FPC’s Q3 Report Shows Face ID’s Impact

Market challenges are bearing down on Fingerprint Cards, but the sensor maker is persevering.FPC's Q3 Report Shows Face ID's Impact That’s the key takeaway from the company’s latest fiscal update, in which FPC reports Q3 revenues of SEK 841.4 million – a 55 percent decline compared to Q3 of 2016.

Apple’s Impact

This was not unexpected. In the wake of Apple’s announcement that its iPhone X would do away with a fingerprint sensor in favor of its new Face ID facial recognition system, FPC issued a revenue warning for the third quarter, citing “a cautious market” that is waiting to see how consumer respond to Apple’s biometric shift.

That factor appears to be very much in play in FPC’s new corporate update, though in his comments CEO Christian Fredrikson is keen to frame it within “a number of concurrent technological trends and uncertainty factors” affecting the company’s China-based OEM customers. Another important – and somewhat related – factor is the trend toward full-size displays. While Apple was happy to simply eliminate its Touch ID fingerprint sensor to make room for the iPhone X’s full-size display, since it uses facial recognition for user authentication, other OEMs are looking to move their sensors to the rear of their devices; and because rear-mounted sensors are less expensive, FPC says it has seen a rate of decline in its average selling price of about 30 percent for this year.

A Multimodal Future

Still, that trend points to OEMs’ reluctance to give up fingerprint scanning, and Fredrikson asserts, “We are seeing no signs that our OEM customers plan to replace the fingerprint sensor with other solutions.” They are instead looking to multimodal solutions, and Fredrikson says FPC’s “major OEM customers… have expressed significant interest” in the company’s iris recognition technology.

OEMs are also looking into the possibility of in-display fingerprint sensors, a technological feat that seems to have eluded Apple this year. Fredrikson says that while “there are no commercial in-display solutions suitable for mass production,” FPC is “engaged in a number of development projects in the area.” And given that FPC proved to be a pioneer of under-glass sensor technology at the end of 2016, it may already have a solid footing here.

Efficiency and Innovation

Other, more immediate measures that FPC is taking to deal with these market pressures include efforts to cut production and supply chain costs, exploring new applications for FPC’s sensor technology, and developing new products. A recent example of that last strategy is FPC’s T-Shape sensor module aimed at smart card applications – an area where many expect to see significant growth in the near future. And Fredrikson says the company’s management will delve into other innovation efforts at its recently announced ‘Technology Update’ scheduled for November 1st.

As for other key figures from FPC’s fiscal update, profits for Q3 came in at SEK 50.1 million, compared to SEK 597.5 million in Q3 of 2016. Revenues for the first nine months of the year came in at SEK 2.35 billion, compared to a little over SEK 5 billion for the first nine months of 2016; and total profit for January to September reached SEK 136.8 million this year, compared to over SEK 1.6 billion in the comparable period in 2016.