Core Viewpoint - GSI Technology, Inc. has faced significant stock decline and net losses despite revenue growth driven by SRAM chip sales, indicating mixed investor sentiment and operational challenges [1][2][4]. Financial Performance - The company reported a net loss of $2.2 million for the first quarter of fiscal 2026, compared to a net income of $1.1 million in the same quarter last year, which included a one-time gain of $5.7 million [2][4]. - Net revenues increased to $6.3 million, a 35% rise from $4.7 million year-over-year and a 7% sequential increase from $5.9 million [3]. - Gross margin improved to 58.1%, up from 46.3% a year earlier and 56.1% in the previous quarter, attributed to a favorable product mix and better fixed cost absorption [3]. Business Metrics and Segment Breakdown - GSI's SRAM business showed strong performance, with SigmaQuad product shipments accounting for 62.5% of first-quarter shipments, up from 36.3% a year ago [5]. - Sales to key customers shifted, with KYEC sales dropping to $0.3 million (4.3% of net revenues) from $1 million (21.9%) a year ago, while Cadence Design Systems emerged as a significant contributor with $1.5 million in sales (23.9% of net revenues) [6]. - Defense and military shipments decreased to 19.1% of total shipments from 31.9% in the prior-year period, indicating a change in customer mix [7]. Management Commentary - CEO Lee-Lean Shu described the quarter as a "strong start" to fiscal 2026, highlighting advancements in product development and customer engagement [8]. - CFO Douglas Schirle noted an improved financial position, with cash and equivalents rising to $22.7 million from $13.4 million, supported by $11 million raised through the ATM program [9]. Factors Influencing Financial Results - Revenue growth was primarily driven by higher SRAM sales and a favorable product mix, although geopolitical factors and tariffs affected the supply chain [10]. - Operating expenses decreased to $5.8 million from $6.8 million a year ago, with R&D spending dropping from $4.2 million to $3.1 million [11][12]. Guidance - For the second quarter of fiscal 2026, GSI Technology anticipates net revenues between $5.9 million and $6.7 million, with a gross margin between 56% and 58% [13]. Other Developments - The company is undergoing a strategic evaluation process to explore capital options and expand application teams, retaining Needham & Company for assistance [14].

Core Insights - GSI Technology reported significant revenue growth in Q1 of fiscal 2026, driven by increased demand for SRAM in AI applications, achieving $6.3 million in revenue, a 7% sequential increase and a 35% year-over-year increase [10][18] - The company achieved a gross margin of 58.1%, up 200 basis points sequentially and over 1,100 basis points year-over-year, attributed to a favorable product mix and operating leverage [3][32] - Operating expenses decreased by 15% year-over-year to $5.8 million, excluding a prior-year one-time gain [3][33] Financial Performance - Operating loss narrowed to $2.2 million in Q1 2026 from $4.7 million in Q1 2025, while net loss was $2.1 million or $0.08 per diluted share, compared to net income of $1.1 million in the same period last year [4][34] - Cash and cash equivalents stood at $22.7 million as of June 30, 2025, bolstered by $11 million raised under the ATM program [5][35] - Working capital increased to $25.7 million from $16.4 million as of March 31, 2025, and stockholders' equity rose to $37.4 million from $28.2 million [5][35] Customer and Product Insights - SRAM sales to major customers included Cadence Design Systems at $1.5 million (23.9% of revenue), KYEC at $267,000 (4.3% of revenue), and Nokia at $536,000 (8.5% of revenue) [6][29] - Defense and military sales accounted for 19.1% of shipments, down from 31.9% year-over-year, while SigmaQuad product shipments represented 62.5% of shipments, up from 36.3% in the prior year [7][30] Strategic Developments - The company completed the second spin evaluation of the Gemini-II chip, which is now production-ready, and delivered a LiDAR tool to a defense contractor, marking a significant milestone [8][19] - Management is evaluating funding options to expand software and application teams supporting Gemini-II and is actively engaging with Needham and Company for strategic alternatives [9][13] - Guidance for Q2 of fiscal 2026 projects net revenues between $5.9 million and $6.7 million, with gross margin expected in the 56%-58% range [9][37] Supply Chain and Market Outlook - Extended lead times for back-end assembly in Taiwan are causing temporary delays in SRAM order fulfillment, but stable SRAM revenue is anticipated for the remainder of fiscal 2026 as customers adjust [8][12] - The company is developing dynamic low-precision software libraries and AI compiler enhancements to support Gemini-II's position in edge and defense AI markets [13][27]

Financial Data and Key Metrics Changes - The company achieved net revenue of $6.3 million, up 7% sequentially and 35% year over year [4] - Gross margin improved by 200 basis points sequentially and over 1,100 basis points year over year, reaching 58.1% [5][16] - Operating expenses declined by 15% year over year, totaling $5.8 million [5][18] - The net loss for the quarter was $2.1 million, or $0.08 per diluted share, compared to a net income of $1.1 million in the same period last year [19] Business Line Data and Key Metrics Changes - SRAM sales continued to rise, driven by demand from AI chip emulation systems, but faced supply chain constraints impacting 2026 sales [9][10] - Sales to KYEC were $267,000, down from $1 million a year ago, while sales to Cadence Design Systems increased to $1.5 million from zero in the same period last year [15] - Defense and military sales accounted for 19.1% of first-quarter shipments, down from 31.9% a year ago [15] Market Data and Key Metrics Changes - The company is experiencing strong demand for high-performance SRAM chips, particularly from hyperscalers in the AI sector [9] - Extended lead times due to supply chain issues are affecting the ability to fulfill orders, but forecasts from major customers remain solid [10][16] Company Strategy and Development Direction - The company plans to target high-growth opportunities in the satellite and edge computing sectors, leveraging AI capabilities [7] - There is an emphasis on advancing the development of the Gemini II chip and preparing for the next-generation APU, Plateau [8][20] - The company is evaluating strategic options to secure necessary capital for product development [20] Management's Comments on Operating Environment and Future Outlook - Management acknowledged supply chain challenges due to tariffs affecting assembly operations, particularly in Taiwan [24] - The company expects net revenues in the second fiscal quarter to range between $5.9 million and $6.7 million, with gross margins between 56% and 58% [20] Other Important Information - The company ended the first quarter with a cash position of $22.7 million, up from $13.4 million at the end of the previous quarter [19] - The company is actively working with the Board and advisors to evaluate strategic alternatives for efficient scaling [7][20] Q&A Session Summary Question: Can you provide more color on the supply chain issues? - The transition of assembly operations from China to Taiwan due to tariffs has affected capacity and lead times [24][25] Question: Will that end up making customers possibly order earlier? - Yes, customers are being informed to adjust their ordering patterns to avoid delays [26][27] Question: Sales to KYEC seemed weak this quarter. Can you comment on that? - Inventory levels have stabilized, but orders were not fulfilled within lead times due to supply chain issues [30] Question: What type of product are you shipping to Cadence? - The company is shipping emulation systems that support the design of AI chips [31] Question: What are the trading windows for the ATM? - The trading window opens two days after the earnings call and closes on the fifteenth of the last month of the quarter [32]

[Executive Summary & Business Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Business%20Highlights) GSI Technology's Gemini-II chip is production-ready, with new AI algorithms for edge applications, while Q1 FY2026 saw net revenues of $6.3 million, improved gross margin, and a strong cash balance [CEO Commentary & Strategic Updates](index=1&type=section&id=1.1%20CEO%20Commentary%20%26%20Strategic%20Updates) GSI Technology's CEO announced the Gemini-II chip is production-ready, with SAR and YOLO algorithms optimized for Edge AI, and a multi-modal LLM under development for edge applications - **Gemini-II chip's** second silicon spin is fully functional and **production-ready**, with all known bugs resolved[3](index=3&type=chunk) - Finalized **SAR and YOLO algorithms**, optimized for a low-power Leda board, targeting **Edge AI applications** such as drones in GPS-denied environments and next-generation satellite applications[3](index=3&type=chunk) - Developing a **multi-modal Large Language Model (LLM)** optimized for **edge applications**, with benchmark results anticipated by fall 2025[3](index=3&type=chunk)[6](index=6&type=chunk) [Key Financial Highlights](index=1&type=section&id=1.2%20Key%20Financial%20Highlights) GSI Technology reported Q1 FY2026 net revenues of **$6.3 million**, a **58.1%** gross margin, and a strong **$22.7 million** cash balance, with increased SRAM revenue | Metric | Q1 FY2026 ($) | Q1 FY2025 ($) | Q4 FY2025 ($) | | :---------------- | :-------- | :-------- | :-------- | | Net Revenues | $6.3M | $4.7M | $5.9M | | Gross Margin | 58.1% | 46.3% | 56.1% | - **SRAM revenue increased 7% sequentially and 35% year-over-year**, driven by strong market momentum for leading AI processors[6](index=6&type=chunk) | Metric | June 30, 2025 ($) | March 31, 2025 ($) | | :---------------- | :-------------- | :------------- | | Cash Balance | $22.7M | $13.4M | [Financial Performance - First Quarter Fiscal Year 2026](index=1&type=section&id=Financial%20Performance%20-%20First%20Quarter%20Fiscal%20Year%202026) GSI Technology's Q1 FY2026 financial performance shows increased net revenues and gross margin, managed operating expenses, a net loss, and a significantly strengthened balance sheet with higher cash and working capital [Net Revenues and Gross Margin](index=1&type=section&id=2.1%20Net%20Revenues%20and%20Gross%20Margin) GSI Technology's Q1 FY2026 net revenues reached **$6.3 million**, a **34%** year-over-year increase, with gross margin significantly improving to **58.1%** due to product mix and higher revenue Net Revenues and Gross Margin Trends | Metric | Q1 FY2026 ($) | Q1 FY2025 ($) | Q4 FY2025 ($) | | :---------------- | :-------- | :-------- | :-------- | | Net Revenues | $6.3M | $4.7M | $5.9M | | Gross Margin | 58.1% | 46.3% | 56.1% | - **Gross margin increased by 200 basis points sequentially and over 1,100 basis points year-over-year**, reaching its **highest level in over two years**, driven by product mix and higher revenue impacting fixed costs[4](index=4&type=chunk)[6](index=6&type=chunk) Key Customer Sales as % of Net Revenues (Q1 FY2026) | Customer/Segment | Q1 FY2026 (% of Net Revenues) | Q1 FY2025 (% of Net Revenues) | Q4 FY2025 (% of Net Revenues) | | :----------------- | :---------------------------- | :---------------------------- | :---------------------------- | | KYEC | 4.3% | 21.9% | 29.5% | | Nokia | 8.5% | 21.4% | 7.5% | | Cadence Design Systems | 23.9% | 0% | 10.9% | | Military/Defense | 19.1% (of shipments) | 31.9% (of shipments) | 30.7% (of shipments) | | SigmaQuad | 62.5% (of shipments) | 36.3% (of shipments) | 39.3% (of shipments) | [Operating Expenses](index=1&type=section&id=2.2%20Operating%20Expenses) Total operating expenses for Q1 FY2026 were **$5.8 million**, a decrease from the prior year (excluding a one-time gain), with R&D expenses declining and SG&A remaining stable Operating Expenses Trends (in thousands) | Expense Category | Q1 FY2026 | Q1 FY2025 (excl. gain) | Q4 FY2025 | | :----------------- | :-------- | :--------------------- | :-------- | | Total Operating Expenses | $5,827 | $6,800 | $5,575 | | Research & Development | $3,097 | $4,214 | $2,966 | | Selling, General & Administrative | $2,730 | $2,604 | $2,609 | Stock-Based Compensation Expense (in thousands) | Expense Category | Q1 FY2026 | Q1 FY2025 | Q4 FY2025 | | :----------------- | :-------- | :-------- | :-------- | | Total Stock-Based Compensation | $341 | $658 | $512 | [Net Income (Loss) and EPS](index=2&type=section&id=2.3%20Net%20Income%20%28Loss%29%20and%20EPS) GSI Technology reported a Q1 FY2026 operating loss of **$(2.2) million** and a net loss of **$(2.2) million**, or **$(0.08)** per diluted share, contrasting with prior-year net income that included a one-time gain Net Income (Loss) and EPS Trends | Metric | Q1 FY2026 ($) | Q1 FY2025 ($) | Q4 FY2025 ($) | | :---------------- | :-------- | :-------- | :-------- | | Operating Income (Loss) | $(2.2)M | $(4.7)M (excl. gain) | $(2.3)M | | Net Income (Loss) | $(2.2)M | $1.1M (incl. gain) | $(2.2)M | | Diluted EPS | $(0.08) | $0.04 | $(0.09) | - The **net income of $1.1 million** in Q1 FY2025 included a **one-time gain of $5.7 million** from the sale and leaseback of the company's corporate headquarters[8](index=8&type=chunk)[9](index=9&type=chunk) [Balance Sheet and Liquidity](index=2&type=section&id=2.4%20Balance%20Sheet%20and%20Liquidity) As of June 30, 2025, GSI Technology significantly increased cash and cash equivalents to **$22.7 million**, with working capital improving to **$25.7 million** and stockholders' equity growing to **$37.4 million** Key Balance Sheet Items (in thousands) | Metric | June 30, 2025 | March 31, 2025 | | :---------------- | :-------------- | :------------- | | Cash and Cash Equivalents | $22,725 | $13,434 | | Working Capital | $25,700 | $16,400 | | Stockholders' Equity | $37,374 | $28,226 | | Total Assets | $50,505 | $43,317 | - The **increase in cash balance** includes proceeds from the **"at the market" (ATM) program**[6](index=6&type=chunk) [Business Outlook](index=1&type=section&id=Business%20Outlook) GSI Technology provides Q2 FY2026 guidance, projecting net revenues between $5.9 million and $6.7 million, with a gross margin of 56% to 58% [Second Quarter Fiscal Year 2026 Guidance](index=1&type=section&id=3.1%20Second%20Quarter%20Fiscal%20Year%202026%20Guidance) For Q2 FY2026, GSI Technology anticipates net revenues between **$5.9 million** and **$6.7 million**, with a gross margin projected at **56% to 58%** Q2 FY2026 Financial Outlook | Metric | Guidance Range | | :---------------- | :------------- | | Net Revenues ($) | $5.9M - $6.7M | | Gross Margin (%) | 56% - 58% | [Company Information](index=2&type=section&id=Company%20Information) GSI Technology, founded in 1995, is an AI leader specializing in APU technology for high-performance edge computing, with contact details provided for investor and media relations [About GSI Technology](index=2&type=section&id=4.1%20About%20GSI%20Technology) GSI Technology leads the AI revolution with APU technology for efficient database searches and high-performance edge computing, leveraging Gemini-I® and Gemini-II® innovations, founded in 1995 with 127 employees and over 125 patents - GSI Technology is at the forefront of the **AI revolution** with groundbreaking **APU technology** designed for unparalleled efficiency in **billion-item database searches** and **high-performance computing**[12](index=12&type=chunk) - Innovations like **Gemini-I® and Gemini-II®** offer **scalable, low-power, high-capacity computing solutions** that redefine **edge computing capabilities**[12](index=12&type=chunk) - **Founded in 1995**, headquartered in Sunnyvale, California, with **127 employees** and **over 125 granted patents**[13](index=13&type=chunk) [Investor Relations & Media Contacts](index=3&type=section&id=4.2%20Investor%20Relations%20%26%20Media%20Contacts) Investor relations are managed by Hayden IR, media relations by Finn Partners, and company inquiries are directed to CFO Douglas M. Schirle - Investor Relations contact: Kim Rogers, Managing Director at **Hayden IR** (385-831-7337, Kim@HaydenIR.com)[17](index=17&type=chunk) - Media Relations contact: Ricca Silverio at **Finn Partners** for GSI Technology (415-348-2724, gsi@finnpartners.com)[17](index=17&type=chunk) - Company contact: **Douglas M. Schirle, Chief Financial Officer** (408-331-9802)[17](index=17&type=chunk) [Forward-Looking Statements & Risk Factors](index=2&type=section&id=Forward-Looking%20Statements%20%26%20Risk%20Factors) This section details forward-looking statements, highlighting that actual results may materially differ due to risks like operating fluctuations, customer dependence, market evolution, competition, and challenges in new product and market development, all amplified by current economic and geopolitical conditions - Forward-looking statements are based on current information and involve **risks and uncertainties** that could cause **actual results to differ materially**[14](index=14&type=chunk) - Key risks include **fluctuations in operating results**, historical **dependence on a limited number of customers**, global public health crises, rapidly evolving markets, the need to develop new products, **intense competition**, and **challenges in developing new products and customer relationships** for associative computing and SRAM products[14](index=14&type=chunk)[15](index=15&type=chunk) - **Economic and geopolitical conditions**, such as changing interest rates, inflationary pressures, policy unpredictability, trade barriers, military conflicts, and global economic declines, are currently **amplifying these risks**[15](index=15&type=chunk) [Condensed Consolidated Financial Statements](index=3&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents GSI Technology's Condensed Consolidated Statements of Operations and Balance Sheets, detailing financial performance and position for the specified periods [Condensed Consolidated Statements of Operations](index=3&type=section&id=6.1%20Condensed%20Consolidated%20Statements%20of%20Operations) The Condensed Consolidated Statements of Operations detail GSI Technology's financial performance for the three months ended June 30, 2025, March 31, 2025, and June 30, 2024, encompassing revenues, cost of goods sold, operating expenses, and net income (loss) per share Condensed Consolidated Statements of Operations (in thousands, except per share data) | | Three Months Ended June 30, 2025 | Three Months Ended March 31, 2025 | Three Months Ended June 30, 2024 | | :---------------------------------- | :------------------------------- | :------------------------------ | :----------------------------- | | Net revenues | $6,283 | $5,883 | $4,671 | | Cost of goods sold | 2,632 | 2,584 | 2,510 | | Gross profit | 3,651 | 3,299 | 2,161 | | Operating expenses: | | | | | Research & development | 3,097 | 2,966 | 4,214 | | Selling, general and administrative | 2,730 | 2,609 | 2,604 | | Gain from sale and leaseback transaction | - | - | (5,737) | | Total operating expenses | 5,827 | 5,575 | 1,081 | | Operating income (loss) | (2,176) | (2,276) | 1,080 | | Interest and other income, net | 13 | 52 | 55 | | Income (loss) before income taxes | (2,163) | (2,224) | 1,135 | | Provision for income taxes | 54 | 6 | 57 | | Net income (loss) | $(2,217) | $(2,230) | $1,078 | | Net income (loss) per share, basic | $(0.08) | $(0.09) | $0.04 | | Net income (loss) per share, diluted | $(0.08) | $(0.09) | $0.04 | | Weighted-average shares used in computing per share amounts: | | | | | Basic | 26,967 | 25,604 | 25,374 | | Diluted | 26,967 | 25,604 | 25,686 | [Condensed Consolidated Balance Sheets](index=4&type=section&id=6.2%20Condensed%20Consolidated%20Balance%20Sheets) The Condensed Consolidated Balance Sheets outline GSI Technology's financial position as of June 30, 2025, and March 31, 2025, detailing assets, liabilities, and stockholders' equity Condensed Consolidated Balance Sheets (in thousands) | | June 30, 2025 | March 31, 2025 | | :---------------------------------- | :-------------- | :------------- | | Cash and cash equivalents | $22,725 | $13,434 | | Accounts receivable | 1,587 | 3,169 | | Inventory | 3,763 | 3,891 | | Other current assets | 3,012 | 2,961 | | Net property and equipment | 722 | 808 | | Operating lease right-of-use assets | 9,232 | 9,547 | | Other assets | 9,464 | 9,507 | | Total assets | $50,505 | $43,317 | | Current liabilities | $5,372 | $7,074 | | Long-term liabilities | 7,759 | 8,017 | | Stockholders' equity | 37,374 | 28,226 | | Total liabilities and stockholders' equity | $50,505 | $43,317 |

Core Insights - GSI Technology, Inc. has successfully completed the evaluation of its Gemini-II chip, confirming it is production-ready and optimized for Edge AI applications, particularly in GPS-denied environments and next-generation satellite applications [3] - The company reported net revenues of $6.3 million for the first quarter of fiscal 2026, a significant increase from $4.7 million in the same period last year, and gross margin improved to 58.1% from 46.3% year-over-year [4][9] - The outlook for the second quarter of fiscal 2026 anticipates net revenues between $5.9 million and $6.7 million, with a gross margin of approximately 56% to 58% [3] Financial Performance - First quarter fiscal 2026 net revenues were $6.3 million, up 34% from $4.7 million in the first quarter of fiscal 2025 and up 7% from $5.9 million in the fourth quarter of fiscal 2025 [4] - Gross margin for the first quarter of fiscal 2026 was 58.1%, an increase of 200 basis points from the prior quarter and over 1,100 basis points compared to the prior year [7] - Total operating expenses for the first quarter of fiscal 2026 were $5.8 million, a decrease from $6.8 million in the same period a year ago [6] Customer and Sales Insights - Sales to Cadence Design Systems increased significantly to $1.5 million, representing 23.9% of net revenues, compared to $0 in the same period last year [5] - Sales to KYEC and Nokia decreased significantly, with KYEC contributing only $267,000 (4.3% of net revenues) and Nokia contributing $536,000 (8.5% of net revenues) in the first quarter of fiscal 2026 [5] Research and Development - The company is developing a multi-modal large language model (LLM) optimized for edge applications, with benchmark results expected by fall 2025 [3][7] - Research and development expenses for the first quarter of fiscal 2026 were $3.1 million, down from $4.2 million in the prior-year period [6] Cash and Equity Position - The quarter-end cash balance was $22.7 million, an increase from $13.4 million at the end of the previous quarter, reflecting strong cash flow management [7][10] - Stockholders' equity as of June 30, 2025, was $37.4 million, up from $28.2 million at the end of the previous fiscal year [10]

Core Insights - GSI Technology, Inc. will announce its financial results for the fiscal first quarter 2026 on July 31, 2025, after market close [1] - A conference call will be held on the same day at 1:30 p.m. Pacific Time to discuss the financial results and outlook for the second quarter [1] - The company is a leader in high-performance memory solutions and AI processing technology, particularly with its Gemini® Associative Processing Unit [4] Financial Announcement Details - The financial results will cover the period ended June 30, 2025 [1] - The conference call will be accessible via phone and live-streamed on the internet [2] - A replay of the call will be available from July 31, 2025, through August 7, 2025 [3] Company Overview - GSI Technology is positioned at the forefront of AI technology with its innovative APU designed for efficient database searches and high-performance computing [4] - The company's products, Gemini-I® and Gemini-II®, provide scalable, low-power, high-capacity computing solutions [4] - GSI Technology aims to redefine edge computing capabilities and contribute to a smarter, faster, and more efficient future [4]

Company Overview - GSI Technology was established in 1995 and had its IPO in 2007[7] - The company has invested $150 million into APU development[7] - GSI Technology has 148 employees worldwide, with 86 dedicated to APU[6] - Insider ownership is at 27%[6] Financial Performance - FY 2025 annual revenue reached $205 million[6] - Cash and cash equivalents totaled $134 million as of March 31, 2025[6] - The company's market capitalization is $942 million[6] - Strategic cost-cutting is expected to generate annualized savings of approximately $35 million[39] - The sale and lease-back of Sunnyvale, CA HQ generated $113 million[39] Market and Product Strategy - The AI semiconductor TAM is projected to reach $312 billion by 2029[15] - The space semiconductor TAM is expected to grow to $48 billion by 2032[14] - GSI is targeting a >$100 million annual market opportunity in radiation-tolerant applications, with ASP up to $30K and 90%+ gross margin[18] - APU reduces operating costs by 80% and power usage by 90% compared to traditional solutions based on AWS benchmark with 1 Billion Dataset[29]

Part I [Business](index=3&type=section&id=Item%201.%20Business) GSI Technology is a fabless semiconductor company transitioning its focus from high-speed synchronous SRAM to in-place associative computing solutions for AI and HPC markets, while continuing to generate revenue from its established SRAM business - The company's primary business is providing in-place associative computing solutions (APU) for AI and HPC markets, while continuing to serve the synchronous SRAM market[11](index=11&type=chunk)[12](index=12&type=chunk) - Fiscal year 2025 net revenue decreased by **6%** compared to fiscal 2024, attributed to cautionary customer spending and reduced demand for SRAM products due to worldwide inflationary pressures and geopolitical tensions[13](index=13&type=chunk)[14](index=14&type=chunk)[15](index=15&type=chunk) - GSI is developing its second-generation Gemini-II chip, with first silicon received in January 2024 and a planned market release in mid-calendar 2025[22](index=22&type=chunk) - The company has secured multiple government contracts (Space Development Agency, AFWERX, U.S. Army) to develop its APU technology for defense and space applications, with milestone payments totaling over **$2.6 million**[16](index=16&type=chunk)[17](index=17&type=chunk)[18](index=18&type=chunk) - In May 2024, GSI initiated a strategic review to explore options like financing, divestitures, licensing, or a sale of the company to maximize shareholder value[26](index=26&type=chunk)[27](index=27&type=chunk) - On June 6, 2024, the company completed a sale and leaseback of its Sunnyvale headquarters, generating net cash proceeds of **$11.2 million** and recording a gain of **$5.7 million**[25](index=25&type=chunk) [Customers](index=17&type=section&id=Item%201.%20Business-Customers) GSI's revenue is significantly concentrated with a few key customers and channels, with distributors accounting for 91.7% of net revenues in fiscal 2025 and Avnet Logistics being the largest direct customer Revenue by Sales Channel (FY2023-FY2025) | Channel | FY2025 | FY2024 | FY2023 | | :--- | :--- | :--- | :--- | | Direct to Contract Manufacturers | 7.9% | 20.5% | 19.8% | | To Distributors | 91.7% | 76.3% | 77.5% | Revenue from Major Direct Customers (FY2023-FY2025) | Customer | FY2025 | FY2024 | FY2023 | | :--- | :--- | :--- | :--- | | Avnet Logistics | 49.6% | 50.6% | 48.1% | | Holystone | 22.6% | 2.5% | 2.4% | | Flextronics Technology | 2.7% | 13.5% | 10.4% | | Nexcomm | 9.8% | 9.3% | 16.6% | Revenue from Major End-User Customers (FY2023-FY2025) | End-User Customer | FY2025 | FY2024 | FY2023 | | :--- | :--- | :--- | :--- | | KYEC | ~23% | ~3% | ~2% | | Nokia | ~12% | ~21% | ~17% | [Manufacturing](index=19&type=section&id=Item%201.%20Business-Manufacturing) GSI operates a fabless manufacturing model, outsourcing all wafer fabrication, assembly, and most testing, relying heavily on TSMC as its single source for all SRAM and APU wafers - The company utilizes a fabless business model, outsourcing wafer fabrication, assembly, and testing[60](index=60&type=chunk) - All SRAM and APU wafers are currently manufactured by a single foundry, **TSMC**, under purchase orders without a long-term supply contract[61](index=61&type=chunk)[63](index=63&type=chunk) - APU products are manufactured using **28nm** and **16nm** process technology, while SRAM products use **0.13 micron, 90nm, 65nm, and 40nm** technologies[64](index=64&type=chunk) [Intellectual Property](index=23&type=section&id=Item%201.%20Business-Intellectual%20Property) GSI's competitive position relies on protecting its proprietary technology through a combination of patents, copyrights, trade secrets, and contractual agreements, holding 142 U.S. patents, including 82 related to associative computing technology - The company holds **142 United States patents**, comprising **60 for memory** and **82 for associative computing**[73](index=73&type=chunk) - GSI relies on a combination of patents, copyrights, trademarks, and trade secret laws to protect its intellectual property[73](index=73&type=chunk) - The company faces risks from potential patent infringement litigation, which could lead to substantial damages, injunctions, or costly licensing agreements[74](index=74&type=chunk)[76](index=76&type=chunk) [Human Capital Resources](index=25&type=section&id=Item%201.%20Business-Human%20Capital%20Resources) As of March 31, 2025, GSI Technology had 121 full-time employees, with a strong emphasis on engineering talent globally distributed across Sunnyvale, Taiwan, and Israel Employee Distribution as of March 31, 2025 | Category | Number of Employees | | :--- | :--- | | **Total Employees** | **121** | | Engineers | 82 | | - Research & Development | 47 | | Sales & Marketing | 16 | | General & Administrative | 10 | | Manufacturing | 44 | Employee Geographic Location | Location | Number of Employees | | :--- | :--- | | Sunnyvale, CA | 40 | | Taiwan | 40 | | Israel | 33 | [Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) The company faces numerous risks that could adversely affect its business, including unpredictable operating results, heavy reliance on major customers, uncertainty of its strategic review, and dependence on single-source suppliers - Significant reliance on key customers **KYEC** and **Nokia**, which accounted for approximately **23%** and **12%** of net revenues in fiscal 2025, respectively[96](index=96&type=chunk)[107](index=107&type=chunk)[109](index=109&type=chunk) - The company's future success is substantially dependent on the commercialization of its new in-place associative computing (APU) products, which involves significant technological and market adoption risks[97](index=97&type=chunk)[113](index=113&type=chunk) - Dependence on single-source suppliers, particularly **TSMC** for all wafer fabrication, poses a significant risk of manufacturing disruption and cost increases[97](index=97&type=chunk)[124](index=124&type=chunk)[125](index=125&type=chunk) - Geopolitical risks are heightened due to software development operations in Israel and manufacturing and testing operations in Taiwan, which could be affected by military conflicts or political instability[104](index=104&type=chunk)[173](index=173&type=chunk)[174](index=174&type=chunk) - The ongoing strategic review creates uncertainty that could adversely affect employee retention, and customer and supplier relationships, with no assurance of a specific outcome[97](index=97&type=chunk)[110](index=110&type=chunk) - The company has a history of significant net losses, reporting losses of **$10.6 million, $20.1 million, and $16.0 million** in fiscal 2025, 2024, and 2023, respectively[117](index=117&type=chunk) [Unresolved Staff Comments](index=64&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments from the SEC - None[189](index=189&type=chunk) [Cybersecurity](index=64&type=section&id=Item%201C.%20Cybersecurity) GSI has established a cybersecurity risk management program that includes processes to identify, assess, and manage material risks from cyber threats, with Board oversight delegated to the Audit Committee - The company has implemented a cybersecurity risk management program designed to align with **ISO standards**[194](index=194&type=chunk) - The Board of Directors has overall oversight of cybersecurity risk, with the Audit Committee designated to regularly review management's processes and procedures for managing these risks[196](index=196&type=chunk)[197](index=197&type=chunk) - Management provides quarterly cybersecurity updates to the Audit Committee, covering threat risk management, response readiness, and incident response planning[199](index=199&type=chunk) [Properties](index=68&type=section&id=Item%202.%20Properties) The company's principal executive offices are located in a 44,277 square foot facility in Sunnyvale, California, and it also leases a 25,250 square foot facility in Hsin Chu, Taiwan, with aggregate annual gross rent of approximately $1.8 million in fiscal 2025 - Leases a **44,277 sq. ft.** facility in Sunnyvale, CA (headquarters) and a **25,250 sq. ft.** facility in Hsin Chu, Taiwan (manufacturing support)[201](index=201&type=chunk) - Aggregate annual gross rent for leased facilities was approximately **$1.8 million** in fiscal 2025[201](index=201&type=chunk) [Legal Proceedings](index=68&type=section&id=Item%203.%20Legal%20Proceedings) The company reports that there are no legal proceedings - None[202](index=202&type=chunk) [Mine Safety Disclosures](index=68&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[203](index=203&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=68&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) GSI Technology's common stock trades on the Nasdaq Global Market under the symbol "GSIT", and the company has never paid cash dividends nor repurchased shares in the most recent quarter - Common stock is traded on the Nasdaq Global Market under the symbol "**GSIT**"[205](index=205&type=chunk) - The company has never declared or paid cash dividends and does not plan to in the foreseeable future[206](index=206&type=chunk) - No shares were repurchased under the company's authorized stock repurchase program in the quarter ended March 31, 2025[207](index=207&type=chunk)[208](index=208&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=71&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In fiscal 2025, GSI's net revenues decreased by 5.7% to $20.5 million, gross margin fell to 49.4%, and a $5.7 million gain from a property sale helped reduce the net loss to $10.6 million, with liquidity supported by $13.4 million in cash [Results of Operations](index=79&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations-Results%20of%20Operations) For fiscal year 2025, net revenues fell 5.7% to $20.5 million, gross margin declined to 49.4%, and a $5.7 million gain from a property sale contributed to a net loss of $10.6 million, a significant improvement from the prior year Fiscal Year 2025 vs. 2024 Financial Performance (in thousands) | Metric | FY 2025 | FY 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Net Revenues | $20,518 | $21,765 | ($1,247) | -5.7% | | Gross Profit | $10,140 | $11,823 | ($1,683) | -14.2% | | Gross Margin | 49.4% | 54.3% | -4.9pp | N/A | | R&D Expenses | $16,005 | $21,689 | ($5,684) | -26.2% | | SG&A Expenses | $10,763 | $10,565 | $198 | +1.9% | | Gain from Sale of Assets | ($5,793) | $0 | ($5,793) | N/A | | Loss from Operations | ($10,835) | ($20,431) | $9,596 | -47.0% | | Net Loss | ($10,639) | ($20,087) | $9,448 | -47.0% | - The decrease in net revenues was primarily due to a **6.4% decrease in units shipped**, with sales to Nokia falling by **$2.0 million**, while sales to KYEC increased by **$4.1 million**[237](index=237&type=chunk) - The decrease in R&D expenses was mainly due to a **$2.4 million reduction** in pre-production mask costs for the APU2 product and a **$2.2 million decrease** in payroll expenses from cost-cutting measures[239](index=239&type=chunk) [Liquidity and Capital Resources](index=83&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations-Liquidity%20and%20Capital%20Resources) As of March 31, 2025, GSI had $13.4 million in cash and cash equivalents, with net cash used in operating activities of $13.0 million, and believes its existing cash and expected cash flow will be sufficient for at least the next 12 months Cash and Cash Equivalents | Date | Amount (in millions) | | :--- | :--- | | March 31, 2025 | $13.4 | | March 31, 2024 | $14.4 | Cash Flow Summary (Fiscal Year 2025 vs 2024, in millions) | Cash Flow Activity | FY 2025 | FY 2024 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | ($13.0) | ($17.4) | | Net Cash Provided by Investing Activities | $11.4 | $2.8 | | Net Cash Provided by Financing Activities | $0.6 | $1.8 | - The company has an At-the-Market (ATM) offering agreement to sell up to **$25.0 million** of its common stock, and in May and June 2025, it sold **3,380,773 shares** for proceeds of **$11.2 million**[253](index=253&type=chunk)[421](index=421&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=87&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company has minimal exposure to foreign currency exchange risk as most transactions are in U.S. dollars and does not believe it has material exposure to interest rate sensitivity due to the short-term nature of its investments - The company has relatively little exposure to foreign currency exchange risk as most transactions are in U.S. dollars[262](index=262&type=chunk) - Due to the short-term nature of its investments in money market funds, the company does not believe it has material exposure to interest rate sensitivity[263](index=263&type=chunk) [Financial Statements and Supplementary Data](index=88&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section contains the company's audited consolidated financial statements for fiscal years ended March 31, 2025, 2024, and 2023, including balance sheets, statements of operations, and cash flows, with key figures for fiscal 2025 showing total assets of $43.3 million and a net loss of $10.6 million Consolidated Balance Sheet Data (in thousands) | Account | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $23,455 | $30,107 | | Total Assets | $43,317 | $42,464 | | Total Current Liabilities | $7,074 | $5,365 | | Total Liabilities | $15,091 | $6,494 | | Total Stockholders' Equity | $28,226 | $35,970 | Consolidated Statement of Operations Data (in thousands) | Account | FY 2025 | FY 2024 | FY 2023 | | :--- | :--- | :--- | :--- | | Net Revenues | $20,518 | $21,765 | $29,691 | | Gross Profit | $10,140 | $11,823 | $17,681 | | Loss from Operations | ($10,835) | ($20,431) | ($15,807) | | Net Loss | ($10,639) | ($20,087) | ($15,977) | | Diluted Net Loss Per Share | ($0.42) | ($0.80) | ($0.65) | - The independent auditor's report identifies the valuation of inventories as a Critical Audit Matter, due to the significant judgments required to forecast customer demand and estimate adjustments for excess and obsolete inventory[271](index=271&type=chunk)[272](index=272&type=chunk)[273](index=273&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=139&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[423](index=423&type=chunk) [Controls and Procedures](index=139&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures and internal control over financial reporting were effective as of March 31, 2025, with no material changes reported during the fourth quarter of fiscal 2025 - Management concluded that disclosure controls and procedures were effective as of March 31, 2025[425](index=425&type=chunk) - Management concluded that internal control over financial reporting was effective as of March 31, 2025[428](index=428&type=chunk) - No changes in internal control over financial reporting occurred during the quarter ended March 31, 2025, that materially affected, or are reasonably likely to materially affect, internal controls[429](index=429&type=chunk) [Other Information](index=140&type=section&id=Item%209B.%20Other%20Information) During the quarter ended March 31, 2025, no director or officer of the company adopted or terminated a Rule 10b5-1 trading plan or a non-Rule 10b5-1 trading arrangement - No director or officer adopted or terminated a Rule 10b5-1 trading plan during the fourth quarter of fiscal 2025[430](index=430&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=140&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - Not applicable[431](index=431&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=141&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding executive officers is provided in Part I of this report, with all other required information incorporated by reference from the company's definitive proxy statement for its 2025 annual meeting of stockholders - Information is incorporated by reference from the company's 2025 definitive proxy statement[434](index=434&type=chunk)[435](index=435&type=chunk) [Executive Compensation](index=141&type=section&id=Item%2011.%20Executive%20Compensation) The information required by this item concerning executive compensation is incorporated by reference from the "Executive Compensation" section of the company's definitive proxy statement for its 2025 annual meeting of stockholders - Information is incorporated by reference from the company's 2025 definitive proxy statement[436](index=436&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=141&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) The information required by this item regarding security ownership and equity compensation plans is incorporated by reference from the company's definitive proxy statement for its 2025 annual meeting of stockholders - Information is incorporated by reference from the company's 2025 definitive proxy statement[437](index=437&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=141&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) The information required by this item concerning related person transactions and director independence is incorporated by reference from the company's definitive proxy statement for its 2025 annual meeting of stockholders - Information is incorporated by reference from the company's 2025 definitive proxy statement[438](index=438&type=chunk) [Principal Accountant Fees and Services](index=141&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) The information required by this item regarding principal accountant fees and services is incorporated by reference from the company's definitive proxy statement for its 2025 annual meeting of stockholders - Information is incorporated by reference from the company's 2025 definitive proxy statement[439](index=439&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=142&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the documents filed as part of the Form 10-K, including the index to the Consolidated Financial Statements and a detailed list of all exhibits filed with the report - Lists the financial statements, financial statement schedules, and exhibits filed as part of the annual report[441](index=441&type=chunk)[442](index=442&type=chunk)[444](index=444&type=chunk) [Form 10-K Summary](index=147&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable to the company - Not applicable[447](index=447&type=chunk)

Summary of GSI (GSIT) Conference Call - May 21, 2025 Company Overview - GSI was founded 30 years ago by Leland Shu, the current president and CEO, and went public in February 2007 [2][3] - The company has a market cap of just under $100 million and maintains a significant insider ownership of 27% [6] Financials - GSI finished fiscal year 2025 with revenues of $20.5 million [4] - The company has $13.4 million in cash and cash equivalents and has never carried debt [5] - Operating costs have decreased to $5.6 million in the past quarter, with a cash burn of just over $1.5 million last quarter [40] - Revenues have been growing, attributed mainly to the build-out of AI, with a previous revenue of approximately $4.5 million a year ago [37] Product Lines and Market Focus - GSI specializes in high-density, high-performance memory products, particularly in the SRAM area, which has been profitable and is experiencing growth from the Sigma Quad family [6][7] - The company is expanding into aerospace and AI markets, specifically targeting edge and inference applications with their AI chip, the APU [7][8] - The APU is described as a unique compute-in-memory architecture, allowing for extreme parallel processing with 2 million bit processors [12][14] Technology and Innovation - GSI's APU technology is positioned as a true compute-in-memory solution, contrasting with other companies that offer near-memory processing [12][61] - The APU architecture allows for significant power savings by eliminating the need to transfer data back and forth between memory and processing units [15][16] - The company has two product families: Gemini One and Gemini Two, with Gemini Two expected to be production-worthy soon [24][44] - The upcoming PLATO chip aims to address multimodal generative AI and large language models at the edge, targeting a power consumption of under 10 watts [26][34] Market Opportunities - The AI industry is projected to grow at over 20% CAGR, while the space market is expected to grow at just under 10% CAGR [8] - GSI aims to capture 10-20% of a $100 million market opportunity in radiation-hardened devices for the space industry [10][11] - The company is actively pursuing government funding through SBIRs, having won three grants totaling approximately $3.35 million [41][42] Strategic Initiatives - GSI is focusing on short-term sales with government and military sectors while maintaining discussions with hyperscalers for long-term growth [49] - The company is looking to raise funds for the development of PLATO and the launch of Gemini Two, with a timeline for funding within the next two to three quarters [57][58] - GSI is open to various funding avenues, including equity raises, partnerships, and potential mergers or acquisitions [47] Challenges and Future Outlook - The company acknowledges the need to demonstrate the value of its technology to the market, as current stock prices do not reflect its potential [59] - GSI is optimistic about the future, expecting milestones to kick in during the second half of the year, particularly with the launch of Gemini Two and the development of PLATO [64]

Core Insights - GSI Technology, Inc. (GSIT) shares have increased by 8.1% since the earnings report for the quarter ended March 31, 2025, outperforming the S&P 500 index, which grew by 0.7% during the same period [1] - The stock has seen a significant rise of 47.5% over the past month compared to the S&P 500's 2.8% increase [1] Financial Performance - For Q4 fiscal 2025, GSI Technology reported a net loss of $0.09 per share, an improvement from a net loss of $0.17 per share in the same quarter last year [2] - Net revenues reached $5.9 million, reflecting a 14% year-over-year increase, while gross margin improved to 56.1% from 51.6% a year earlier [2] - The net loss narrowed to $2.2 million from $4.3 million in the previous year [2] Operating Metrics - Operating expenses decreased to $5.6 million from $7.2 million year-over-year, primarily due to a reduction in R&D costs, which fell to $3 million from $4.8 million [3] - Government funding under the SBIR program contributed $0.9 million to offset R&D expenses [3] - SG&A expenses increased slightly to $2.6 million from $2.4 million [3] Revenue Breakdown - Sales to KYEC surged to $1.7 million, representing 29.5% of quarterly revenues, up from $0.5 million (10.6%) in the prior year [4] - Sales to Nokia declined to $0.4 million, or 7.5% of revenues, down from 13.5% a year earlier [4] - Military and defense sales accounted for 30.7% of quarterly shipments, slightly down from 35.5% last year [4] - SigmaQuad sales remained stable at 39.3% of shipments [4] Management Insights - The CEO highlighted strong demand for legacy SRAM products as a key driver of revenue growth and noted a strategic breakthrough with a North American prime contractor for higher-margin radiation-hardened SRAM chips [5] - Additional orders are expected in fiscal 2026, which is seen as pivotal for market access [5] Product Development - Progress continues in the AI product segment with the Gemini-II APU, with production-ready chips expected by the end of Q1 fiscal 2026 [6] - Successful milestones have been achieved under SBIR contracts with the U.S. Space Development Agency and Air Force Research Laboratory [6] - A new enhancement to the Plato processor includes a built-in camera interface, positioning it as a compact solution for edge AI applications [7] Earnings Drivers - Improvements in both top-line and bottom-line performance were attributed to a favorable product mix and cost discipline [8] - Gross margin benefited from increased sales of higher-margin products and better absorption of fixed manufacturing costs [8] - R&D expenses for the full year dropped to $16 million from $21.7 million in fiscal 2024 [9] Fiscal Year Overview - For the full fiscal year, revenues totaled $20.5 million, a decrease of 5.7% from fiscal 2024, while the net loss narrowed to $10.6 million, or $0.42 per share, from $20.1 million, or $0.80 per share a year ago [11] Future Guidance - For Q1 fiscal 2026, GSI expects revenues between $5.5 million and $6.3 million, with gross margin projected at 56% to 58% [12] - Continued momentum in SRAM demand and potential Gemini-II commercialization milestones are expected to support near-term growth [12] Other Developments - The company completed the sale and leaseback of its Sunnyvale headquarters, resulting in a $5.8 million gain and a reduction in working capital [13] - Working capital declined to $16.4 million from $24.7 million a year earlier, with cash and cash equivalents reported at $13.4 million and stockholders' equity at $28.2 million as of March 31, 2025 [13]