2017 Ramp Up of Flexible Fingerprint Sensors for Smart Cards & NEXT-Enabled Markets

Oslo, Norway – NEXT Biometrics Group ASA CEO Tore Etholm-Idsoe in a letter to investors announced, “As the smart card market represents almost endless opportunities, and with the NEXT flexible fingerprint sensor already prototyped, NEXT emphasis now is on ramping up for volume production along with our partner Innolux in Taiwan. Our target is to complete this process within the end of the first half of 2017.”

He said, “The aim is to enter into mass production by the end of the second quarter of 2017, and the project remains on track for this timing target. A team of 25 highly skilled engineers from display industry giant Innolux and NEXT are now working on this production ramp-up project. The aim is to build a capacity of 2 million sensors per month in 2017 and to grow this capacity to 10 million fingerprint sensors per month during 2018.”

Etholm-Idsoe noted that at the recent Trustech 2016 in Cannes, France, NEXT demonstrated the world´s first flexible fingerprint sensor that meets all ISO standard requirements. “Meeting all the specifications is considered to be mandatory in high volume governmental and financial markets. First customers have already signed three volume orders for delivery from the second half of 2017. The total volume of the first orders are well above 1 million sensors.”

In his annual New Year’s Letter, Etholm-Idsoe said, “At the start of 2017, NEXT Biometrics can look back on a year in which the company took major steps toward becoming the leading player in the field of flexible fingerprint sensors. In parallel, with significant technological and operational developments we secured a strong competitive advantage within important segments of the rigid fingerprint sensor market.”

He added, “The new generation ASIC is key to achieving cost down in all market segments, and thus fully realizing the NEXT technology cost advantages. Management therefore, is focusing special attention on keeping this project on track in the coming months.”

Recapping NEXT’s significant progress during the second half of 2016, and in outlook for 2017, he announced that with NEXT having a technological leadership within the flexible fingerprint sensors market for smart cards that NEXT will strategically focus on related projects and markets.

Etholm-Idsoe detailed NEXT accomplishments during the second half of 2016, including:

• Flexible sensor smart cards demonstrated at Trustech 2016.
• Mass production of the flexible sensor on track for summer 2017.
• Successful release of the second generation rigid sensors. Industry standard high level yields realized in sensor modules from Q4-2016.
• Successful tests of the second generation ASIC. Project for cost down in excess of $2.50 per module on track.
• After the first smartcard order signed in May, 2016, NEXT won two more volume orders for flexible sensors.
• NEXT have to date been chosen as supplier for all known smart card market volume projects.
• NEXT has demonstrated its ability to serve world class customers.

In his annual letter New Year Letter to investors and others interested in the progress of NEXT, the CEO said further focus areas of the company for 2017 include:

• New smart card industry volume customer projects.
• Realization of first volume NEXT-Enabled projects.
• Continued expansion within the market for Notebooks and Tablets.
• Organizational expansion.
• Further cost-downs and attractive margins in all market segments.

Discussing Notebooks and Tablets, he said, “There are clear signs that the market for fingerprint sensors for notebooks and tablets is growing and NEXT expects penetration will increase in the near future. Most of NEXT revenue in 2016 came from this segment. It is expected that revenue from notebooks and tablets will further increase in 2017. This will materialize from the first quarter of 2017.”

Regarding NEXT-Enabled Markets, Etholm-Idsoe told investors, “NEXT continues to see huge opportunities in the ‘NEXT-enabled markets,’ where the low cost and high quality of the NEXT embedded module opens up completely new markets. In this segment, competition is limited and margins healthy, as other suppliers cannot compete with the NEXT ability to serve these quality dependent markets with uncompromised security and convenience as smaller sensors and pin-code back-ups are not acceptable.”

He added that, “Most of the NEXT-enabled projects have multiple year life cycles and they will implement the new generation ASIC, scheduled to be deliverable in volumes from Q3 this year.”

The CEO said, “The new generation ASIC is on track for sampling at the end of the first quarter of 2017, and transfer to mass production early in the third quarter of this year. This will bring down production costs by more than $2.50 per sensor module. Along with other general economies of scale, NEXT will reach the cost levels estimates we previously communicated, a production cost 70% lower than competing same size/same quality sensors.”

Etholm-Idsoe said, “From the first quarter of 2017, NEXT will start reporting on cost of goods sold. The company already enjoys high yields from its second generation sensors and from implementation of the new ASIC, healthy margins will be realized in all market segments of NEXT.”


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