The internet of everything by Thin Film Electronics

2017-05-28 21:57, Edited at: 2017-05-28 22:14

When a company has a unique, cost-effective way to produce a high volume product for which the demand is beyond imagination, it is time to start investing. In 2014 the printed labelling market was valued at $32.7 billion and expected to grow to $41.6 billion in 2019. The main driver for growth is smart labelling, which enables products from wine bottles to handbags to practically anything to become connected and interactive. Thin Film Electronics is ready to take the world's mind from IoT to IoE.

Introduction

Thin film Electronics (Thinfilm) is a high tech company developing and researching ways to revoloutionize the labelling market. Its main focus is to provide a cheap, interactive soloution increasing the level of security, transparency and communication between consumers and producers.
To do this, Thinfilm has developed a way to print electronics directly on a sillicone-like sheet, creating internet connected tags, each with an individual ID. The applications for these tags are endless since they can be desgiend to respond and interact in many different ways.

World-leading technology

Thinfilm has 50+ patents on the first and only printed rewritable nonvolatile memory in the industry. Their product portfolio consists of tags which use different types of technology depending on the properties desired by the producer. To give you a hint of what these can be one of them will be described below, the rest will be linked to.

Open Sense Technology

These tags consist of two interacting parts which also are connected to the 'cloud'. By printing a product with this type of technology during packaging, a bottle, can, bag or any package becomes wirelessly "sealed". The package is immedately connected to Thinfilm's database and will remain "sealed" until opened. When the package becomes open, the second part of the tag will give the consumer exact information regarding its due date (foods and drinks), when the package was opened, when and where it was produced, complementary products, reviews etc. This is possible through the printed electronics usage of NFC (Near Field Communication) which more or less is a standard feature in new smartphones.

Market outlook and partners

As previously mentioned the market for printed labelling is already very big and the potential for smart labelling it is beyond huge. By 2022, 5 years from now, the market of printed electronics labels alone is estimated to be worth around $12 billion. For a company such as Thinfilm, currently valued at around $300 million, the future looks very bright. The primary ways of income for Thinfilm will be from its own produced tags, royalty revenues from companies using its IPR (Intellectual property rights) and from the usage of its software platfrom, CNECT.

Thinfilm cooperates with a number of large companies within many different areas. A selected few are the following: Xerox, Nedap, Jones Packaging, Flextronics, Inktec, Imprint Energy, and Barbadillo.

Future growth

The first quarter of 2017 was the best Q1 so far with substantial orders going into Q2 and many new partnerships. The shipments of "Speed Tap" doubled from Q4 16 to Q1 17. Thinfilm expects to more than double shipments of NFC tags in Q2 with yet another doubling in Q3, meanwhile shipments of other products is expected to keep rising as well. The market is definitely opeing up for Thinfilm. Later this year the company will begin production of its tags in their new facility in Silicon Valley. Possible production will rise from 40 million sensors to 6,7 billion per year, resulting in revenues around $910 million annually. Full production in the San Jose based factory is expected to be possible during 2018.

A few words from the CEO David Sutija:
"I believe 2017 marks the dawn of a new era in Thinfilm’s history – an era in which we materially move the needle in the electronics industry. We’ll soon see a day when intelligence is infused in hundreds of billions of everyday items, and unique digital signatures transform each of those products into their own media channels. Mobile marketing as we know it today will change profoundly, as advancements in wireless communication, augmented reality, and other disruptive technologies further blur the lines between physical and digital. The milestones and accomplishments of 2016 have strongly positioned Thinfilm for the opportunities ahead. We have the technology the market needs. We have the solutions that brands want. We will soon have the capacity to manufacture at ultra-scale. And we have the right people in place to make our vision – adding a little intelligence to a lot of things – become a reality. The Internet of Everything is on the not-too-distant horizon – one trillion smart objects strong – and Thinfilm is prepared to take you there."

Conclusion

Thinfilm has its brightest days ahead. The market is growing fast, production costs will soon be decimated and the company has the best technology available. The case reminds me of Fingerprint Cards in 2014. A company full of intelligence at the right place at the right time made the sales rally 1100% the following year and the stock price followed. I believe a similar scenario is at hand for Thinfilm and my thoughts are supported by Edison Investment. They have a current target price of NOK 8,19 and that is probably just the beginning.

For me Thinfilm is a solid buy and I would suggest all those who buy it to hang on to the stock the next couple of years as the prospects and possibillities are enormous.

Sources:

http://thinfilm.no/wp-content/uploads/2017/05/EdisonNO0010299068Thinfilmupdate100517.pdf

http://www.marketsandmarkets.com/PressReleases/printed-electronics-market.asp

https://www.avanza.se/placera/pressmeddelanden/2016/07/06/thin-film-electronics-asa-thinfilm-partners-with-leading-global-pharmaceutical-company-to-create-nfc-technology-platform-for-medical-devices.html

http://thinfilm.no/

http://thinfilm.no/wp-content/uploads/2017/05/5390_Thinfilm_Q1_2017_Report_R5.pdf

http://thinfilm.no/wp-content/uploads/2017/04/Thin-Film-Electronics-ASA-Annual-Report-2016.pdf