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China's smartphone industry rushing to adopt fingerprint modules

10 December 2015 David Hsieh

Fingerprint modules expected to become a key component in the Chinese smartphone market in 2016

On 24 November 2015, Xiaomi Inc. released its new Redmi Note 3 with 5.5-inch full high definition (FHD) thin film transistor (TFT)-liquid crystal display (LCD) screen, a metal case, and a fingerprint module at a price of 899 yuan (or about $145). With this, apart from TCL Corp., nine of the top 10 Chinese smartphone brands (Huawei Technologies Co., Xiaomi Inc., ZTE Corp., Lenovo Group Ltd., TCL, Oppo Mobile Telecommunications Corp., vivo Communication Technology Co., Coolpad Group Ltd., Gionee Communication Equipment Co., and Meizu Technology Co.) have released smartphones with fingerprint modules.

As we reported in the Touch User Interfaces Controller, Sensor & Fingerprint Report - 2015, fingerprint modules that are supplied at the $6 range are expensive compared to other components, making up a large portion of the production cost. However, as users can see fingerprint modules from the outside, it is possible to clearly differentiate fingerprint module-applied products from others. Moreover, since all the competitors are scrambling to adopt the technology, fingerprint modules are considered to be essential to be competitive in the market.

The penetration of fingerprint modules into the top 10 Chinese smartphone brands is expected to reach 14.0–15.0% in 2015. In 2016, with an increase of 120 million shipment units, the penetration will grow to 30–35%.

The sensor, a key component for fingerprint module technology, is currently supplied by Apple Inc, Synaptics Inc., Fingerprint Cards AB (FPC), Goodix Technology Inc., and Sliead Inc. The module companies include ASE Group, Synaptics, CrucialTec Co Ltd , O-Film Tech Co., Q-TECH Corp., Huizhou Speed Wireless Technology Co., Primax Electronics Ltd., Lite-On Technology Co., Truly Opto-electronics Ltd.,Dreamtech Co., Holitech Technology Co., and General Interface Solution (GIS) Holding Ltd. However, since Apple is supplied only from ASE, and Synaptic is the sole provider for Samsung Electronics Co., smartphone brands apart from Apple and Samsung Electronics will determine the future development of fingerprint modules.

In the fingerprint supply chain, except in that of Apple and Samsung Electronics, currently, FPC and Goodix are most distinguished for sensors and Crucialtec and O-film for modules.

O-film pursuing aggressive growth

Crucialtec has overwhelmingly outstripped O-film in terms of fingerprint module shipments up until 2015, but O-film is aggressively expanding its supply capacity, leading to fierce competition with Crucialtec in 2016.

O-film shipped out 450,000 units in May and then 1.6 million units in August, getting much closer to the 2 million mark of CrucialTec. As of October 2015, O-film’s monthly fingerprint module production capacity stands at 6.5 million, and this is expected to reach 10 million in December. It will likely grow to 15 million in the second quarter of 2016, up 2.5 times from October.

Since O-film is supplying touch panels, liquid crystal modules (LCM), and camera modules to most Chinese smartphone companies, it has an incomparable client base compared to its competitors. On top of that, it has sensor supply contracts with fingerprint sensor suppliers, such as FPC, Synaptics, Goodix, and Egis Technology Inc. Moreover, it has recently invested in the system in package (SiP) process, and it is also being aggressive in deploying the coating technology for the surface of fingerprint modules. Once O-film can push up the production yields, it is expected to take over the fingerprint module industry, just like it did in the touch panel market. The fingerprint supply supply is rapidly growing in China. Each smartphone brands in China are facilitating their new models with fingerprint function. This will lead the total fingerprint era of the smartphone in China as we reported in the Touch User Interfaces Controller, Sensor & Fingerprint Report - 2015.

David Hsieh is a display senior analyst for IHS
Posted on 11 December 2015

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