Idex ASA, a Norwegian maker of fingerprint-imaging technology whose stock rose almost eightfold since the start of 2013, is projecting customer and revenue gains as phonemakers add biometric sensors to their devices.
The company expects a “significant” pickup in sales next year as volumes increase, Chief Executive Officer Hemant Mardia said in an interview. Idex received its first volume order for 300,000 sensors in January.
Smartphone manufacturers are adding sensors to devices after Apple Inc. unveiled its iPhone 5s with fingerprint detection last year and Samsung Electronics Co. showed its Galaxy S5 with a swipe sensor in February. Idex is targeting the other smartphone makers to pick its technology, competing against rivals such as Synaptics Inc. of the U.S.
“The biometric market is exploding,” Mardia said. “We are now at a critical-mass point where there is significant momentum behind mass adoption of fingerprint sensors.”
The two biggest smartphone manufacturers adding biometric sensors will force rivals to follow as security and mobile payments become crucial, Mardia said. Besides phonemakers, Idex targets companies looking to incorporate readers in their mobile-payment systems.
The smartphone market shot up 38 percent last year to 1 billion units, according to researcher IDC. Mobile payments are set to soar as people transfer money and shop on phones. The value of total transactions will rise to $721 billion by 2017 from $235 billion in 2013, according to researcher Gartner Inc.
Apple spent $350 million buying fingerprint-sensor maker AuthenTec Inc. in 2012. Synaptics bought rival Validity last year for $92.5 million. There are over 1 billion devices with Synaptics interfaces, according to the San Jose, California-based company’s website.
Mardia said the elimination of codes and passwords for easier entry and convenience along with consumers’ willingness to make money transactions from their phones is a “megatrend that is moving very quickly.”
Fornebu, Norway-based Idex, founded in 1996, and Gothenburg, Sweden-based Fingerprint Cards AB are two Nordic suppliers who see opportunity in robust smartphone sales and the need for greater security.
“The interest from the rest of the industry is at an all-time high,” Fingerprint Cards CEO Johan Carlstroem said in an interview last week. “We look at a very optimistic second-half of the year and going into 2015.”
The expected rise in sensor sales hasn’t gone unnoticed. Fingerprint’s shares more than quadrupled last year, while Idex added 527 percent and has continued gains this year. Idex fell 3.4 percent to 7.44 kroner at 10:05 a.m. in Oslo, valuing the company at 3 billion kroner ($500 million).
“Smartphones are definitely the next opportunity and judging by the amount of new activity in the biometric marketplace the suppliers of this type of technology are certainly seeing it,” said Andrew Kellett, an analyst at Ovum in the U.K.