As the Chinese smartphone market gradually realizes consumption upgrades, more and more high-end flagship phone functions have begun to become popular introductory phones, among which fingerprint recognition has gradually become the standard configuration for smartphones. In the first half of 2016, domestic smartphone shipments reached 240 million units, of which more than 100 million units were shipped with fingerprint recognition, with a penetration rate of more than 40%. It is expected that the penetration rate of smartphone fingerprint recognition will further increase in the future.
Among the fingerprint chip manufacturers, the largest dark horse in 2016, Huiding, the stock price soared for a while after its listing, and its total market value was close to that of its shareholder MediaTek. Huiding Technology CEO 3 Zhang Fan also predicted on different occasions that Huiding's shipments in 2016 will reach 100 million. In fact, Huiding has successively won orders for flagship phones in mobile phone brands including Meizu, VIVO, LeTV, and Dowei , and successfully broke the monopoly of international fingerprint chip manufacturers such as AuthenTec, FPC, and Synaptics in 2016. At the same time, it is understood that in addition to Huitong, there are currently more than 5 domestic fingerprint chip manufacturers with monthly shipments of more than 1kk.
entered the brand market from white cards, and the mid- and low-end fingerprint market will explode
From various signs, it can be predicted that the price of fingerprint chips will drop rapidly in the next one or two years. Judging from the data, the current penetration rate of smartphone fingerprint recognition exceeds 40%. When the penetration rate is lower than 50%, it is a time when the industry's profit is relatively high. However, once the penetration rate continues to increase and exceeds 50%, the industry will enter a relatively fierce competition period. For example, the gross profit margin of FPC remained at around 49%, while Huiding Technology only had a gross profit margin of 34% in 2015, and after a large-scale increase in volume in 2016, it could basically stabilize at around 41%. However, by 2017, with the popularization of fingerprint functions in mid- and low-end smartphones, I believe the overall gross profit margin of the industry will further decline.
is currently still following Huitong and FPC. According to third-party statistics, among domestic fingerprint chip manufacturers, in October 2016, among domestic fingerprint chip manufacturers, the shipments of more than 500K were ADC , Mindray Micro, Feengel, Xinwei Technology, Yilong, Xinqihang, Bertrade, etc. These manufacturers will make efforts in the mid- and low-end markets in 2017. Huitong and FPC, which are currently in the leading position, will encounter great challenges.
In fact, low-end fingerprint chips have dropped rapidly from US$5 at the beginning of 2016 to around US$2 by the end of the year. According to Feengel, Wang Kai, the hype of mobile phone manufacturers based on fingerprint selling points will fade in 2017, and the price of fingerprint ICs that have become standard will drop from US$2 at the end of 2016 to less than US$1 in 2017. Of course, the front cover and the rear Coating module will always maintain a price gap of more than US$1. Since the technical threshold for fingerprint chips in the mid- and low-end market is already very low, and there are basically no patent restrictions, this part is about who can provide the lowest price possible while ensuring product quality.
The cost composition of a fingerprint chip? How can
continue to ensure a more advantageous price? Generally speaking, the chip cost depends on several points: first, the R&D cost, which is what we call IP. The cost of how many IPs are developed by yourself or buying other people’s IP algorithms directly is completely different. For example, some chip IPs are paid in one lump sum, and are not considered in the chip single-chip cost. Some IPs pay patent fees based on shipment volume. The other is chip manufacturing and packaging and testing costs. Compared with chip design cost, hardware manufacturing cost is easier to calculate. The manufacturing cost of a single chip is equivalent to the number of DIEs of a Wafer cut chip plus the packaging and testing cost. If the yield is lower, the more expensive it is. In addition, the use of 28nm or 40nm processes also has a great impact on cost. Of course, if the chip shipment is larger, the manufacturing costs mentioned above can be allocated.
The technology and foundry used by major fingerprint chip manufacturers. Currently, the mainstream production capacity is 8 inches, so the 8 inches production capacity is very tight, and there is a very likely out of stock in 2017. For the majority of mobile phone manufacturers, in order to prevent the out-of-stock crisis from happening again, companies with wafer fab resources should be locked in advance.
price competition, who is more qualified to turn the table up?
So, who has more cost advantage in so many domestic fingerprint chip manufacturers mentioned above?
Theoretically speaking, who has better manufacturing cost advantages, who has higher yields, and whose advantages are more obvious. Considering that the current process of fingerprint chips is mainly concentrated in the 8-inch line, when the overall production capacity of the 8-inch line is tight, companies with fab resources such as Feenger and Yilong are more likely to obtain production capacity.
Other cost advantage is patents and IP. It is understood that most of the current FPC, Huiding, Siliwei, Xinwei and others use active pixel floating technology. The characteristics of this solution are large chip area, low packaging yield, and high cost; while Feenger uses passive phased switch compensation technology - "PCST". This solution is a new chip architecture based on charge pump technology, which can provide the best performance single-chip driveless passive solution, greatly improving the cost-effectiveness of the chip. Since a single chip is used, the smaller the chip area, the higher the packaging yield, so it has more advantages in cost.
In addition, most of the industry currently use third-party algorithms, such as PB, and require a patent fee of US$0.15/PCS. Only a few companies such as Apple, ASUS, HSMA, Mindray, Feengel, etc. have their own algorithms, among which Feengel also has its own unique algorithm - "texture matching recognition algorithm for multi-example learning". In addition to not having to pay a patent fee, the own algorithm can also better match the sensor research and development, better complete image preprocessing and correction, correct the sensor image production effect, and improve the yield rate. The yield rate is higher and the cost is naturally lower.
(The above picture shows the relevant data compiled by Xinzhixun based on current public information)
At the end of March last year, Feenger held a chip launch conference in Shenzhen with the theme of "The King of Cost Performance, 'Finger' must have'" and officially released its three fingerprint chips. FPS1098 is mainly aimed at coating solutions without metal rings, FPS1056 is mainly aimed at front home buttons and side pressing solutions without metal rings, and FPS1398 is mainly aimed at cover solutions such as ceramics and glass. In the future, Feengel launched a more cost-effective 96×96 pixels sensor array, FPS998, which does not require a metal ring, and this product later became the main product shipped by Feengel. It can be said that "cost-performance ratio" has become its slogan for the fingerprint chip industry. Although it only started shipments in July 2016, shipments are growing very fast at present.
"For Feenger, it is an important goal to use the fingerprint chip to make standard elements like image resistors and capacitors." Feenger Wang Kai said seriously.
The so-called standard part, in a narrow sense, is mainly the mechanical industry, and the semiconductor industry rarely adopts this statement. In general, standard parts must comply with certain national or industry standards. Once a product is standardized, it will quickly reduce the production costs of the entire industry.
Of course, the price of fingerprint chips cannot be the only standard for measuring fingerprint chips, and product quality (especially the truth rejection rate and false recognition rate) and supporting services are indispensable. Wang Kai said: "The reason why there is a mixture of people in the industry is mainly because of the lack of an industry standard. Feengel hopes to promote the three industry standards of fingerprint recognition chips: one is the performance standard, which determines the entire fingerprint system rather than the single IC standard by defining indicators such as FAR/FRR response speed, electrostatics, etc.; the other is the structural standard, which defines modules of different forms, such as Coating, cover plates, IFS size and thickness, etc.; through the previous two standards, a transparent module quotation system will eventually be formed."
's view, domestic chip manufacturers have also begun to realize that blindly killing low-end prices can only earn the lowest profits. They should learn from international chip giants and establish industry standards so as to maximize profits. However, how to establish a standard that many chip manufacturers can agree with is a difficult problem.
No matter what, a fierce price war in the fingerprint chip market in 2017 is about to begin. Is it a vicious competition like "killing one hundred enemies and losing three thousand themselves" or will it be a dark horse that is enough to challenge international giants from survivors? Let's wait and see!
Author: Xinzhixun-Ji Mu / Langkejian
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