Just to recap, InvenSense's new fingerprint sensing technology allows smartphone vendors to turn the display of a mobile device into a fingerprint sensor, eliminating the need for a fingerprint sensor embedded in a separate area (in Apple's case, in the home button).
Neiger says that although it's not a guarantee that Apple will use this technology in a future iPhone, he doesn't think it's out of the question.
I disagree; I think that there is essentially zero chance that InvenSense will win an iPhone fingerprint sensor spot. Here's why.
Apple rolls its own fingerprint sensors, thank-you-very-much
You may recall that Apple acquired a company known as AuthenTec back in 2012 for $356 million. Apple put the AuthenTec assets and teams to good use, introducing its first Touch ID fingerprint sensor in the iPhone 5s which launched in the fall of 2013.
Since then, I would argue that Apple has led the industry with respect to fingerprint recognition technology. As Android vendors have just now begun to implement touch area fingerprint sensors similar to the first generation Touch ID, Apple is already shipping its much improved second generation Touch ID as part of the iPhone 6s.
I don't want to take away from InvenSense's interesting technology, but I think Apple's internal fingerprint scanning research and development pipeline is quite robust, making it unlikely that it will use a third party solution. Remember that Apple presciently picked up AuthenTec and I am sure that since this purchase Apple has been investing heavily in future biometric sensing technologies.
And, frankly, given how much revenue Apple has riding on the iPhone, I would be shocked if the company weren't spending significant amounts of money recruiting some of the most innovative minds in the industry to try to stay ahead of the curve with respect to biometrics.
InvenSense can potentially make decent money selling this tech to Android vendors
The market for InvenSense's new fingerprint scanning solution -- which the company expects to begin ramping to production in calendar 2017 -- is probably going to be high-end Android devices rather than Apple's iPhone. InvenSense can also go after high end Microsoft (NASDAQ:MSFT) Windows smartphones, but given the software giant's extremely small market share in phones, I'm not so sure how big of a win that is.
If InvenSense's technology is really ahead of what other merchant fingerprint reader vendors, like Synaptics (NASDAQ:SYNA) (whose fingerprint scanners can be found in flagship Samsung (OTC:SSNLF) phones) and Qualcomm (NASDAQ:QCOM) (which has been promoting its "Snapdragon Sense ID" technology) can offer while coming in at reasonable cost, then I think it could make some good money from these products.
However, it's worth noting that any potential financial impact from this technology is more than a year away and I doubt that the competition is standing still. It is by no means a guarantee that, by the time that InvenSense's solution is available on the market, it will be the only product available with the capabilities that the company is advertising.
From an investment perspective, I would be cautiously optimistic that InvenSense will be able to increase its content share within high-end smartphones with this technology, but it's not something that -- at this point -- is going to drastically influence my opinion of the business or the stock.