Okay, so welcome to the Sidoti Virtual Conference, and thank you for joining us today. I'm Anya Soderstrom, a Senior Equity Analyst here at Sidoti. And as I mentioned, next up we have GCT Semiconductor Holding, its ticker GCTS. With us today, we have John Schlaefer, the CEO, and Edmond Cheng, the CFO. So this will start as a presentation by the management team, followed by Q&A. And if you would like to submit a question and participate, you can do so via the Q&A function at the bottom of your screen. And with that, I'm happy to welcome you, John, and hand it over to you.
Thank you, Anya, so we'd like to tell you about GCT Semiconductor. We've been a public company since March of this year. We did a De-SPAC activity at the end of March, and we're happy to be part of the public market now, so hopefully you can see the presentation I have up here, and I will start to scroll through it, so let me just give you a brief overview. Who are we? GCT is a fabless semiconductor company, which means that we focus on the design, marketing, and sale of our chipsets. We don't do manufacturing, but our focus is on the RF and the modem and software portions of the 4G and 5G chipsets. These are the 4G is the de facto standard in the wireless space that's actually now transitioning to 5G.
Our customers are the suppliers into the worldwide operators like Verizon, AT&T, and other such operators in other countries and around the world, as well as private network operators. So we sell into their suppliers. We are an enabling chipset for their devices that work on those networks. We've got a large patent portfolio in CMOS, focusing on multi-antenna technology, on modem technology, and RF, which means radio and transceiver technology, and why now? Why is this important? I mean, right now, what we have is a shortage of semiconductor suppliers and specifically a shortage of 5G suppliers, given the barriers to entry, as well as we've got a market that is ripe for transition and growth, so we're transitioning from 4G to 5G.
5G has with it a whole lot of other use cases that lead to significant growth, as well as all of the macroeconomic tailwinds that's kind of pushing that. On top of that, the actual chipset pricing for us is going from approximately a $10 range to a $40 range. The combination of the growth, the tailwinds that's pushing that, and the price increase leads to an inflection point for GCT in the 2025 timeframe. And so the market opportunity that we're talking about here is our focus is the wireless space, as I mentioned. All of the applications except for smartphones, we're not in the smartphone space. But as we go into 5G, the volumes associated with the other devices is very large and growing.
And you can see the very large TAM here, as well as what you should notice, too, is as we're going, the growth, as we're going forward now, is all in 5G, so the 4G volume is rolling off. The 5G volume is increasing. Although there will be applications that resist integration, and that is because those applications really don't necessarily need the improved performance, reduced legacy latency, and those sorts of features that 5G is promising, but for the vast majority of applications and devices, there will be a transition to 5G, and the key segments that we're talking about here, number one is FWA, and we've been strong in this area in the 4G space, so FWA is basically the replacement for fiber and cable, and up until 5G, the throughput rates have not been sufficient for that to happen.
There will be, and these sorts of devices will be the modem for actually residential and business use. Mobile broadband, the key device there would be hotspots that you could buy from Verizon and others that you might have at your home or in your pocket so you can get connectivity. These applications here are all the other very large set of use cases like tracking and security, ruggedized tablets and phones for first responders and so forth. There's a lot of other applications in these areas that are growing. The situation now is what you have is you have a market and environment where we've got, we're streaming everywhere. There's augmented reality and virtual reality, industrial automation, artificial intelligence. All of these sorts of applications require low latency.
And the low latency, the typical example of latency would be on your phone when you're talking over each other. And that is annoying in a voice conversation. It's actually devastating in other high-speed data applications. And so actually 5G solves that problem. There are structural issues in place that provide us good positioning. I mean, right now there really is not strong alternatives in the West to Qualcomm. So that's really the dominant solution that the operators and the suppliers are looking for alternatives to. And so our job here is not to, we're not going to replace Qualcomm, but we are a second source in a lot of applications, as well as we are servicing segments that they're not servicing. And again, and as we go forward, the smartphone subscribers is not really the growth driver anymore. It used to be for the operators.
The operators now are seeing that smartphone subscribers have stagnated, and the growth now is coming from broadband data. If you were to look at Verizon's performance over the last eight or nine quarters, you'll see that actually broadband data is really where it's getting its subscriber growth, and 90% of that is from FWA, and then there's political tailwinds with infrastructure growth that's actually pushing for 5G, not just here in the U.S., but elsewhere, and there's also a decoupling with China, which has a number of effects. One of those is fewer suppliers on the competitive landscape, so if we just look at the FWA space, for instance, so if we go back to this slide here, remember FWA was one of our key applications, so FWA market looks like this, and on the right side, what you're seeing here is connections worldwide.
At the end of 2023, there was about 133 million connections, and 36 million of those were actually 5G. So the vast majority were 4G. And then as we go to 2028, you see the total growing to 300 million connections, where the vast majority is actually 5G. So 5G is really driving this growth, and you see that in the 5G space, you're going up significantly. There's about an 8x growth from where we are now in 5G to what is promised in actually 2028. And on the left side, what you're seeing here is the number of subscribers for the major operators in the U.S. So this represents Verizon. This represents T-Mobile and AT&T. So we're seeing significant growth in FWA subscribers' connections, mainly for Verizon and T-Mobile in the U.S., less so for AT&T because they've invested mainly in fiber up until now.
But you're seeing significant growth here as well. And as I mentioned, the revenue growth there is coming from broadband data growth and not from subscribers for smartphones. If you look at the competitive landscape, the environment has looked like this over time. So as you go in this direction, you go from 4G. So 4G was the standard that, as I mentioned, started 12 to 14 years ago, 4.5G, 4.9G. So there is a progression. It doesn't just jump from 4G to 5G and then 5G. So the landscape has looked like a graveyard of who's gotten in and who's gotten out. So these players have all exited, and you've got some big names in here. You've got NVIDIA and Broadcom and Intel as well.
And really the situation here has been, in order for those players to have the right scale for it to be meaningful, they really had to compete with Qualcomm. And that means you've got to compete head to head in the smartphone space. So they tried that and they got out. There are others that have gotten out as well, including players because of U.S. sanctions. There's been some acquisitions. So Altair has been bought by Sony. And then what you have here in the 5G area now is a list of the last men standing. And so Qualcomm is a dominant player focusing in the smartphone space. Samsung also is focusing on smartphones, but that is not really a merchant offering. It's something that they're offering to their internal handset division. So we don't see them in the marketplace. MediaTek has been mainly focused in the Asia area.
And then you've got Sequans, which has been in the news recently, which has actually licensed their 4G legacy IP to Qualcomm. But the focus here has been on the low end, on the IoT space. So we're really not competing with Sequans in the areas that I showed you, like FWA, which requires the high-end 5G chipset. So there's very few players here, and we compete mainly with Qualcomm. So this is the environment that now exists, and we see that there's huge opportunity for us as we go into 2025 and later. A little bit of history here. So we have supplied these sorts of devices with these sorts of chipsets. So if you look at the 4G world, the 4G chipset, it's not homogeneous. There's what's called category three and four and all the way up to category 12.
These represent higher throughput chipsets for applications that have higher demands. But these are the various sorts of devices that we've actually provided into suppliers that supply these operators. So we've got a long history of doing this. We know how to do it. We understand the ecosystem and the relationships. And now we're transitioning that to 5G. So one of the advantages that we have over others is we have been focusing on the non-smartphone space now since the 2011 timeframe that has been our focus. And in all of our high-end 4G chipsets and all of our 5G chipsets will be our multi-antenna capability that we've optimized. And so the multi-antenna capability allows for better reception.
Also, it's one of the things that will help resolve the overburdened network situation as we go into 5G. I mean, there is some forecasting that there will be overload on the network given all the traffic. And the solution to that is MIMO. So multiple in, multiple out, multiple- users. MU-MIMO means multiple- user, multiple in, multiple out. And it's a more efficient way to use your existing network. So this is a feature that we have in our chipset. Also, we've worked with Verizon now for over 12 years in the 4G space. And we have this multi-antenna capability in our 4G chipsets. And we will have this in our 5G chipsets. But if you look at the Verizon situation with the competitors, really the key competitor here in the areas that we're targeting is mainly Qualcomm.
And as you go from IoT on the low end, and then this is mid-tier, and this is high-end, you see that the other players, they actually fall out. And as I mentioned, Sequans recently announced that they were discontinuing their Taurus line. And I think we've announced that we do have an agreement with Verizon, where Verizon has provided development money for us for our 5G chipset. And that is for the purpose of having an alternative to Qualcomm in their lineup. So we will be supporting Qualcomm. We'll be supporting Verizon as one of our alpha customers. So if you look at the 4G situation, we've been through this before. We've completed all of the 4G certifications needed for the major networks around the world. This has to happen with every chipset, of course. And we'll be doing the same thing with our 5G chipset.
We are now at the end of our development process, and we will have samples available for our key customers and alpha customers specifically in the Q1 timeframe. You can see the shortlist here of the alpha customers that we are targeting right now. Some of these are customers that we have alpha customer development agreements with now that we've been working with through 2024 and earlier, preparing them for use for our chipset. The purpose of that is twofold. One, it gets them up to speed as quickly as possible with our chipset, but it also helps them with their development activity, which will expedite the launch of our chipset in the 2025 timeframe. Our portfolio looks like this. These are the chipsets that are in production now that we've been shipping now for a while.
These are the 4G chipsets, and they span from IoT on the low end. When I say low end, I mean low end with throughput. Also, there's lower cost for these or lower pricing for these chipsets. This is what's called our IoT chipset. This is a category four. This is a category seven. This is category 12. We also have a category 19 chip. So as you go this way, you progress in price, value, as well as throughput rate for the applications that actually need that, and the same thing will happen in the 5G area. So on the high end here, you've got a chipset that will do about 800 Mbps. As you go over here to the 5G chipset, it'll go up by 10x. That's one of the major improvements for the 5G chipset is the throughput rate. The other is latency.
These are the chipsets that we'll be sampling in the Q4 timeframe, as well as we'll be progressing with our portfolio as I show here. We've got only one more 4G chipset that we're producing now that will also be sampling in the Q1 timeframe. 4G will continue to exist alongside 5G. There's a number of applications that will resist integration and actually transition to 5G. In this particular case, this chipset is optimized and provided for the utility space, which has long legs. This is not something that gets replaced every nine months. This is something that will. Products in this area will have a life of five, six, seven years or so forth. Again, this will be our last development activity for 4G, and then everything else forward will be 5G. It's a summary of the key investment highlights.
Right now, as I mentioned, there's a shortage in the semiconductor space, given all the consolidation, and as we've come out of COVID, I think we all have realized the importance of semiconductors and that it's a very broad and diverse market. It's not just NVIDIA, and right now, specifically in the 5G space, there is a shortage of players as a result of all of the exits that have happened over time and the barriers to entry for getting in. We have a proven ability to support the first-tier operators as well as other private network operators. We've done this for the last decade plus with our 4G chipset offering. What we're seeing right now is a significant increase in the volumes, specifically the volumes for the sectors that we're in, and that's mobile data and broadband data.
With the transition of the volumes is also a significant increase in the ASP. So as I mentioned, we'll be going from a $10 ASP to about a $40 ASP. We've got a number of 5G development agreements. These are with our alpha customers that are helping to get them ready for our chipsets and preparing them for their transition into 5G. So this is a combination of, it does provide us some early revenue in the 5G space in the form of service revenue, but the more important thing is it's preparing us and them for the ramp of our 5G chipsets. We're using Samsung's 8-nanometer process, so we do have a first-tier foundry that we're working with that will be providing us capacity. And then, again, I mentioned this already, the very strong growth as we go into 5G.
That concludes my presentation, and we're available for any questions that you might have.
Okay. Thank you so much. That was a good overview. And for the audience, we do have a couple of questions populated already, but if you would like to participate, you can submit your question in the Q&A function at the bottom of your screen. So one question I have here is, when do you expect to be profitable?
Edmond, you want to take that?
Yes. From our modeling standpoint, we are expecting to break even in Q3 2025, and we will be expecting to be profitable starting Q4 in 2025 and beyond.
Okay. Can you just touch on your capitalization and how you're funded?
Historically, we are funded by debt capital from that sense, and because of the, just recently, we've been on the SPAC process, and we were expecting to raise more funding than what we had, and we didn't expect to have the level of redemption from the SPAC holders from that perspective. We are constantly working on deleveraging on our balance sheet. At this point of time, our majority funding source is from debt. We are hoping that with the rollout of the 5G chip, we will be gradually transitioned to a more balanced capital structure into 2025.
Okay. And another question here is, since AI is still only in the early innings, how do you see this industry affecting your organization long-term, such as with high-growth opportunities?
When you say AI, so artificial intelligence?
Yes.
Well, so I think that in our industry, AI has a lot of uses. So in our particular area, which is the 5G area, it's all 5G, and what we do is how to replace the cable. So you're replacing the cable, you're replacing the wire, and this is all about modulating and coding and decoding data so it can be transmitted wirelessly effectively, as well as the efficient use of spectrum. So however, there's AI elements to that to intelligently use the spectrum, intelligently modulate and reuse of the spectrum, etc. So there will be some AI in that. There'll be some AI engine use in our modem to do that efficiently. So there's some of that. The other piece of it is all of the traffic, and I think that it's the traffic over the network. So the traffic over the network needs efficient transmission.
It needs 5G because of the throughput rate and so forth. So those are the two key elements of it. So I think that it's on both sides. It's on the chipset side, and it's on the traffic side, which creates huge demand.
Okay. Thank you. And another question here is, can you talk about the cadence of work transitioning from 4G to 5G and then when 6G work might come into play for you?
Okay. So I did show some slides here. Let me just go back to that a little bit. So let me see. So this is a good one. Let's just use this for an example. So this kind of shows the transition from 4G to 5G, and I think that 4G has been around, if you will, as a major standard since the 2010 timeframe, and here we are in 2014, and it's still here, and it's going to continue to exist, and then we've got 5G that is really just at the beginning. This is going to be at least a 10-year thing, and really, what will drive the transition into 6G, and 6G, of course, will happen, is what are the improvement specs on throughput and other specifications that have to improve? I mean, faster, better. Faster, better, cheaper is always the way that everybody wants to go.
But what is really driving that? What are the key specs that people really want? And until those are really identified and there is a demand for that, specifically, the network operators are really not going to want to invest in that transition. So it will happen, and I would guess that there's going to be the start of 6G in the 10 years out. And what you're going to see as well is, just like we saw in the 4G space, that there's optimization and improvement that can happen in 4G before you really need to roll out 5G. So we saw improvement in performance and other specs in throughput rate and so forth as you go from 4.0 4G LTE, 4.5 LTE, 4.75. You're going to see the same thing here. People are going to start referring to it as 5.5G, 5.75G.
And then finally, you're going to need that 10x improvement, and that's going to jump you up to six, and people are going to be willing to make that investment.
Okay. And one last question for me here as we are out of time, but what kind of visibility do you have on your revenue for the next couple of quarters or in the coming years, couple of years?
Yeah, so I think right now, because our revenue is relatively low, it's a little hard to predict because it is kind of bursty, and we are transitioning from 4G to 5G, so the 4G revenue is a little uncertain as our customers are transitioning, but I think that as we go into 5G and we have a diverse customer base, we'll be able to forecast better. We haven't provided guidance at this point for that reason, but we believe that as our customer base broadens with 5G, we'll be able to do that.
And you'll also have an uplift, right, in the pricing?
Oh, yeah. So we'll see significant volume increases as well as an uplift in the pricing, which will all affect our revenues in a positive way.
Okay. Well, I'm going to end it here, and I want to thank you, John and Ed and GCT, for being here today and everyone in the audience who participated. I know you have a pretty full one-on-one schedule, but if anyone would like to catch up with the management team as a follow-up to this presentation, you can reach out to us at Sidoti or to the company directly. And with that, I'll hand it over to you, John, for some closing remarks.
Thank you. Thank you. Thank you, everybody, for joining us. We feel that, I mean, Edmond and I have been doing what we can to get the word out on who we are and the exciting market that we're in. So we really feel that there's some growth ahead of us, and we're in a good position in this market, and we're excited about what we're going to see in the 2025 timeframe. Thank you for joining us.
Thank you.
Thank you, everyone.