Company: GCTS
Filing Date: 2025-03-25
Form Type: 10-K
Source: 0000950170-25-044438
Chunk: 188

Company: GCT Semiconductor Holding, Inc.
Filing Date: 2025-03-25
Form: 10-K
Item: Item 1B
Chunk 188
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 does not have a history of cancelling these agreements once production has started. As of December 31, 2024, the Company had outstanding noncancellable purchase commitments for these production agreements of $0.2 million.Samsung Agreement Liability ReleaseIn July 2020, the Company entered into a research and development agreement with Samsung Electronics Co., Ltd (“Samsung”). According to the agreement, the Company would design 5G chip products and Samsung would provide development and intellectual property support, mass production set up support including mask sets for manufacturing and engineering sample chip supply to the Company for a specific product. The total fee amount for the research and development (“R&D”) services pursuant to the agreement was $21.1 million. The Company bore the risk of R&D failure and was obligated to pay the $21.1 million total fee based on milestones defined in the agreement, of which $11.7 million was due based on development milestones and $9.4 million of additional NRE (“non-recurring engineering”) was to be paid within a maximum of 4 years after the planned product first shipment date. The Company recognized R&D expenses based on an estimate of the percentage completion of services provided by Samsung during the respective financial reporting period. In the first quarter of 2024, Samsung agreed to unconditionally release the Company from payment for work Samsung had completed to date because it had not met certain of the development milestones and due to a change in Samsung’s business strategy. As a result, the Company recognized a gain of $14.6 million upon such unconditional release of its liability to Samsung. During the first quarter of 2024, the parties mutually agreed that the agreement had expired and there were no remaining obligations of either party under the agreement.Alpha Foundry Product Development AgreementIn February 2024, the Company and Alpha Holdings Co., Ltd. (“Alpha”) entered into a foundry product development agreement related to 5G chip development for a total fee of $7.6 million. The Company bears the risk of R&D failure and is obligated to pay the fee based on milestones defined in the agreement. The Company recognizes R&D expenses based on an estimate of the percentage completion of services provided by Alpha during the respective financial reporting period. For the year ended December 31, 2024, the Company recorded $6.7 million in R&D expenses related to services provided by Alpha. As of December 31, 2024, the outstanding short-term purchase obligations to Alpha were $0.9 million. The aggregate unpaid amount related to