Synaptics, Incorporated (NASDAQ:SYNA) announced that it is moving into mass production with the Clear ID in-display fingerprint sensor, an optical sensor that can read fingerprints through a smartphone’s screen. With this news, SYNA has solved one of the biggest problems currently facing smartphone manufacturers.
Synaptics says it is working with a “top 5 OEM”, suggesting that one of the big smartphone makers is about to get a serious leg up on the competition.
SYNA stock popped 3.5% on the news before settling to a 2.7% gain on the day.
The Race for An In-Display Fingerprint Sensor
Apple Inc. (NASDAQ:AAPL), Samsung, Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL) and the other smartphone manufacturers have a problem. Their quest for smartphones that are all display requires banishing the home button, but they need to keep the fingerprint sensor used for biometric security.
The fingerprint sensor has become a key feature on smartphones. On the iPhone, it enables Touch ID, a secure unlocking feature much faster than entering a code. Touch ID is critical to Apple Pay.
Before Synaptics’s announcement, none of the smartphone manufacturers had yet figured out a way to keep fingerprint technology while ditching the home button.
For a while, it seemed as though Apple might pull it off with this year’s iPhones. The company pivoted to Face ID on the iPhone X, using advanced cameras and projectors that scan a user’s face. Apple says Face ID is even more secure than Touch ID. But Face ID has drawbacks, including a big notch in the top of the iPhone X display to accommodate the cameras and sensors and a delay in iPhone X production.
Other smartphone makers, including Samsung and Google, kept their fingerprint recognition. With no in-display fingerprint sensor available, however, they were forced to move the sensor to the back of their smartphones. That’s not the greatest location. Samsung received a flood of complaints from users with fingerprints all over their camera lens from trying to unlock their phones.
Synaptics Clear ID Sensor
Synaptics’s Clear ID sensor is the in-display fingerprint sensor that everyone has been waiting for. The company claims Clear ID is twice as fast as alternatives and provides the high-resolution accuracy needed for security.
In a statement, the company described the need for its new in-display fingerprint sensor:
“Consumers prefer fingerprint authentication on the front of the phone, and with the industry quickly shifting to bezel-free OLED infinity displays, the natural placement of the fingerprint sensor is in the display itself. Synaptics’ Clear ID fingerprint sensors are faster, more convenient, and more secure than alternative biometrics, and this optical technology represents a major innovation shift and opportunity for the smartphone market.”
Who Is SYNA’s Mysterious “Top 5 OEM”?
The Synaptics announcement also says the company has entered mass production with a “Top 5 OEM.”
Apple is unlikely. The iPhone X is well into mass production, and the next iPhone won’t be entering production until summer 2018. Apple also has its own AuthenTec technology for Touch ID.
The Verge suggests it could be China’s Xiaomi. However, Samsung was previously reported to be working closely with Synaptics to integrate an in-display fingerprint sensor on the Galaxy S8 — an effort that failed. But the successor Galaxy S9 is due to make its debut this spring, so that is a possibility.
Whoever integrates the Clear ID sensor first is going to win serious bragging rights. And Apple will be under heavy pressure to do something about the notch on the iPhone X display, a flaw it’s been trying to market as a distinguishing feature. Of course the big winner is Synaptics, which could use some good news after a year that has seen SYNA stock lose 25% of its value.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.