Fingerprint Sensor is Becoming Standard Feature in Smartphones

More than one billion fingerprint sensor enabled smartphones will be shipped in 2018. The fingerprint sensor is likely to become the standard choice for smartphone OEMs to provide for authentication. This is driven by a rapid rise in services such as digital payments, mobile banking and the commensurate increase in the need to be able to authenticate the user securely.

Exhibit 1: Global Smartphone Fingerprint Sensor Penetration.

 Source: Market Outlook CY2017Q2

In CY 2018, almost three in four smartphones will be equipped with a fingerprint sensor. Not only the adoption rate by users but also the advancement in the sensor integration has been rising by leaps and bounds. With changing smartphone designs to include more edge to edge displays, ultrasonic and optical fingerprint sensor technology, which can be used in with wide range of materials and even under the display screen or under water, will drive the technology forward.

The penetration of fingerprint sensors in the low-mid end smartphones will increase next year due to rising scale and declining cost of the fingerprint sensor, making it one of the essential components in a smartphone.

Exhibit 2: Smartphone Fingerprint Sensor Penetration and share by OEMs in CY2017Q2.


Source: Smartphone Fingerprint Sensor Report CY2017Q2

Samsung was the market leader within fingerprint enabled smartphones, contributing to 12% market share, followed by Apple and Huawei with 11% and 8% respectively, during Q2 2017. In terms of adoption across the total portfolio shipments, Apple and Xiaomi led, followed by Huawei and OPPO. However, Samsung, ZTE and LG lagged their rivals with a relatively lower rate of fingerprint sensor integration across their total shipments. Chinese brands are already using fingerprint sensors as a differentiator, especially in emerging markets, to compete with local and international brands. They are adding capabilities beyond just unlocking the phones or payments to include gestures to control the camera, gallery and other applications.

Reliability of the fingerprint sensor is major issue, as most of the capacitive fingerprint sensors can be easily spoofed. However, with the latest fingerprint sensors that have live finger detection, or employ ultrasonic fingerprint sensing technology to create a 3D image of the fingerprints, it is potentially more secure and should be the next factor of differentiation for OEMs.

There is an increasing pressure on fingerprint suppliers to match the growing demand of sensors, match the cost expectations to remain competitive and at the same time innovate. Suppliers like Fingerprints, Synaptics & Goodix currently contribute to over half of the total smartphone fingerprint sensors. However, players such as Qualcomm, eGIS and Silead are positioned to grow with more design wins in coming quarters.

In a scenario where OEMs are increasingly differentiating their products from competition in terms of unique designs, the placement and the type of the fingerprint sensor plays a major role in the overall design of the smartphone. The suppliers have their work cut out and will be responsible for many OEM flagship design decisions. Watch out for under the glass and in-display designs in the next wave of flagship launches. Furthermore, customizing the smartphone sensor with a smart home button that can provide gesture support and over the top features like heart rate monitoring can also make it a more versatile sensor.

Fujitsu to sell its handset business – will there be more to follow?

Fujitsu to sell its handset business – will there be more to follow?

Rumors are spreading that Japan’s Fujitsu has decided to sell its subsidiary operating the mobile phone business. The bidding process may start next month. Fujitsu already categorized its mobile phone business as non-core and spun-off the division into a subsidiary in February 2016. Fujitsu has now decided to sell-off the entire handset business.

In early 2000, there were about 11 Japanese companies involved in the handset sector, including Fujitsu. Japanese handset makers grew to almost 20% of the global handset market at its peak. The domestic market was dominated by these local brands. Japanese brands ruled the local market with more than 80% for a long time. Since 2009, however, Japanese makers began to struggle due to the rapid growth of Apple. Japanese makers slowly exited the global market and their share declined. This happened even in the Japanese market to around 30%.

Japan Handset Market Share by OEM origin


Macroeconomic factors of the Japanese economy seem to have influenced the Japanese mobile phone companies to some extent. The aging of the Japanese society progressed rapidly and Japanese companies showed a tendency to avoid big changes. Japanese makers focused more on feature phones, despite the fact that smart phones were already attracting attention. And this tendency of Japanese companies continued until 2016.

2009 is the year the Japanese handset market had finally started to change from a feature phone market to smartphones. Yet Japanese companies did not respond actively. This phenomenon accelerated each year and now the share of smartphones sold among overall handsets has exceeded 90% for the first time during 2017. Of the original 11 Japanese mobile phone companies in early 2000, only five companies, remain including Sony and Kyocera.

External changes in the market are important but the response or internal strategies of a company are important factors determining success and failure as well. Japanese companies are building a product portfolio centered on mid- to low-end products, so operating margins are lower than previous generation products. Japanese makers have fallen into a vicious cycle in which they are forced to change their R & D investment more conservatively due to a drop in market share and a drop in sales margin. Considering the needs of customers, investing in the latest technology is an important factor to succeed in the mobile phone business.

According to our analysis on model sales, only Sony has a 50:50 ratio of premium and mid-tier phones, while Sharp and Kyocera focus on mid-tier products in the Japanese market. Currently Sharp and Kyocera’s earnings are not bad as demand for mid-end phones has soared since the transition from feature phones to smartphones has been rapid. However, in the a long-term, demand for premium phones may rise as first time smartphone users show a trade-up trend. If Japanese makers do not act accordingly, more may follow Fujitsu’s exit.

The Japanese handset market is changing – The proliferation of smartphones, Price diversification, and the exit of marginal players

Analysis of the handset market share in the Japanese market clearly shows that the market is changing. In 2016, Fujitsu’s market share in Japan was about 7%, ranking fourth, and Fujitsu’s main products were targeting the >$400 price band. Customers belonging to the >$400 price band will likely be absorbed by Apple, Sony and Samsung.

[2017 Q2 Japanese Smartphone Shipments]

Apple, the strongest player in Japanese market, is also targeting the mid-range market with its iPhone SE and iPhone 6. Failure to fully address all segments of the market will lead to remaining players getting squeezed out almost entirely.

Meet Counterpoint at Mobile Phone Industry Chain Summit 2016 on Nov 25th in Shenzhen, China

Counterpoint Research and Reed Exhibitions Kuozhan Shanghai Co., Ltd. are jointly holding the “Mobile Phone Industry Chain Summit 2016” on Nov 25th in Shenzhen, China. During this event, industry experts from Counterpoint Research as well as representatives from top smartphone vendors and OEMs will be invited to discuss smartphone development trends and new growth opportunities beyond the mobile market.

Growth in the global mobile market is slowing down as the market becomes increasingly saturated. 2015 is expected to be the last year of double-digit growth. In US, Europe and China, first-time buyers continue to decline while demand for upgrades has hit a historical high. China with its 1.38bn population contributes to 30% of the global mobile market while India with its 1.26bn population only contributes to just 10%. Will India replace China as the next largest growth market?

The smartphone market is also becoming more competitive in terms of pricing. Prices for smartphones have come down while demand from consumers continue to increase, such as higher performance chips, better resolution cameras, faster charging batteries, clearer screens etc. However, smartphone manufacturers are being more cost cautious in introducing new technology, i.e. sapphire glass. How do manufacturers balance between ever-growing expectations from today’s consumers and costs?

With growth stagnating, smartphone manufacturers are seeking to expand into other adjacent areas of fast growth like AR, VR and smart automobiles. How will players take advantage of these new growth opportunities?

These questions will be tackled by our speakers in the summit. Please come and join us at the “Mobile Phone Industry Chain Summit 2016”.


Key Speakers at the Summit:


Jeff Fieldhack

Research Director at Counterpoint

Topic: Global Mobile Phone Industry Trends & Competitive Environment – Deeper Look into OEMs – Winners & Losers


Tarun Pathak

Senior Analyst at Counterpoint Research

Topic: Hottest Market for Next Three Years: India’s Mobile Phone Industry Trends & Potential


Neil Shah

Research Director at Counterpoint Research

Topic: Smartphone Feature Sets & Key Component Trends – Chipsets, Memory, Battery, Displays, Touchscreen, Sensors (fingerprint) and so forth


Peter Richardson

Research Director at Counterpoint Research

Topic: New Areas of Growth Beyond Mobile: AR, VR, Automotive and so forth


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