Goodix Share Price Rallies on Share Listing

19 Oct

Share price of Goodix, which produces touch-screen and fingerprint recognition chips, rallied at daily limit of 10%, closing at 30.76 yuan, on 18 Oct. following surge of 44% on opening price of 19.42 yuan on the first trading day of 17 Oct. for its shares on Shanghai Stock Exchange, bringing potential windfall to MediaTek, with 24% stake originally, which has been diluted to 21.34% after the IPO.

The warm reception underscores the huge potential of Goodix, thanks to fast-expanding demand for touch-screen chips, a result of rapid emergence of global mobile-payment market, and fingerprint-recognition systems, which have gradually become a built-in device for smartphones. It is expected that the number of smartphones with built-in fingerprint-recognition system will hit 450 million in 2016. Goodix focused its R&D on touch-screen chips upon its inception in 2006 before extending to the field of fingerprint-recognition chips later on. Attracted by its potential, MediaTek bought into the company in 2011.

Goodix boasted 28.23% share on China’s capacitive touch-screen chip market in 2014, the second largest and the only non-native firm among the top 5.

Goodix shipped 10 million fingerprint recognition systems in 2015, when it raked in 378 million yuan of net profit, down 1.43%, on sales of 1.12 billion yuan, up 31.15%. It is one of the major suppliers of fingerprint recognition systems for mobile phones on the world market, along with Synaptics, Silead of China, and Taiwan’s Egis, FocalTech, and Elan. Samsung’s mobile phones, for instance, are equipped with fingerprint recognition systems supplied by Synaptics and Egis, while Apple’s iPhones embraced its own-developed systems.

With touch-screen chips still accounting for over 70% of its sales, Goodix expects to ship 60 million fingerprint recognition systems in 2016, double the 2015 figure, generating 23.3% of its sales.

Goodix raked in NT$1.529 billion of net profit in the first half of 2016 and is expected to contribute NT$3-5 to MediaTeke’s earnings per share in the fourth quarter. Hsieh Chin-chiang, vice chairman of MediaTek, remarked that share listing of Goodix underscores success of MediaTek’s investment strategy, adding that the company will continue seeking cooperative opportunities with other companies in China.