Fingerprint Cards AB

Interim Report January - March 2019 - Seite 2

Fingerprints should be able to achieve a higher level of profitability and my assessment is that the positive effect on profitability of the generational change to FPC1511 will continue during the second quarter of 2019. FPC1511 has been very well received by our OEM customers and this sensor will be a substantive part of our product portfolio in capacitive sensors during 2019.

We plan to further refine our offering in cost-effective capacitive sensors by launching a new sensor generation based on FPC1511 later this year. These sensors will be even smaller and thus more cost-effective, but will maintain the same, high biometric performance. They will also have the potential to increase our addressable market by making it possible to include a fingerprint reader even in low-end smartphone models.

Major changes are occurring in the market for biometric solutions for smartphones, where the capacitive fingerprint sensor has dominated to date. In-display sensors, which were introduced in 2018, will probably overtake the capacitive sensor already this year as the largest portion of the market for fingerprint sensors for smartphones in terms of value. Our goal is to capture a considerable portion of this growing market and in February, we launched FPC1610, our first in-display sensor that is based on our optical sensor technology. The sensor is currently undergoing tests with our OEM customers and the response to date has been positive. The project is proceeding according to plan.

Diversifying the business into areas outside the smartphone segment is also a very important strategic priority. As previously communicated, we signed a partnership with Gemalto in February and secured the world's first volume order of fingerprint sensors for dual interface payment cards. This testifies to the strength of our offering. Fingerprints is very well positioned to capture a significant share of this emerging market. If we look at the market trials conducted to date in the world, we can see that Fingerprints' solutions are included in all of the tests of contactless biometric cards. During the first quarter, further market tests were initiated, and I anticipate increased activity during the year with a significant number of tests. However, the business volumes will be modest in 2019, but we expect to see a broader commercial launch in 2020.