IPhone Fingerprint Reader Talk Boosting Biometric Stocks

IPhone Fingerprint Reader Talk Boosting Biometric Stocks

As the technology world buzzes with speculation that the next iPhone will have a fingerprint reader, makers of biometric security devices are bracing for a race among smartphone makers to adopt the technology.

Apple Inc. will unveil a new iPhone next month, according to a person familiar with the plans. ABI Research and KGI Securities Co. are among the industry watchers that say the device will include a fingerprint reader, a prediction bolstered by Apple’s $350 million purchase of fingerprint- sensor maker AuthenTec Inc. last year.“Apple is giving a strong indication that market leaders see biometrics as part of their roadmap,” said Thomas Marschall, chief executive officer of Precise Biometrics AB, a maker of authentication equipment such as fingerprint sensors in Lund, Sweden. “All competitors are looking for alternatives to match Apple — it’s the kickoff of a rally in the industry.”

Mobile-device makers are turning to biometrics to make smartphones more secure and quicker for making payments and accessing files, music and video through so-called cloud services. An Apple embrace of fingerprint sensors could give the technology a lift, much like the boost touch screens got after the iPhone’s introduction in 2007. Device makers started paying attention to biometrics, which can replace passwords and signatures, after the AuthenTec acquisition, Marschall said.

Fresh Momentum

Shares of Precise Biometrics have almost doubled since Apple’s AuthenTec deal, on expectation than its technology will see more demand. Fingerprint Cards AB, another Swedish maker of biometric security solutions, has risen more than tenfold.

A fingerprint sensor would provide iPhone users a simpler way to access files via the Internet and make mobile purchases, strengthening Apple in its battle with devices using Google Inc.’s Android operating system, according to Kuo Mingchi, a KGI analyst in Taipei who covers Apple suppliers. An iPhone with the technology would provide “fresh momentum” for fingerprint-sensor suppliers, the analyst said in an Aug. 12 note. Apple declined to comment.

Mobile payments are set to soar as more people transfer money and shop on their smartphones. Total transactions will rise to $721 billion by 2017 from $235 billion this year, according to researcher Gartner Inc.

Tattoo Recognition

Suppliers of secure identification cards with embedded chips are already benefiting from growing adoption of biometric authentication. Companies such as Gemalto NV, Morpho, and Oberthur Technologies have developed fingerprint, retina-scanning and facial recognition technologies for customers such as governments and banks. Now, they say, ID cards and passports with programmable chips that contain biometric information will increasingly be used for transactions such as paying subway fares or online shopping.

“We used to make ID cards and passports,” said Bernard Didier, founder and chief of Morpho, a unit of Paris-based aerospace, defense and security group Safran SA. “Today we’re asking: Why not use your ID for transport, social security or even payments?”

Morpho, which issues driver’s licenses for 42 U.S. states and counts governments from Albania to Chile among its clients, has helped customers catch criminals using tattoo recognition and move travelers through airports more quickly thanks to gates equipped with facial-recognition.

Parking Tickets

“Electronic passports are only the tip of the iceberg,” Olivier Piou, CEO of Gemalto, said in a June interview. “Any chip in an ID card comes loaded with secure software containing some credentials and some empty spots. We can fill those later with all sorts of new applications.”

One Gemalto client, Oman, has loaded parking and speeding tickets as well as tax stamps onto its ID card. Gemalto has forecast sales at its security business, including identification, will grow 10 percent or more this year from 384 million euros ($511 million) in 2012, thanks to issuing secure documents and helping manage the relevant data with software.

Shares of Amsterdam-based Gemalto have jumped 41 percent in the past year. Morpho’s parent Safran has gained 52 percent.

Still, even as some laptops and computer keyboards come with fingerprint sensors, biometric identification hasn’t found widespread consumer popularity. Apple, with its record of setting trends in technology, may change that, said Johan Carlstroem, CEO of Fingerprint Cards in Gothenburg, Sweden.

“The use of biometrics in consumer electronics isn’t new,” he said. But if “Apple gets its fingerprint solution to work seamlessly and delivers a great user experience, it will mean a paradigm shift and a milestone for biometrics.”

To contact the reporters on this story: Marie Mawad in Paris at mmawad1@bloomberg.net; Adam Ewing in Stockholm at aewing5@bloomberg.net

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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