GSI TECHNOLOGY INC

GSI Technology, Inc. is a semiconductor company pursuing a two-pronged business strategy centered on the commercialization of its proprietary associative processing unit technology for artificial intelligence, high-performance computing, and search applications at the edge, funded by an established legacy business designing and selling high-speed synchronous static random access memory products primarily for the networking and telecommunications, test and measurement, and military/defense and aerospace markets. The company operates under a fabless manufacturing model and is headquartered in Sunnyvale, California, with additional operations in Taiwan and Israel. The total addressable market for APU in AI, search applications, and HPC has been determined by GSI to be approximately $247 billion in 2025, growing at a compound annual growth rate of 27% to $708 billion by 2028, and the serviceable available market for APU in edge AI deployments is approximately $7 billion in 2025, anticipated to grow at a CAGR of 18%-22% to $16 billion by 2030.

GSI's principal competitors for its in-place associative computing solutions include NVIDIA Corporation and new well-funded entrants, while for its SRAM products the principal competitors include Infineon Technologies AG, Integrated Silicon Solution, and Renesas Electronics Corporation. The company believes its focus on performance leadership provides key competitive advantages, and it maintains long-term relationships with leading OEM customers including KYEC, Cadence Design Systems, and Nokia. GSI believes it is the only SRAM manufacturer to offer monolithic 288Mb densities and the highest truly random transaction rate in the industry at 1,866 million transactions per second.

The company generates revenue through the design, development, and marketing of Very Fast SRAMs and is developing a subscription business model for certain new APU products. Substantially all of the company's revenue is derived from sales of SRAM products, which represented approximately 99% of total revenues in each of the fiscal years ended March 31, 2026, 2025, and 2024. Sales are made through a direct sales force, international and domestic sales representatives, and distributors, with sales to foreign and domestic distributors accounting for 93.3% of net revenues in fiscal 2026.

GSI offers four families of high-speed synchronous SRAMs: SyncBurst, NBT, SigmaQuad, and SigmaDDR, which together provide the basis for approximately 10,000 individual part numbers across a variety of density, data width performance, temperature, and package configurations. The company has introduced and continues to market radiation-hardened and radiation-tolerant SRAMs for military/defense and aerospace applications, including 288 megabit, 144 megabit, and 72 megabit devices from the SigmaQuad-II+ family, as well as 144 megabit, 72 megabit, and 32 megabit SyncBurst and NBT RadTolerant products. The SigmaQuad-II+ is believed to be the industry's highest-density RadHard SRAM.

GSI's APU family of products includes the Gemini-I part, which is in full production, and the Gemini-II device, which is in pre-production and already in the market with sales delivery of PCIe boards and chips. The company offers board-level products including a full size double width PCIe card called Leda-E2 for Gemini-II, and for Gemini-I the Leda-E full-size PCIe card and Leda-S 1U E1.L card. GSI has off-the-shelf server product offerings with 8 Leda-E cards in a single 2U server providing 10 POPS of Boolean operation, and a single 1U server with 16 Leda-S cards providing 15 POPs of Boolean performance. The next generation APU internally named Plato is being designed to support sub-20W applications for autonomous mobile robotics such as humanoid robots, delivery vehicles, and drones.

During fiscal 2026, GSI was awarded four contracts under the U.S. Department of Defense Small Business Innovation Research program, with aggregate payments received totaling approximately $1.6 million in fiscal 2026. In January 2026, the company announced a new proof-of-concept engagement with two government agencies, partnering with G2 Tech on Sentinel, a program to develop an autonomous perimeter security system jointly backed by the U.S. Department of War and a foreign government agency. In May 2026, GSI announced it was awarded Phase I of a Smart City project by a local government agency in Taiwan, marking its first smart city deployment of the Gemini-II APU. In March 2025, the company secured an initial production order for its radiation-hardened SRAM from a North American prime contractor. On October 21, 2025, GSI entered into a registered direct offering, issuing 1,508,462 shares of common stock at $10.00 per share and pre-funded warrants to purchase 3,491,538 shares, with gross proceeds of approximately $50 million. Between May and August 2025, the company sold 4,508,350 shares of common stock pursuant to an At-the-Market offering at an average price of $3.29 for net proceeds of $14.3 million.

Net revenues increased by 22.4% from $20.5 million in fiscal 2025 to $25.1 million in fiscal 2026, driven by strong SRAM sales to chip design and simulation customers. Gross profit increased by 35.1% from $10.1 million in fiscal 2025 to $13.7 million in fiscal 2026, with gross margin increasing from 49.4% to 54.5%. Net loss was $13.2 million in fiscal 2026 compared to $10.6 million in fiscal 2025, with the increase primarily due to higher research and development expenses including $3.2 million for intellectual property rights purchased for the Plato project. Cash and cash equivalents were $67.2 million as of March 31, 2026, compared to $13.4 million as of March 31, 2025, with no debt.

The company states it expects that research and development expenses will continue to be substantial in future periods and may lead to operating losses in some periods, and that sales and marketing expenses will increase in absolute dollars if the company is able to grow and expand its sales force.

The primary growth vector is the commercialization of the APU product line, particularly the Gemini-II device which is in pre-production and the next generation Plato chip. The total addressable market for APU in AI, search applications, and HPC is estimated at approximately $247 billion in 2025, growing at a CAGR of 27% to $708 billion by 2028, and the serviceable available market for APU in edge AI deployments is approximately $7 billion in 2025, anticipated to grow at a CAGR of 18%-22% to $16 billion by 2030. The company is focusing on markets where the APU shows factors of improvement against CPU or GPU systems, including similarity search, multi-modal vector search, real-time very large database search, and scientific high-performance computing workloads processing sensor data. GSI is also pursuing opportunities in the military/defense and aerospace markets with its RadHard and RadTolerant SRAMs and APU-based solutions, and in May 2026 was awarded Phase I of a Smart City project in Taiwan for the first smart city deployment of the Gemini-II APU.

The company is pursuing growth through its APU technology in edge AI applications, including physical AI, drones, and edge compute, with applications in environment self-aware navigation and security monitoring. GSI is also developing the next generation APU named Plato, designed to support sub-20W applications for autonomous mobile robotics such as humanoid robots, delivery vehicles, and drones, and expects Plato will increase addressable sales and open new avenues in the migration of AI to the autonomous edge. The company is undertaking an effort to adopt several AI models to 1-bit and ternary (1.58-bit) optimization for Gemini-II application to further density and value for the edge market. Additionally, GSI will license the intellectual property underlying the APU to companies that have their own chip design capabilities and provide design services to help integrate the IP into new processor, FPGA, or ASIC designs.

The company expects that its overall gross margins will fluctuate from period to period as a result of shifts in product mix, changes in average selling prices, and its ability to control cost of revenues. Gross margin increased from 49.4% in fiscal 2025 to 54.5% in fiscal 2026, primarily related to change in the mix of products and customers and the impact of fixed overhead on higher shipment levels. The company expects that research and development expenses will continue to be substantial in future periods and may lead to operating losses in some periods, and that sales and marketing expenses will increase in absolute dollars if the company is able to grow and expand its sales force.

The company outsources wafer fabrication, assembly, and testing, with all SRAM and APU wafers manufactured by TSMC under individually negotiated purchase orders without a long-term supply contract. The APU products are manufactured at TSMC using 28 nanometer and 16 nanometer process technology, while the majority of SRAM products are manufactured using 0.13 micron, 90 nanometer, 65 nanometer, and 40 nanometer process technologies on 300 millimeter wafers at TSMC. All manufactured wafers are tested for electrical compliance and most are packaged at Advanced Semiconductor Engineering in Taiwan, and Wistron Neweb Corporation in Taiwan manufactures the boards for the APU product line. The company expects to continue to transition the manufacture of its products to smaller geometry process technologies to remain competitive.

Research and development expenses were $19.9 million in fiscal 2026, including $3.2 million for intellectual property rights purchased for the Plato project. Capital expenditures were $486,000 in fiscal 2026. The company does not have a share repurchase program with a specific authorization amount mentioned in the filing, and the Board of Directors has authorized the company to repurchase shares at management's discretion, but no repurchases occurred during the quarter ended March 31, 2026. The company has never declared or paid cash dividends on its common stock and does not anticipate declaring or paying any cash dividends in the foreseeable future.

The company faces significant headwinds including the decline in the networking and telecommunications market, which has accounted for a significant portion of net revenues in the past and is expected to continue to decline. The company is reliant on a single foundry, TSMC, for all wafer supply, and on single sources for assembly and testing, with no long-term supply agreements. Worldwide inflationary pressures, increased or new tariffs, export controls and other trade barriers, trade disputes, increasing geopolitical tensions, and the military conflicts in Ukraine and the Middle East are expected to adversely affect revenues, results of operations, and financial condition. The company also faces the risk that Nokia, which has been one of its largest end user customers, is incorporating internally developed alternative memory solutions into certain next-generation products in place of the company's SRAM products, with purchases by Nokia declining from approximately 21% of net revenues in fiscal 2024 to approximately 6% in fiscal 2026.

The company's APU commercialization efforts face risks including that sales of APU products continue to be in research and academic areas and commercialization proceeds through proof of concept stages that take time, with revenue from APU products not material to date. The company faces intense competition from significantly larger and better-resourced companies in the AI hardware market, particularly NVIDIA Corporation which has established a dominant position through its GPU architecture and CUDA software platform. Evolving government regulation of artificial intelligence in the U.S., EU, and other jurisdictions may increase compliance costs, delay or restrict deployment of products, or otherwise adversely affect the business. The company's estimates of the total addressable market and serviceable available market for its APU products are based on internal assumptions and publicly available research reports that may prove to be materially inaccurate.

The company is substantially dependent on a single foundry, TSMC, for all wafer supply for both SRAM and APU products, and on single sources for assembly and testing, with no long-term supply agreements, meaning any disruption at TSMC or allocation of capacity to larger customers could severely constrain production. Customer concentration is extreme, with two customers accounting for 52% and 34% of accounts receivable at March 31, 2026, and purchases by KYEC, Nokia, and Cadence Design Systems representing approximately 14%, 6%, and 12% of net revenues respectively in fiscal 2026, while Nokia's purchases have declined from 21% of net revenues in fiscal 2024 to 6% in fiscal 2026 as it develops internal memory solutions. The company has incurred significant net losses of $13.2 million, $10.6 million, and $20.1 million in fiscal 2026, 2025, and 2024 respectively, and revenue from APU products has not been material to date, creating risk that the substantial research and development investment in associative computing may not be recovered. The company faces intense competition from NVIDIA Corporation and other well-funded entrants in the AI hardware market, and its APU architecture represents a fundamentally different approach requiring customers to adopt an unfamiliar technology from a comparatively small company. The company's operations and supply chain are concentrated in Taiwan and Israel, exposing it to risks from geopolitical tensions, including the deterioration of relations between the U.S., Taiwan, and China, and the evolving military conflict in Israel.

Management's message emphasizes the two-pronged business strategy of commercializing the proprietary APU technology while funding development through the established SRAM business. Key themes include the successful completion of all milestones under four SBIR contracts as of March 31, 2026, except for certain amended milestones, with aggregate payments received totaling approximately $1.6 million in fiscal 2026. Management highlights that net revenue increased by 22% compared to fiscal 2025, reflecting strong SRAM sales to chip design and simulation customers, and that gross margin increased by 5% compared to the prior fiscal year primarily reflecting a favorable mix weighted toward higher-margin SRAM products. Strategic priorities emphasized include the complete productization of in-place associative computing products, identifying and developing new long tail markets where the APU is differentiated, rapidly increasing sales of RadHard and RadTolerant SRAMs, and exploiting opportunities to expand the market for SRAM products. Management also notes the strengthening of the balance sheet through the sale of the Sunnyvale property in June 2024, the At-the-Market offering raising net proceeds of $14.3 million, and the registered direct offering with gross proceeds of approximately $50 million.