Fingerprint sees touch ID going mainstream for smartphones

STOCKHOLM Thu Dec 5, 2013 12:17am IST

A man uses a smartphone in the financial district in San Francisco, California November 6, 2013. REUTERS/Robert Galbraith/Files

A man uses a smartphone in the financial district in San Francisco, California November 6, 2013.

Credit: Reuters/Robert Galbraith/Files

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STOCKHOLM (Reuters) - Fingerprint Cards (FINGb.ST) is aiming to sell its identity technology to most of the world's biggest smartphone makers, which are likely to follow Apple in offering touch recognition for mobiles from next year.

Apple's APPL.O September launch of the iPhone 5S was the first smartphone with a fingerprint identity touch sensor, provided by AuthenTec, part of Apple.

Following on from this, Sweden's Fingerprint hopes to sell its own touch sensors to other big mobile phone makers like Samsung (005930.KS), LG Electronics (066570.KS) and Huawei.

"I think at least seven or eight will launch a phone with a touch sensor in 2014," Johan Carlstrom, Fingerprint's Chief Executive Officer, told Reuters in an interview on Wednesday.

He said Fingerprint Cards hoped to clinch contracts with the majority of those firms after announcing last week new touch fingerprint sensors for Android smartphones and tablets, and the Windows operating system.

Carlstrom said Fingerprint expected Samsung, the world's biggest maker of smartphones, to launch at least one smartphone - or probably even two - with either a swipe or touch fingerprint sensor next year.

"Samsung is well known for having multiple suppliers for most components and our goal is to be selected as one of their sensor suppliers already in 2014," he said.

Fingerprint is one of only a handful of global specialists in touch sensor technology. Rival AuthenTec was bought by Apple and Validity was bought by Synaptics (SYNA.O) in October.

Fingerprint already has contracts to supply its cheaper "swipe" fingerprint technology to Japan's Fujitsu (6702.T), South Korea's Pantech and China's Konka 000016.SZ.

The company has forecast a fivefold increase in revenues for 2014 to at least 500 million Swedish crowns. Its share price has surged more than 600 percent in the past year.

In October, Fingerprint was caught up in a hoax following a fake press release which claimed Samsung was buying the company for $650 million.

The Swedish Economic Crime Authority launched a fraud probe. Carlstrom declined to comment on the case on Wednesday, saying that an investigation was underway.

BREAKTHROUGH

Fingerprint's revenues have been dominated by sales of fingerprint security products to Chinese banks like Industrial and Commercial Bank of China (601398.SS) (1398.HK).

But in the third quarter of this year, more than 50 percent of revenues came from mobile phones, Carlstrom said, a trend the company expects will continue.

The group expects to secure a 60 percent share of the smartphone market for touch sensors in 2014 and 2015, excluding Apple smartphones.

The smartphone market is growing rapidly. Worldwide smartphone shipments are forecast to grow 40 percent year-over- year to more than 1.0 billion units this year, according to International Data Corporation.

Last year, when Apple bought fingerprint sensor developer AuthenTec for $356 million this was viewed as a signal that the technology would finally go mainstream.

"It was an industry breakthrough and certainly opens the flood gates and starts a new industry," Carlstrom said.

He said that Apple, which also looked at Fingerprint back in 2010 when it was eyeing AuthenTec, sets the agenda for smartphone makers when it comes to functionality and design.

Asked if he would be open to a sale, Carlstrom said that given the industry's growth potential, he believed the company - with a $488 million market capitalisation - was not yet fully valued.

"We are just at the beginning of the growth phase," said Carlstrom, who has spent 25 years in the telecommunications industry. "We have no intention to sell at the current time, and at current valuations," he said.

(Reporting by Mia Shanley and Olof Swahnberg; Editing by Simon Johnson and Jane Merriman)

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