Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ⌧ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2020 or ◻ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-33387 GSI Technology, Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction of inco ...

Financial Data and Key Metrics Changes - The company reported a net loss of $5.2 million or $0.22 per diluted share on net revenues of $6.8 million for Q3 fiscal 2021, compared to a net loss of $4.6 million or $0.20 per diluted share on net revenues of $10 million for Q3 fiscal 2020 [19] - Gross margin decreased to 47.3% from 60.2% in the prior year period [19] - Total operating expenses were $8.3 million, down from $10.8 million in Q3 fiscal 2020 [20] Business Line Data and Key Metrics Changes - Sales to Nokia were $2.8 million or 42% of net revenues, up from $2.6 million or 26.3% in the same period a year ago [16] - Military defense sales constituted 26% of third-quarter shipments, compared to 18.9% in the comparable period a year ago [16] - SigmaQuad sales remained stable at 62% of third-quarter shipments compared to the same quarter in fiscal 2020 [16] Market Data and Key Metrics Changes - The company is facing challenges related to COVID-19, impacting face-to-face meetings critical for military and defense sales [17] - The company is adapting to remote access for customer testing, which is expected to slow the sales process for Gemini [18] Company Strategy and Development Direction - The company is focused on launching the Gemini APU and enhancing its software capabilities to improve performance [5][7] - Plans to release a compiler stack for Python and C++ to grow the APU ecosystem [7][12] - The company aims to win design contracts for Gemini-I in various sectors including aerospace, defense, and e-commerce [11] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about the reception of the Gemini APU despite the challenges posed by COVID-19 [5] - The company anticipates launching Gemini-II by late calendar 2022, with significant performance improvements over Gemini-I [12] - Management acknowledged the impact of silicon shortages and price increases on operations but noted that they are managing to grow slightly [32] Other Important Information - The company had $52.3 million in cash and short-term investments as of December 31, 2020, down from $66.6 million a year prior [22] - Working capital decreased to $54.4 million from $70.9 million at the end of the previous fiscal year [23] Q&A Session Summary Question: Are you still on lockdown, or have you recently reopened after inauguration in California? - Management confirmed that they are still working from home and do not expect to return until summer [26] Question: What is the current status of facial recognition technology? - Management stated that they are still moving ahead with facial recognition applications, particularly in niche markets [27] Question: When can we expect revenue from Gemini-I and Gemini-II? - Management indicated that some revenue from Gemini-I is expected in the first half of the year, while Gemini-II will take longer, with first silicon expected in early 2022 [29] Question: How are silicon shortages affecting the company? - Management acknowledged that silicon shortages have led to increased costs and longer lead times, but they are managing to grow slightly despite these challenges [32]

| --- | --- | --- | --- | |----------------------------------------------------------------------|-------|------------------------------------|---------------------------------------------------| | | | | | | | | | | | | | | | | High Performance Memory Technology for for LeadingEdge Applications | | VP of Sales and Investor Relations | Doug Schirle, CFO Didier Lasserre, January 2021 | Safe Harbor The statements contained in this presentation that are not purely historical are forward-looking statements withi ...

| --- | --- | --- | --- | |----------------------------------------------------------------------|-------|------------------------------------|----------------------------------------------------| | | | | | | High Performance Memory Technology for for LeadingEdge Applications | | VP of Sales and Investor Relations | Doug Schirle, CFO Didier Lasserre, November 2020 | Safe Harbor The statements contained in this presentation that are not purely historical are forward-looking statements within the meaning of S ...

GSI Technology, Inc. (NASDAQ:GSIT) Q2 2021 Results Earnings Conference Call October 29, 2020 4:30 PM ET Company Participants Lee-Lean Shu - Chairman, President, Chief Executive Officer Didier Lasserre - Vice President of Sales Douglas Schirle - Chief Financial Officer Conference Call Participants Denis Pyatchanin - Needham & Company Jeff Bernstein - Cowen Operator Ladies and gentlemen, thank you for standing by. Welcome to GSI Technology's second quarter fiscal 2021 results conference call for the quarter e ...

| --- | --- | --- | --- | |------------------------------------------------------|-------|-------|------------------------------------------------------------------------------------| | | | | | | | | | | | | | | | | High Performance Memory for Leading-Edge Technology | | | Doug Schirle, CFO Didier Lasserre, VP of Sales and Investor Relations June 2020 | Safe Harbor The statements contained in this presentation that are not purely historical are forward-looking statements within the meaning of Section 21E of ...

GSI Technology, Inc. (NASDAQ:GSIT) Q1 2021 Earnings Conference Call July 30, 2020 4:30 PM ET Company Participants Lee-Lean Shu - President and Chief Executive Officer Didier Lasserre - Vice President, Sales Douglas Schirle - Chief Financial Officer Conference Call Participants Ari Shusterman - Needham & Company Jeffrey Bernstein - Cowen, Inc. Kurt Caramanidis - Carl M. Hennig, Inc. Operator Please stand by, we’re about to begin. Ladies and gentlemen, thank you for standing by. Welcome to GSI Technology’s Fi ...

Part I [Business](index=3&type=section&id=Item%201.%20Business) GSI Technology, a fabless semiconductor company, is transitioning from high-performance SRAM to developing and commercializing its Associative Processing Unit (APU) for AI and big data markets, while maintaining specialized SRAM production - The company's principal strategic objective is the development and commercialization of its **Associative Processing Unit (APU) products** for applications like similarity search in e-commerce and drug discovery[17](index=17&type=chunk) - GSI continues to be a leading provider of **high-performance SRAMs**, focusing on **high-density** and **radiation-hardened/tolerant products** for military, aerospace, and other specialized markets, despite the overall decline in the networking and telecom SRAM market[16](index=16&type=chunk)[28](index=28&type=chunk) - The company utilizes a **fabless business model**, outsourcing wafer fabrication to partners like **TSMC**, which allows it to focus on research and development while minimizing capital investment[16](index=16&type=chunk)[49](index=49&type=chunk) Key Customer Concentration (Fiscal Years 2018-2020) | Customer/Channel | FY 2020 | FY 2019 | FY 2018 | | :--- | :--- | :--- | :--- | | **Nokia (End Customer)** | ~38% | ~45% | ~36% | | **Avnet Logistics (Distributor)** | 34.3% | 31.3% | 35.3% | | **Sanmina (Contract Mfr.)** | 17.4% | 17.7% | 16.0% | | **Flextronics (Contract Mfr.)** | 14.8% | 21.8% | 14.0% | | **Nexcomm (Distributor)** | 15.1% | 14.8% | 16.1% | [Overview and Strategy](index=3&type=section&id=Item%201.%20Business%23Overview) GSI's core strategy involves completing the productization of its APU for AI and big data, expanding into new markets for both APU and radiation-tolerant SRAMs, and leveraging its fabless model - The company's primary operational objective is the complete productization of its initial in-place associative computing (APU) product, which is on track for completion in **calendar year 2020**[40](index=40&type=chunk) - A key strategy is to aggressively target the **Aerospace & Defense (A&D) markets** for its newly qualified radiation-hardened (RadHard) and radiation-tolerant (RadTolerant) SRAMs[40](index=40&type=chunk) - The APU technology utilizes **process-in-memory (PIM) structures** to address performance bottlenecks in traditional CPUs and GPUs, aiming to significantly improve computation speed and reduce power consumption for large dataset processing[23](index=23&type=chunk) [Products](index=5&type=section&id=Item%201.%20Business%23Products) GSI offers high-speed synchronous SRAMs, including radiation-hardened variants for specialized markets, and its new Associative Processing Unit (APU) as a PCIe card for emerging computing applications - The company offers four main families of high-speed synchronous SRAMs: **SyncBurst™**, **NBT™**, **SigmaQuad™**, and **SigmaDDR™**, which form the basis for approximately **10,000 individual part numbers**[29](index=29&type=chunk)[30](index=30&type=chunk) - GSI has developed **radiation-hardened (RadHard)** and **radiation-tolerant (RadTolerant) SRAMs**, including **288Mb**, **144Mb**, and **72Mb** devices from its SigmaQuad-II+ family, specifically for aerospace and military applications[37](index=37&type=chunk) - The new APU product is currently offered as a **half-length PCIe card** suitable for servers, with considerations for other form factors to expand its addressable market[26](index=26&type=chunk) [Manufacturing and Competition](index=9&type=section&id=Item%201.%20Business%23Manufacturing%20and%20Competition) GSI employs a fabless model, outsourcing manufacturing to TSMC and ASE, and competes with established SRAM providers and emerging APU developers like NVIDIA and Intel - The company outsources all SRAM wafer manufacturing to **TSMC** and most packaging to **Advanced Semiconductor Engineering (ASE)**, both located in Taiwan[50](index=50&type=chunk)[54](index=54&type=chunk) - The new in-place associative computing (APU) products will initially be manufactured at **TSMC** using **28 nanometer process technology**[51](index=51&type=chunk) - Principal competitors for SRAM products include **Cypress Semiconductor**, **Integrated Silicon Solution**, and **Micron**; for the developing APU products, prospective competitors are **NVIDIA Corporation** and **Intel Corporation**[57](index=57&type=chunk) [Intellectual Property and Employees](index=11&type=section&id=Item%201.%20Business%23Intellectual%20Property%20and%20Employees) GSI protects its technology with **85 U.S. patents**, including **25** for associative computing, and employs **166** full-time staff, with **108** engineers, across its global facilities - The company holds **85 United States patents**, comprising **60 memory patents** and **25 associative computing patents**, with over a dozen additional applications pending[61](index=61&type=chunk) - As of **March 31, 2020**, the company had **166 full-time employees**, including **108 engineers**. The employees are located in the US (**59**), Taiwan (**58**), and Israel (**34**)[63](index=63&type=chunk) [Risk Factors](index=13&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including unpredictable results, heavy customer reliance, COVID-19 impacts, APU development challenges, intense competition, single-source supplier dependence, and geopolitical factors - The **COVID-19 global pandemic** creates uncertainty in customer demand and the worldwide economy, which may decrease sales and revenues, particularly for SRAM products, and could impact the APU product launch[78](index=78&type=chunk)[80](index=80&type=chunk) - The company is heavily dependent on its largest customer, **Nokia**, which accounted for approximately **38% of net revenues in fiscal 2020**. A reduction in purchases from Nokia would significantly harm operating results[79](index=79&type=chunk) - Future success is substantially dependent on the successful development and market acceptance of new **in-place associative computing products**, which entails significant technological, financial, and market-building risks[88](index=88&type=chunk)[89](index=89&type=chunk) - The company depends on **single-source suppliers** for key components, most notably obtaining all wafers for its Very Fast SRAM and APU products from a single foundry, **TSMC**, creating significant supply chain risk[95](index=95&type=chunk) - As of **May 31, 2020**, executive officers, directors, and their affiliates beneficially owned approximately **35%** of the company's outstanding common stock, allowing them to exercise substantial influence over corporate matters[138](index=138&type=chunk) [Properties](index=28&type=section&id=Item%202.%20Properties) GSI's main operations are in its owned Sunnyvale facility, supplemented by leased spaces in Taiwan for manufacturing support, and smaller offices in Georgia, Texas, and Israel - The company owns its **44,277 sq. ft.** principal facility in Sunnyvale, California[145](index=145&type=chunk) - A key manufacturing support facility of **25,250 sq. ft.** is leased in Hsin Chu, Taiwan, with the lease set to expire in **August 2020**[145](index=145&type=chunk) [Legal Proceedings](index=28&type=section&id=Item%203.%20Legal%20Proceedings) The company reported no material legal proceedings - None[146](index=146&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=29&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) GSI's common stock trades on Nasdaq under **"GSIT"**, with no history or plans for cash dividends, and no share repurchases in the most recent quarter - The company's common stock is traded on the **Nasdaq Global Market** under the symbol **"GSIT"**[149](index=149&type=chunk) - The company has never declared or paid cash dividends and does not plan to in the foreseeable future[150](index=150&type=chunk) - No shares were repurchased under the company's authorized stock repurchase program during the quarter ended **March 31, 2020**[151](index=151&type=chunk) [Selected Financial Data](index=29&type=section&id=Item%206.%20Selected%20Financial%20Data) This section summarizes five years of consolidated financial data, showing a net loss of **$10.3 million** on **$43.3 million** in revenues for fiscal 2020, a decline from fiscal 2019 Selected Financial Data (Fiscal Years 2018-2020) | Metric | FY 2020 (in thousands) | FY 2019 (in thousands) | FY 2018 (in thousands) | | :--- | :--- | :--- | :--- | | **Net Revenues** | $43,343 | $51,486 | $42,643 | | **Gross Profit** | $25,343 | $31,628 | $22,426 | | **Loss from Operations** | $(10,802) | $(182) | $(4,471) | | **Net Income (Loss)** | $(10,337) | $163 | $(4,515) | | **Diluted EPS** | $(0.45) | $0.01 | $(0.21) | | **Total Assets (at year-end)** | $102,561 | $106,223 | $99,540 | | **Total Stockholders' Equity** | $89,641 | $93,155 | $86,815 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a **15.8%** revenue decrease and **$10.3 million** net loss in fiscal 2020, driven by lower Nokia sales and increased R&D for APU, while maintaining a strong liquidity position Fiscal 2020 vs. Fiscal 2019 Results | Metric | FY 2020 | FY 2019 | Change | | :--- | :--- | :--- | :--- | | **Net Revenues** | $43.3M | $51.5M | -15.8% | | **Gross Profit** | $25.3M | $31.6M | -19.9% | | **Gross Margin** | 58.5% | 61.4% | -2.9 pts | | **R&D Expenses** | $25.2M | $21.4M | +18.1% | | **Net Income (Loss)** | $(10.3)M | $0.16M | N/A | - The decrease in FY2020 revenue was primarily driven by a **$6.8 million** decline in direct and indirect sales to **Nokia**, which fell from **$23.1 million** in FY2019 to **$16.3 million** in FY2020[183](index=183&type=chunk) - The company is devoting substantial resources to developing its new **in-place associative computing products**, leading to an **18.1% increase** in R&D expenses in fiscal 2020[187](index=187&type=chunk)[170](index=170&type=chunk) - As of **March 31, 2020**, the company had a strong liquidity position with **$70.7 million** in cash, cash equivalents, and investments, and no debt. Management believes this is sufficient to meet needs for at least the next **12 months** despite COVID-19 uncertainty[160](index=160&type=chunk)[206](index=206&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces minimal foreign currency risk due to USD-denominated transactions and limited interest rate risk on its short-term **$70.7 million** investment portfolio - The company has relatively little exposure to foreign currency exchange risk because revenues and most expenses are denominated in **U.S. dollars**. It does not currently engage in currency hedging[234](index=234&type=chunk) - Due to the short-term nature of its **$70.7 million** investment portfolio, the company believes it does not have material exposure to changes in fair value from interest rate fluctuations[236](index=236&type=chunk) [Financial Statements and Supplementary Data](index=45&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements for fiscal years 2018-2020, including an unqualified opinion from **BDO USA, LLP** on both financial statements and internal controls - The independent auditor, **BDO USA, LLP**, issued an **unqualified opinion** on the consolidated financial statements and the company's internal control over financial reporting as of **March 31, 2020**[239](index=239&type=chunk)[246](index=246&type=chunk) Consolidated Balance Sheet Highlights (as of March 31, 2020) | Account | Amount (in thousands) | | :--- | :--- | | **Total Current Assets** | $79,113 | | *Cash and cash equivalents* | *$51,506* | | **Total Assets** | **$102,561** | | **Total Current Liabilities** | $8,260 | | **Total Liabilities** | **$12,920** | | **Total Stockholders' Equity** | **$89,641** | Consolidated Statement of Operations (Year Ended March 31, 2020) | Account | Amount (in thousands) | | :--- | :--- | | **Net Revenues** | $43,343 | | **Gross Profit** | $25,343 | | **Loss from Operations** | $(10,802) | | **Net Loss** | **$(10,337)** | [Notes to Consolidated Financial Statements](index=53&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data%23Notes%20to%20Consolidated%20Financial%20Statements) The notes detail significant accounting policies, including new standard adoptions, customer concentration, tax provisions, MikaMonu acquisition earnouts, stock-based compensation, and confirm single-segment operations - The company adopted **ASC 606** (Revenue from Contracts with Customers) in **fiscal 2019** and **ASC 842** (Leases) in **fiscal 2020**[279](index=279&type=chunk)[310](index=310&type=chunk) - Due to a cumulative three-year loss, the company recorded a full valuation allowance of **$9.4 million** against its net deferred tax assets as of **March 31, 2020**[293](index=293&type=chunk)[338](index=338&type=chunk) - In connection with the **MikaMonu acquisition**, the company may be required to make future earnout payments, including **$2.8 million** and **$4.0 million** if revenue milestones are met by **Jan 2021** and **Jan 2022** respectively, and up to a maximum of **$30.0 million** based on a percentage of future product revenues through **2025**[403](index=403&type=chunk) - As of **March 31, 2020**, the company had **$4.8 million** of total unrecognized stock-based compensation cost, which is expected to be recognized over a weighted average period of **1.90 years**[393](index=393&type=chunk) [Controls and Procedures](index=83&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management and **BDO USA, LLP** concluded that the company's disclosure controls and internal control over financial reporting were effective as of **March 31, 2020**, with no material changes - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of **March 31, 2020**[410](index=410&type=chunk) - Management assessed internal control over financial reporting using the **COSO framework** and concluded it was **effective** as of **March 31, 2020**. This was audited and confirmed by **BDO USA, LLP**[415](index=415&type=chunk)[416](index=416&type=chunk) Part III [Directors, Executive Officers, Corporate Governance, Compensation, and Security Ownership](index=85&type=section&id=Items%2010-14) Information for **Items 10-14**, covering governance, compensation, and security ownership, is incorporated by reference from the company's forthcoming **2020 proxy statement** - Information for **Part III (Items 10-14)** is incorporated by reference from the company's definitive proxy statement for its **2020 annual meeting of stockholders**[420](index=420&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=86&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section provides a comprehensive list of all exhibits and financial statement schedules filed with the **Form 10-K**, including corporate documents, equity plans, and certifications - This section contains the list of all financial statements, schedules, and exhibits filed with the **Form 10-K**[428](index=428&type=chunk) - Filed exhibits include key corporate documents, equity compensation plans (**2007**, **2016**), the **2015 MikaMonu stock purchase agreement**, and **CEO/CFO certifications**[431](index=431&type=chunk)[432](index=432&type=chunk)

Financial Data and Key Metrics Changes - For the fiscal year ended March 31, 2020, the company reported a net loss of $10.3 million or $0.45 per diluted share, on net revenues of $43.3 million, compared to a net income of $163,000 or $0.01 per diluted share, on net revenues of $51.5 million in the previous fiscal year [23] - Gross margin for fiscal 2020 was 58.5%, down from 61.4% in the prior year [23] - The company reported a net loss of $3.8 million or $0.16 per diluted share, on net revenues of $8.5 million for the fourth quarter of fiscal 2020, compared to a net loss of $102,000 or $0.00 per diluted share, on net revenues of $12.7 million for the fourth quarter of fiscal 2019 [26] Business Line Data and Key Metrics Changes - Sales to Nokia were $2.4 million or 28.3% of net revenues, down from $5.2 million or 41.1% in the same period a year ago [20] - Military and defense sales increased to 30.9% of fourth quarter shipments compared to 22.1% a year ago [21] - SigmaQuad remains the best performing product category with sales of 44.7% of fourth quarter shipments, down from 57.4% in the fourth quarter of last year [21] Market Data and Key Metrics Changes - The company has seen slower sales to Nokia, which is expected to continue through the end of June, but anticipates an improvement in sales in the second half of calendar 2020 [20] - The search market is growing, with new solutions like the Gemini APU expected to deliver high performance while keeping total cost of ownership low [12] Company Strategy and Development Direction - The company remains focused on its long-term strategy despite the challenges posed by the COVID-19 pandemic, emphasizing its strong financial position and the experience of its team [6] - The Gemini-I product is positioned to serve a broader search market as a universal hardware solution, with plans to continue developing solutions for various applications over time [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to succeed during difficult times, citing a strong financial position and commitment to product excellence [6] - The company is uncertain about future performance metrics due to the current disruption in the marketplace caused by COVID-19 [33] Other Important Information - As of March 31, 2020, the company had over $70 million in cash and no debt, with stockholders' equity at $89.6 million [7][32] - The company has expanded its guidance range for the upcoming quarter to reflect potential changes in customer buying patterns due to COVID-19 [33] Q&A Session Summary Question: Are Weizmann getting free chips and boards as a collaborator? - Yes, the company has loaned them systems in the past and they plan on paying for the upgraded system [36] Question: How is the company marketing to larger drug companies? - The marketing team has created sales collateral and is conducting remote workshops for demonstrations [15][38] Question: Can you explain the stock selling by executives? - Executives receive options that vest over four years, and many sell shares to cover taxes or buy additional shares [42][44] Question: Any update on Rad-Hard products? - The qualification for the 288 megabit, SQ-II+ family has been completed, and the company is now able to offer QMLV equivalent devices [47] Question: Is there any indication of interest for APU orders this summer? - It is difficult to predict, but there is significant interest in the government space for APU technology [52]

GSI Technology, Inc. (NASDAQ:GSIT) Q3 2019 Earnings Conference Call January 30, 2020 4:30 PM ET Company Participants Lee-Lean Shu - Co-Founder, President, CEO & Chairman Didier Lasserre - VP, Sales Douglas Schirle - CFO Conference Call Participants Ariel Shusterman - Needham & Company Kurt Caramanidis - Carl M. Hennig, Inc. Jeffrey Bernstein - Cowen Inc. Operator Ladies and gentlemen, thank you for standing by. Welcome to the GSI Technology's Third Quarter Fiscal 2020 Results Conference Call. [Operator Inst ...