While remaining bearish on the smartphone supply chain, Morgan Stanley last week said it was upbeat about the outlook for the optical fingerprint sensor industry next year due to technology improvements and more reasonable prices.
Among those focusing on fingerprint integrated circuits (ICs) in the region, MediaTek Inc’s (聯發科) Shenzhen-based subsidiary Goodix Technology Inc (匯頂) and Egis Technology Inc (神盾) in the Neihu Technology Park in Taipei are expected to see earnings double next year, the US investment bank said in a report on Tuesday.
“We believe the adoption rate of optical underglass fingerprint [technology] in Android [smartphones] will increase to 10 to 15 percent in 2019 (versus our prior expectation of 6 to 7 percent) from 3 percent in 2018, or shipments of about 150 million units in 2019,” Morgan Stanley analysts led by Daniel Yen (顏志天) said in the report.
“Given the higher average selling price (more than four times that of capacitive fingerprint sensors), we believe the total addressable market for fingerprint ICs could nearly double in 2019,” the analysts said.
The increasing demand for all-screen smartphones worldwide has prompted more smartphone makers to add fingerprint recognition to their mobile devices.
In a report in August, Yuanta Securities Investment Consulting Co (元大投顧) said the trend toward optical underglass fingerprint sensors from this year to next year would benefit optical fingerprint’s IC suppliers such as Goodix, Egis, Silead Inc (思立微), Novatek Microelectronics Corp (聯詠) and FocalTech Systems Co Ltd (敦泰).
Morgan Stanley analysts said that market dynamics saw improvement this year and the optical fingerprint market could see a significant pickup next year, given the more mature technology, lower adoption of 3D sensing by Chinese smartphone makers, comparatively lower costs for underglass solutions and Samsung Electronics Co’s adoption in its flagship model.
Morgan Stanley reiterated its “overweight” rating for Goodix and raised its 12-month target price on the stock from 90 yuan to 94 yuan.
“We believe Goodix remains the leading player in the fingerprint IC industry and also has the fastest roadmap for optical fingerprint,” the analysts said.
The US investment bank upgraded Egis to “overweight” from “equal-weight” and raised its target price from NT$145 to NT$235, citing company orders secured for Samsung’s Galaxy A series and possible orders for Samsung’s Note 10 in the second half of next year.
Egis shares closed up 2.31 percent on Saturday at NT$221 in Taipei trading, while Goodix fell 1.44 percent to 77.89 yuan in Shanghai on Friday.
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