.1 million and $1.0 million for the three months ended June 30, 2026 and 2025, respectively.

General and Administrative Expenses

General and administrative expenses decreased by $0.6 million, from $3.4 million for the three months ended June 30, 2025 to $2.8 million for the three months ended June 30, 2026. The decrease was primarily due to a lower loss resulting from changes in the allowance for credit losses on accounts receivable. Changes in the allowance for credit losses resulted in a loss of $0.6 million during the three months ended June 30, 2026, compared to a loss of $1.1 million during the three months ended June 30, 2025.

Interest Expense

Interest expense decreased by $0.3 million, from $1.5 million for the three months ended June 30, 2025 to $1.2 million for the three months ended June 30, 2026, primarily due to lower average outstanding debt balances resulting from debt repayments made since June 30, 2025.

Gain (Loss) on Foreign Currency Transactions, net

Foreign currency transactions resulted in a gain of $0.8 million for the three months ended June 30, 2026 and a loss of $3.2 million for the three months ended June 30, 2025. The primary factor behind these fluctuations is our term loans portfolio, which is largely denominated in the South Korean won. During the second quarter of 2025, the South Korean won appreciated against the U.S. dollar, resulting in foreign currency losses, while during the second quarter of 2026, the South Korean won depreciated against the U.S. dollar, resulting in foreign currency gains.

Change in Fair Value of Common Stock Warrant Liabilities

The change in fair value of common stock warrant liabilities resulted in a loss of $12.3 million for the three months ended June 30, 2026 and a loss of $1.0 million for the three months ended June 30, 2025. For the public warrants, the losses in both periods were primarily driven by increases in the quoted market price of our common stock warrants. For the private placement warrants, the losses reflected both the increase in quoted market price and changes in the expected volatility assumption used in the Black-Scholes valuation model. The larger loss recognized during the three months ended June 30, 2026 reflects the greater increase in these valuation inputs relative to the three months ended June 30, 2025.

Change in Fair Value of Convertible Promissory Notes

Losses from changes in fair value of convertible promissory notes remained consistent at $0.2 million for each of the three months ended June 30, 2026 and 2025.

For the Six Months Ended June 30, 2026 and 2025

The following table sets forth our historical results for the periods indicated and the changes between periods (in thousands):

Net Revenues

Net revenues increased by $1.2 million, from $1.7 million for the six months ended June 30, 2025 to $2.9 million for the six months ended June 30, 2026. This change was due to an increase of $0.4 million in product sales and $0.8 million in service revenues.

Product sales increased by $0.4 million, from $0.5 million for the six months ended June 30, 2025 to $0.9 million for the six months ended June 30, 2026. The increase was primarily due to a $0.4 million increase in 5G platform product sales during the six months ended June 30, 2026.

Service revenues increased by $0.8 million, from $1.2 million for the six months ended June 30, 2025 to $2.0 million for the six months ended June 30, 2026. The increase was due to a $2.0 million increase in 5G service revenue partially offset by a $1.2 million decrease in LTE platform revenue as our service project portfolio shifted to 5G service offering.

Cost of Net Revenues

Cost of net revenues increased by $1.0 million, from $1.2 million for the six months ended June 30, 2025 to $2.2 million for the six months ended June 30, 2026.

Product costs increased by $1.1 million from $0.8 million for the six months ended June 30, 2025 to $1.9 million for the six months ended June 30, 2026. The increase in product costs was primarily attributable to a $0.5 million increase in direct manufacturing costs associated with the ramp-up of 5G production, a $0.3 million increase in depreciation related to 5G mask sets placed into service during the third and fourth quarters of 2025, and a $0.3 million increase in other indirect manufacturing costs.

Changes in service costs were not material.

Our gross margin decreased to 25% for the six months ended June 30, 2026 from 28% for the six months ended June 30, 2025 primarily due to higher product costs, including increased platform costs, production overhead, depreciation, and pre-production and certification costs related to our 5G products.

Research and Development Expenses

Research and development expenses decreased by $1.1 million, from $7.6 million for the six months ended June 30, 2025 to $6.5 million for the six months ended June 30, 2026. This decrease was primarily driven by a $0.9 million reduction in professional services provided by Alpha for the design of 5G chip products following the completion of this development project in the second quarter of 2025, and a $0.5 million reduction in project-specific intellectual property expenses incurred in the six months ended June 30, 2026, partially offset by net increases in other research and development costs of $0.3 million.

Sales and Marketing Expenses

Sales and marketing expenses remained consistent at $2.2 million and $2.1 million for the six months ended June 30, 2026 and 2025, respectively.

General and Administrative Expenses

General and administrative expenses decreased by $0.5 million, from $6.0 million for the six months ended June 30, 2025 to $5.6 million for the six months ended June 30, 2026. The decrease was primarily attributable to a $0.2 million reduction in the loss from changes in the allowance for credit losses, and a $0.3 million decrease in other general and administrative expenses.

Interest Expense

Interest expense increased by $0.4 million, from $2.6 million for the six months ended June 30, 2025 to $3.0 million for the six months ended June 30, 2026. This increase was primarily due to the penalties incurred on our outstanding loans that are past their maturity dates.

Gain (Loss) on Foreign Currency Transactions, net

Foreign currency transactions resulted in a gain of $3.4 million for the six months ended June 30, 2026 and a loss of $3.2 million for the six months ended June 30, 2025. The primary factor behind these fluctuations is our term loans portfolio, which is largely denominated in the South Korean won. During the six months ended June 30, 2025, the South Korean won appreciated against the U.S. dollar, resulting in foreign currency losses, while during the six months ended June 30, 2026, the South Korean won depreciated against the U.S. dollar, resulting in foreign currency gains.

Change in Fair Value of Common Stock Warrant Liabilities

The change in fair value of common stock warrant liabilities resulted in a loss of $15.4 million for the six months ended June 30, 2026 and a gain of $0.6 million for the six months ended June 30, 2025. For the public warrants, the loss for the six months ended June 30, 2026 was primarily driven by an increase in the quoted market price of our common stock warrants. The gain for the six months ended June 30, 2025 was primarily driven by a decrease in the quoted market price of our common stock warrants. For the private placement warrants, the losses reflected both the increase in quoted market price and changes in the expected volatility assumption used in the Black-Scholes valuation model. The smaller loss recognized during the six months ended June 30, 2026 reflects the greater increase in these valuation inputs relative to the six months ended June 30, 2026.

Change in Fair Value of Convertible Promissory Notes

Losses from changes in fair value of convertible promissory notes were $1.5 million and $0.2 million for the six months ended June 30, 2026 and 2025, respectively. The increase in expense was primarily attributable to the change in fair value of the Indigo Note recognized prior to its conversion during the first quarter of 2026.

Liquidity and Capital Resources

Since inception, we have financed our operations primarily through cash receipts from customers, the issuance of convertible promissory notes, borrowings, the issuance of capital stock, and the exercise of stock options.

With limited exceptions, we have incurred, and expect to continue to incur, significant operating losses. For the six months ended June 30, 2026 and 2025, we had a net loss of $30.2 million and $20.5 million, respectively. For the six months ended June 30, 2026 and

2025, we used $24.0 million and $16.6 million in cash in operating activities, respectively. As of June 30, 2026, we had an accumulated deficit of $635.6 million. Our unaudited condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets, or on the amounts and classification of liabilities, that might be necessary if we are unable to obtain adequate financing in the future. We undertake various activities to finance our operations, as further discussed below.

At-Market Offering

In April 2025, we entered into an at-market issuance sales agreement ("ATM Agreement") with B. Riley Securities, Inc. and H.C. Wainwright & Co., LLC, acting as sales agents, pursuant to which we may sell shares of our common stock through at-the-market offerings or to the sales agents as principal purchasers ("ATM Offering"). In June 2026, we amended the ATM Agreement to increase the maximum aggregate gross proceeds from $75.0 million to $120.0 million. As there is no commitment for future sales of additional shares under the at-market issuance sales agreement or the ATM Offering, we cannot predict how much, if any, additional proceeds may be realized. During the six months ended June 30, 2026, we received net proceeds of approximately $53.8 million in cash related to the ATM Offering.

Related Party Borrowings from Dr. Kyeongho Lee and Anapass, Inc.

In November and December 2024, we entered into term loan agreements with Dr. Kyeongho Lee ("Kyeongho Lee"), the chairman of our board of directors, pursuant to which we borrowed $2.9 million and $2.1 million, originally maturing in December 2024 and January 2025, respectively. In October 2025, we partially repaid to Kyeongho Lee $1.4 million of the term loans originally entered into in December 2024. In January and April 2026, we partially repaid to Kyeongho Lee $0.9 million and $1.2 million of the term loan originally entered in November 2024. In June 2026, we fully paid off the remaining loan of $0.7 million originally entered into in November 2024. The remainder of the term loan originally entered into in December 2024 is outstanding as of June 30, 2026. In January 2025, we entered into a term loan agreement with Kyeongho Lee, pursuant to which we borrowed $4.4 million maturing in February 2025, which remained outstanding as of June 30, 2026. For the six months ended June 30, 2026, we incurred penalties of 3% of principal per month on loans in the amount of $1.1 million that are past their maturity dates, calculated daily until the principal and accrued interest are paid. Outstanding penalties payable to Kyeongho Lee as of June 30, 2026 are $1.5 million.

In December 2024, we entered into a term loan agreement with Anapass, Inc., our major stockholder, pursuant to which we borrowed $3.4 million maturing in December 2025. In March 2025, we entered into a term loan agreement with Anapass, Inc., pursuant to which we borrowed $3.1 million maturing in March 2026. In July 2025, we entered into a term loan agreement with Anapass, Inc., pursuant to which we borrowed $2.1 million maturing in July 2026. In July 2026, we executed an amendment with Anapass, Inc. to extend the maturity date from July 2026 to July 2027 for the term loan with a principal amount of $2.1 million. In August 2025, we entered into a term loan agreement with Anapass, Inc., pursuant to which we borrowed $1.4 million maturing in August 2026. In August 2026, we executed an amendment with Anapass, Inc. to extend the maturity date from August 2026 to August 2027 and change the annual interest rate from 6.5% to 7.0%. In September 2025, we entered into a term loan agreement with Anapass, Inc., pursuant to which we borrowed $10.7 million maturing in September 2026. In July 2025, we executed an amendment with Anapass, Inc. to extend the maturity date of a term loan, originally entered into in July 2016 with a principal of $4.5 million, from July 2025 to July 2026. In November 2025, we executed an amendment with Anapass, Inc. to extend the maturity date of a term loan, originally entered into in May 2022 with a principal of $2.2 million, from November 2025 to November 2026. In December 2025, we executed an amendment with Anapass, Inc. to extend the maturity date of the term loan originally entered into in December 2024 with a principal of $3.4 million from December 2025 to December 2026. In March 2026, we executed an amendment with Anapass, Inc. to extend the maturity date of the term loan originally entered into in March 2025 with a principal of $3.1 million from March 2026 to March 2027 and change the annual interest rate from 6.5% to 7.0%. In July 2026, we partially repaid KRW 2.0 billion ($1.3 million) of the promissory note issued to Anapass, Inc. and entered into an amendment with Anapass, Inc. to extend the maturity date of the promissory note with the remaining outstanding principal of KRW 4.0 billion ($2.6 million) from July 2026 to July 2027 and change the annual interest rate from 5.5% to 7.0%.

2024 Convertible Promissory Notes

In February 2026, we executed an amendment to extend the maturity date of the 2024 convertible promissory notes from February 2026 to February 2028. In connection with the execution of this amendment, we issued a warrant to purchase 500,000 shares of our common stock to a holder of the 2024 convertible promissory notes ("February 2026 Warrant"). The February 2026 Warrant was immediately exercisable at $2.50 per share and will expire three years following the issuance date.

Indigo Convertible Promissory Notes

In December 2025, we entered into a convertible promissory note purchase agreement with Indigo Capital LP ("Indigo"), which provides for the issuance of convertible promissory notes of up to $20.0 million in aggregate ("Indigo Notes" or "Indigo Facility"). Each Indigo Note will be issued at a purchase price equal to 93% of its principal amount and matures 24 months from its issuance date and is convertible into our common stock at any time on or before its maturity date unless redeemed by us. The conversion price is 90% of the reference price, which is calculated as the lowest volume-weighted average price ("VWAP") of our common stock over the three trading days immediately preceding Indigo's submission of a conversion notice. The reference price is subject to a floor of 96% of the average VWAP during this three-day period. No interest is payable on the Indigo Notes, and we have an optional redemption right beginning 12 months following the issuance of the Indigo Notes. Redemption between 12 and 18 months from issuance carries a 7% premium on the principal amount redeemed, increasing to 14% if redeemed between 18 months and maturity.

In December 2025, we issued two Indigo Notes, each with a principal amount of $1.0 million, and received gross proceeds of $1.9 million, reflecting the discount at issuance. In December 2025, the first Indigo Note was converted into 903,710 shares of our common stock. During the six months ended June 30, 2026, we issued three Indigo Notes, each with a principal amount of $1.0 million, and received gross proceeds of $2.8 million, reflecting the discount at issuance. During the six months ended June 30, 2026, the Indigo Notes with principal amount of $4.0 million converted into 4.4 million shares of common stock. No Indigo Notes remained outstanding as of June 30, 2026.

Obsidian Convertible Promissory Notes

In March 2026, we entered into a convertible promissory note purchase agreement with Obsidian Global GP, LLC ("Obsidian"), which provides for the issuance of convertible promissory notes of up to $20.0 million in aggregate ("Obsidian Notes" or "Obsidian Facility"). Through June 30, 2026, no Obsidian Notes have been issued.

Each Obsidian Note will be issued at a purchase price equal to 96.5% of its principal amount. Each Obsidian Note will mature 24 months from its issuance date and is convertible into our common stock at any time on or before its maturity date unless redeemed by us. The conversion price is 95% of the reference price, which is calculated as the average VWAP of our common stock over the three trading days prior to the submission of a conversion notice by Obsidian. No interest is payable on the Obsidian Notes, and we have an optional redemption right beginning 12 months following the issuance of the Obsidian Notes. Redemption between 12 and 18 months from issuance carries a 7% premium on the principal amount redeemed, increasing to 14% if redeemed between 18 months and maturity.

Additional Liquidity Needs

We expect significant ongoing operating expenditures to be necessary to successfully implement our business plan and market our products. Production shipments of our 5G products commenced in the fourth quarter of 2025, and we expect continued significant related expenditures, including production-related costs such as mask sets, wafers, and assembly and test costs, most of which will be incurred prior to the commencement of manufacturing and production.

As of June 30, 2026, our existing sources of liquidity include $30.2 million in cash and cash equivalents. Our current sources of available financing include convertible debt and equity offerings, including under the ATM Offering, the Indigo Facility, the Obsidian Facility, and debt financings and extensions with lenders, including related parties. These external sources represent potential unused liquidity; however, the amount and timing of any proceeds depend on market conditions, contractual limitations, and our ability to satisfy applicable conditions. As of June 30, 2026, we have borrowings with a total principal amount of $39.1 million, which are contractually due within 12 months from this Quarterly Report. In addition, we have borrowings with a total principal amount of $11.0 million and a convertible promissory note with a principal amount of $5.0 million, which are contractually due between one and three years from this Quarterly Report. We will need to start generating positive cash flows, renegotiate our existing debt obligations and raise additional capital through debt or equity financing. There can be no assurance that such additional debt or equity financing will be available on terms acceptable to us or at all.

If we do not have sufficient funds to make such payments, or if we cannot extend the terms of our existing commercial loans or to raise additional capital through equity or debt offerings, the payments can be delayed, which may adversely affect our business operations and financial performance. While we believe we will be able to secure additional capital and funding in the next 12 months to sustain our operations, there remains a substantial doubt about our ability to continue as a going concern. For a more detailed description of such risks, please see the section entitled "Risk Factors" disclosed in our Annual Report filed with the SEC on March 25, 2026.

We intend to mitigate the risk of a working capital deficit by continuing to pursue our 5G sales strategy and execute appropriate actions to secure funding as a publicly traded company, including the extension and refinancing of existing loans, public or private equity

offerings, debt financings, and other means. In the second fiscal quarter of 2025, we filed a universal shelf registration statement on Form S-3 that allows us to raise up to $200.0 million through the issuance of our securities, including the ATM Offering. We have historically been able to raise capital through the issuance and sale of equity and equity-linked instruments, such as redeemable convertible preferred stock, convertible promissory notes, and borrowings, although no assurance can be provided that we would continue to be successful in doing so in the future.

We expect to use additional liquidity and our available cash and cash equivalents to finance the following activities:

While we believe we have a reasonable basis for our expectations and will be able to raise additional funds, we cannot provide assurance that we will be able to complete additional financing in a timely manner. In addition, the sale of additional equity securities could result in dilution to our stockholders. The incurrence of indebtedness would result in increased debt service obligations and may include operating and financial covenants that would restrict our operations. We cannot be certain that any financing will be available in the amounts we need or on terms acceptable to us, if at all. Should we enter into definitive collaboration and/or joint venture agreements or engage in business combinations in the future, we may be required to seek additional financing.

Cash Flow Comparison for the Six Months Ended June 30, 2026 and 2025

The following table summarizes our cash flows for the periods indicated (in thousands):

Overview of Cash Flows

During the six months ended June 30, 2026 and 2025, we funded our operations primarily through financing activities. This included proceeds from the issuance of common stock under the ATM Agreement in the first half of 2026, and from a registered direct offering and borrowings from related parties in the first half of 2025. We remain dependent on cash inflows from financing activities to fund our operating expenses. The repayment of the outstanding borrowings will require a combination of cash generated from future operations, additional financing activities, and renegotiation of maturity dates. We are continuously evaluating our capital structure and cash flow projections as we work towards meeting our debt obligations and other liabilities.

Operating Activities

Cash used in operating activities of $24.0 million during the six months ended June 30, 2026, was primarily attributable to our net loss of $30.2 million and a net change in our operating assets and liabilities of $13.7 million, partially offset by non-cash adjustments of $19.9 million. Non-cash adjustments consisted primarily of a $15.4 million loss from the change in fair value of warrant liabilities, a $1.5 million loss from the change in fair value of convertible promissory notes, a $1.1 million increase in provision for credit losses, $0.8 million in stock-based compensation, $0.6 million in depreciation and amortization charges, $0.3 million in amortization of operating lease right-of-use assets and $0.2 million related to the fair value of common stock warrants issued in connection with a convertible note extension. The change in our operating assets and liabilities of $13.7 million primarily resulted from a decrease of $7.2 million in accrued and other current liabilities, an increase of $6.4 million in prepaid expenses and other current assets, an increase of $0.5 million in inventory, a decrease of $0.4 million in accounts payable, a decrease of $0.4 million in lease liabilities, partially offset by an increase of $0.4 million in net defined benefit liabilities, a decrease of $0.3 million in accounts receivable, a decrease of $0.3 million in contract assets, and an increase of $0.2 million in other liabilities.

Cash used in operating activities of $16.6 million during the six months ended June 30, 2025, was primarily attributable to our net loss of $20.5 million, non-cash adjustments of $2.3 million, and a net change in our operating assets and liabilities of $1.6 million. Non-cash adjustments consisted primarily of a $1.4 million increase in provision for credit losses, $1.0 million in stock-based compensation, $0.3 million in amortization of operating lease right-of-use assets, $0.3 million in depreciation and amortization charges, and a $0.2 million

loss from the change in fair value of convertible promissory notes, partially offset by a $0.6 million gain from the change in fair value of warrant liabilities and a $0.3 million gain from the change in fair value of common stock forward liability. The change in our operating assets and liabilities of $1.6 million primarily resulted from a decrease of $1.3 million in prepaid expenses and other current assets, an increase of $1.2 million in accrued and other current liabilities, an increase of $1.1 million in net defined benefit liabilities, a decrease of $0.5 million in accounts receivable, and a $0.1 million decrease in other assets, partially offset by an increase of $0.9 million in contract assets, a decrease of $0.8 million in lease liabilities, a decrease of $0.5 million in accounts payable, a decrease of $0.3 million in other taxes payable, and a decrease of $0.2 million in other liabilities.

Investing Activities

Cash used in investing activities during the six months ended June 30, 2026 and 2025 was related solely to the purchases of property and equipment.

Financing Activities

Cash provided by financing activities of $54.0 million during the six months ended June 30, 2026, consisted of $55.7 million in proceeds from the issuance of common stock under the ATM Agreement and $2.8 million in proceeds from the issuance of convertible promissory notes, partially offset by a $2.6 million repayment of our bank borrowings and a $1.8 million payment of common stock issuance costs.

Cash provided by financing activities of $16.1 million during the six months ended June 30, 2025 consisted of $11.0 million gross proceeds received from the issuance of common stock in a registered direct offering, $7.5 million in proceeds from borrowings, and $0.5 million in proceeds from the issuance of common stock under the ATM Agreement, partially offset by a $2.2 million repayment of our bank borrowings and a $0.8 million payment of common stock issuance costs.

Commitments and Contractual Obligations

We have material commitments and contractual obligations, including leases, purchase commitments, and research and development agreements. We have various operating leases, under which we lease office equipment and office space. The operating leases have various expiration dates through 2028.

We have certain commitments for outstanding purchase orders related to the manufacture of certain wafers utilized by the Company and other services, and we have entered into a material research and development agreement. See Note 7 to our unaudited condensed consolidated financial statements included in this Quarterly Report for more information regarding our additional commitments and contractual obligations.

We have certain debt agreements in place related to convertible promissory notes and borrowings. See Note 6 to our unaudited condensed consolidated financial statements included in this Quarterly Report for more information regarding our debt arrangements.

Critical Accounting Estimates

Our management's discussion and analysis of our financial condition and results of operations is based on our unaudited condensed consolidated financial statements, which are prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of our unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts and related disclosures. We base our estimates on historical experience and other factors we believe are reasonable under the circumstances, which form the basis for judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions due to inherent uncertainty in making them, and any such differences may be material.

There have been no material changes to our critical accounting estimates from those described in "Management's Discussion and Analysis of Financial Condition," "Results of Operations - Critical Accounting Policies and Significant Judgments and Estimates" disclosed in our Annual Report filed with the SEC on March 25, 2026, except that from the Closing we have certain contracts in our own equity that are subject to liability classification and remeasurement each reporting periods.

Revenue Recognition

Our revenues are generated from the sale of mobile semiconductor solutions, including products and platform solutions for the LTE and 5G industries, as well as development services, and technical advice and maintenance services.

The timing of revenue recognition and the amount of revenue recognized in each case depends on various factors, including the specific terms of each arrangement and the nature of the underlying performance obligations. Revenues from sales of our products are recognized

upon transfer of control to the customer, which is generally at the time of shipment. Service revenues from development services, technical advice, and maintenance services are generally recognized over time as these performance obligations are satisfied.

We estimate potential future returns and sales allowances related to current-period product revenue. We analyze historical return rates and changes in customer demand when evaluating the adequacy of returns and sales allowances. Although we believe we have a reasonable basis for our estimates, such estimates may differ from actual returns and sales allowances. These differences may materially impact reported net product revenues and amounts ultimately collected on accounts receivable.

Provision for Credit Losses

Accounts receivable balances are primarily derived from revenues earned from customers located in the United States, China, South Korea, Japan, and Taiwan. We perform ongoing credit evaluations of the financial condition of our customers and distributors, and generally do not require collateral from our customers. We continuously monitor collections and payments from customers and maintain a provision for credit losses based on the collectibility of our customer accounts. We review the provision by considering certain factors such as historical experience, industry data, credit quality, age of balances and current economic conditions that may affect a customer's ability to pay. Uncollectible receivables are written off when all efforts to collect have been exhausted and recoveries are recognized when they are recovered. We cannot guarantee that we will continue to experience the same credit loss rates that we had in the past. A significant change in the liquidity or financial position of any of our significant customers could materially affect the collectibility of our accounts receivable and our future operating results. The provision for credit losses was $5.2 million and $4.0 million as of June 30, 2026 and December 31, 2025, respectively.

Fair Value of Convertible Promissory Notes

We have made an election to account for certain promissory notes under the fair value option. The convertible promissory notes are recorded at their initial fair value on the date of issuance and then are adjusted to fair value upon any modification and at each balance sheet date thereafter. Changes in the estimated fair value of the convertible promissory notes are recognized as non-cash gains or losses in the unaudited condensed consolidated statements of operations within other income (expenses), net.

Our convertible promissory notes are valued using a discounted cash flow ("DCF") model or a binomial lattice model ("BLM"), both of which are Level 3 fair value measurements. Significant assumptions used in the DCF include the remaining term and discount rate. Significant assumptions used in the BLM include volatility, remaining term, risk-free rate, and credit spread.

Fair Value of Liability-Classified Warrants

We classify share-settled contracts, including private placement warrants to purchase shares of the Company's common stock, that do not meet the indexation guidance as liabilities. At the end of each reporting period, these liability-classified instruments are remeasured using an option-pricing model or the BLM. Significant assumptions are used in determining the fair value of our warrants and include volatility and the risk-free rate.

Recent Accounting Pronouncements

See Note 2 to our unaudited condensed consolidated financial statements included herein for more information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one yet, of their potential impact on our financial condition and results of operations.

JOBS Act Accounting and Emerging Growth Company Elections

We are an "emerging growth company" ("EGC"), as defined in the JOBS Act. Under the JOBS Act, EGCs can delay adopting new or revised accounting standards issued after the enactment of the JOBS Act until those standards apply to private companies.

We have elected to use this extended transition period for complying with certain new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an EGC or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our unaudited condensed consolidated financial statements may or may not be comparable to companies that comply with new or revised accounting pronouncements as of the public companies' effective dates.

Our EGC status commenced upon the completion of the initial public offering of Concord Acquisition Corp III, our predecessor, in November 2021. Our EGC status is expected to continue for up to five years from this date, through November 2026, unless certain disqualifying events occur earlier, such as achieving large accelerated filer status.

Smaller Reporting Company Status

We are also a "smaller reporting company," as defined in the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an EGC. We have elected to take advantage of certain of the scaled disclosures available to smaller reporting companies, and will be able to take advantage of these scaled disclosures for so long as the market value of our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are a "smaller reporting company", as defined by Rule 12b-2 of the Securities and Exchange Act of 1934, as amended (the Exchange Act), and in Item 10(f)(1) of Regulation S-K, and are not required to provide the information otherwise required under this item.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2026. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2026 to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended June 30, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitation on the Effectiveness of Internal Controls and Procedures

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

PART II-OTHER INFORMATION

Item 1. Legal Proceedings.

We are not currently a party to any material legal proceedings. From time to time, we may, however, in the ordinary course of business, become involved in legal proceedings. Regardless of outcome, litigation could have a material adverse effect on us due to defense and settlement costs, diversion of management resources, negative publicity, reputational harm and other factors, and there can be no assurances that favorable outcomes will be obtained.

ITEM 1A. Risk Factors.

There have been no material changes to the risk factors we previously disclosed in our Annual Report filed with the SEC on March 25, 2026. Our operations could also be affected by additional factors that are not presently known to us or by factors that we currently consider immaterial to our business.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

During the quarter ended June 30, 2026, none of the Company's directors or officers informed the Company of the adoption or termination of a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as those terms are defined in Regulation S-K, Item 408.