Biometrics

Fingerprint Firms Look to Unlock New Markets Beyond Smartphones

Fingerprint Firms Look to Unlock New Markets Beyond Smartphones
Image credit: Reuters | Fabrizio Bensch | Files
4 min read
This story originally appeared on Reuters

A tap of a finger could soon suffice to identify credit card shoppers and rail commuters, offering areas of new business for specialist companies which have benefited from the use of such technology in smartphones.

Sweden's Fingerprint Cards (FPC) sees biometric smart cards -- those using fingerprint identification -- becoming its fastest growing market as early as 2018, having already become the market leader in a crowded sector for supplying such sensors for smartphones.

Others within the industry are not convinced the smart card business will take off so quickly, prompting questions about whether FPC can maintain its runaway rise in valuation.

FPC's share price surged around 1,600 percent last year as demand for fingerprint sensors in phones soared after Apple, which uses its own in-house supplier, helped to popularize the technology. FPC now has a market value of around $4.1 billion.

Advocates say the technology offers greater security and simplicity when compared to techniques such as using pin codes to confirm identification.

The fingerprint sensor business has a handful of companies supplying significant volumes today, with an equal number planning to enter the market. Three are based in the Nordic region where technology companies have thrived.

Needing to maintain its momentum, FPC says it is in initial talks with potential big customers for smart cards. It declines to name names at this stage.

"Our ambition for smart cards, and all other segments, is that we shall continue to be number one," FPC's Chief Executive Jorgen Lantto told Reuters.

Silicon Valley firm Synaptics, the closest rival to FPC in sensors for smartphones, is more cautious on new markets.

"It's hard for me to project market share in a segment of the market (when) we're not sure when it's going to happen," said Anthony Gioeli, vice president of marketing in the biometrics division of Synaptics.

Sascha Behlendorf, a card systems product manager at Germany's Giesecke & Devrient, one of the top three smart card makers, expects widespread adoption of biometrics in smart cards could take some five to 10 years.

Range of uses

Gothenburg-based FPC has been around for almost two decades, building a technology business based on an old Swedish fingerprinting patent. That left it well placed when the market expanded and it has also benefited by hiring staff from Nokia and Ericsson as their mobile phone businesses declined.

Analysts say expectations for new markets have helped to underpin the huge leap in valuation for FPC.

However, Carnegie analyst Havard Nilsson this week cut his recommendation for FPC to "sell" from "hold", citing what he called unwarranted share price appreciation and repeated his target price of 450 crowns. The shares traded at 524 crowns on Thursday.

"Given that smartphones should constitute 60-70 percent of the global addressable market (in 2020), we do not believe new verticals, such as smart cards, will be able to compensate for competitive pressure in consumer electronics," Nilsson wrote.

He sees earnings per share peaking at 37 crowns in 2018.

Beyond payments, biometric smart cards could be used to allow access to buildings and IT-systems, according to FPC. Keyless entry to cars is another potential major market, as are wearable products such as watches or wristbands serving as a substitute identity card. FPC includes such applications in its forecasts for "other segments" of business.

FPC sees a total addressable market for this part of its business of roughly 100 million sensors in 2017 and around 500 million in 2018. It is the only player so far to make specific forecasts for these new markets.

"We talk to a lot of players and companies come to us. There is substance behind our numbers," Lantto said, adding that FPC has held talks with a handful of big potential smart card clients since last autumn.

Most suppliers of fingerprint sensors, including FPC, use 3D imaging technology for recognition of a fingerprint, while Next Biometrics in Norway uses heat sensing technology.

IDEX, another Norwegian competitor, roughly shares FPC's forecasts for segments beyond smartphones for the coming few years, Chief Financial Officer Henrik Knudtzon said.

IDEX, which last summer entered a partnership with an unnamed global payments company for biometric applications, is integrating its sensors into smart cards with partners and expects shipments to start toward the end of this year, Knudtzon said.

(Reporting by Olof Swahnberg; Editing by Eric Auchard and Keith Weir)

More from Entrepreneur

Grow Your Business at Entrepreneur LIVE! Join us on Nov. 16 in Brooklyn, NY, to learn from legends like Danica Patrick and Maria Sharapova, pitch our editors, meet with investors, and potentially walk away with funding!
Register here

One-on-one online sessions with our experts can help you start a business, grow your business, build your brand, fundraise and more.
Book Your Session

Whether you are launching or growing a business, we have all the business tools you need to take your business to the next level, in one place.
Enroll Now

Latest on Entrepreneur

My Queue

There are no Videos in your queue.

Click on the Add to next to any video to save to your queue.

There are no Articles in your queue.

Click on the Add to next to any article to save to your queue.

There are no Podcasts in your queue.

Click on the Add to next to any podcast episode to save to your queue.

You're not following any authors.

Click the Follow button on any author page to keep up with the latest content from your favorite authors.