Back to growth

Continued product innovation drove growth and an expansion of margins, while the revenue streams were broadened to new areas at a significantly higher pace than before.

During 2021, Fingerprint Cards delivered sales growth of 16 percent in constant currency terms while the gross margin strengthened by 7 percentage points to 29 percent. I am delighted that this positive result could be achieved despite inadequate availability of production capacity throughout the year due to the global shortage of semiconductors. This demonstrates the strength and stability of our operations, which also began to expand into new attractive areas during the year at a significantly higher pace than previously. We expect continued favorable revenue growth, which is reflected in the previously communicated revenue forecast of SEK 1,600–2,000 M for the 2022 fiscal year.

Increased access to production capacity

Although the prevailing global shortage of semiconductors will also affect us during 2022, our access to production capacity continues to improve. This applies to the large semiconductor manufacturers and to the module suppliers that are responsible for the integration and packaging of various components into modules that are ready for assembly. We continue to work with our existing providers to ensure as large volumes as possible from them, while we are simultaneously making a continuous effort to establish collaboration with new producers to increase our access to additional capacity on reasonable terms and conditions. In 2021, we added yet another semiconductor manufacturer as a supplier to Fingerprints.

World leader in capacitive sensors

Our Mobile operations developed strongly during the year. Following a weak 2020, when many consumers postponed upgrading their smartphones due to the coronavirus pandemic, we saw higher demand in 2021. The global smartphone market expanded by approximately 5 percent compared with 2020, which also drove the market for fingerprint sensors. Capacitive sensors, in which Fingerprints is the world leader, dominate. Fingerprints’ strong position in this segment is based on renowned high product quality, security and biometric performance. Our latest generation of ultrathin sensors, designed for side mounting, continued to increase its share of the market. We have a highly competitive offering in this application area, which we continue to develop. At the end of the year, we made our first volume deliveries of an upgraded sensor version. To strengthen our position of market leadership, we will continue to focus on developing innovative products, broadening the supplier base and ensuring a competitive cost structure.

Diversification of revenue streams

We also made significant progress in 2021 in terms of diversifying the revenue streams to new areas. We received the first volume orders for our new biometric PC solution, and this market is rapidly emerging as an attractive application area for our fingerprint sensors. Our sales to the PC industry have all the prerequisites to outgrow the Access area in the next 12 months and thereby develop into the second largest application area for our products, after smartphones. Fingerprints has a strong starting position. We already dominate the market for fingerprint sensors in Chromebooks, while three of the world’s five largest manufacturers of Windows PCs are already working on integrating our technology in their products. To date, we have been able to announce Windows PC launches with our sensors by Dell, Honor, Huawei, Lenovo and Xiaomi. The market outlook is bright. About 350 million PCs were shipped in 2021, compared with approximately 300 million in 2020 and 270 million in 2019. External market analyses indicate that the global PC market will stabilize over the coming years at approximately the levels we noted in 2021, a significant increase in relation to the volumes seen before the pandemic. At the same time, the proportion of PCs equipped with fingerprint sensors is increasing. Perhaps one fifth of the PCs currently delivered are equipped with some form of biometric solution. We estimate that this figure will move towards at least four fifths. We also expect that fingerprint recognition will become the dominant biometric modality in the PC segment, as in the mobile industry, and that up to two thirds of all PCs will have a touch fingerprint sensor.

Increased focus on security

Alongside this development in the PC segment, we saw in 2021 that the increased focus on security also started to have an impact on access cards/entry cards.

Biometric access cards are ideally suited to the integrated security approach that is becoming increasingly commonplace and that is addressing physical and digital security in a significantly more coordinated way than before. Biometric access cards can combine logical and physical access control, enabling the use of the same card to access IT systems and to unlock doors. An example of this is SentryCard™, a biometric card developed by Sentry Enterprises and intended for physical and logical access. In 2021, we received an order from Sentry Enterprises for several hundred thousand T-Shape® sensor modules. This order confirms the positive demand trend for biometric authentication for access control, and illustrates the synergies that exist between our access and payment card operations. Many of our partners in the payment area, with whom we engage in product and business development initiatives, are also active in access cards.

Biometric payment cards - next mass market

In 2021, we started to see commercial launches of biometric payment cards on a somewhat larger scale, not least by two of Europe’s largest banks: BNP Paribas and Crédit Agricole. Fingerprint sensors for payment devices, including smart cards, wearables and USB devices, represent a considerable potential market for our products and we expect to see an increasing number of launches in 2022. At the end of 2021, Fingerprints’ technology had been used in six commercial launches in various parts of the world and we are continuing to drive development forward by scaling up the business, in collaboration with several of the world’s leading payment card players. Together, we have the coverage, size and deep technological knowhow to ensure that contactless biometric cards will become the next global mass market for biometrics.

The fact that the world’s three largest suppliers of secure chips for payment cards have chosen Fingerprints’ technology for their reference designs illustrates this point well. During 2021, we made important progress within the framework of these partnerships. An example of this is STPay-Topaz-Bio, an advanced platform for biometric payment cards developed by STMicroelectronics in collaboration with Fingerprint Cards and Linxens. The solution was acknowledged in early January 2022 when it received a CES 2022 Innovation Award. In 2021, we also demonstrated, in collaboration with Infineon, that our latest generation of T-Shape sensor modules (T2) enables biometric authentication to be executed entirely within the secure element on a payment card, with retained performance and higher security. With this solution, a separate micro-controller unit (MCU) is no longer needed, thus making it cheaper and easier for card manufacturers to develop and roll out biometric payment cards on a large scale. At the end of 2021, we received an order for the latest generation of the T-Shape sensor module (T2) from one of the world’s three largest card manufacturers, to be used for the commercialization of the next generation of biometric payment cards. In January 2022, we announced that this T-Shape sensor module (T2) meets Mastercard’s updated security requirements for fingerprint sensors.

Let me finish by thanking all employees for your hard work and dedication during a successful year. I look forward, together with you, to continuing to generate value for our customers, business partners and shareholders.

Christian Fredrikson, President and CEO