All of the four big international smart card vendors have now reported their 2004 results, and it was clearly a good year. It appears 2005 is also off to a good start.
All told, the Big Four of the smart card industry reported total 2004 sales of 2.59 billion euros (US$3.26 billion), up 18% from $2.20 billion euros in 2003. Gemplus retained its top spot in terms of revenue, with sales of 865 million euros, and a 33.4% share of the four companies' combined revenue in 2004, down just slightly from 34.0% the prior year.
Axalto retained the second spot, with 707 million euros in 2004 revenue. (Axalto reports its financials in dollars, and does not release a conversion to euros). Axalto gained the most market share, growing from 25.6% of the revenue for the four largest players to 27.3% in 2004. Oberthur, which says it has adopted a strategy of steering clear of deals for low-margin, lower cost subscriber identity module cards for mobile phones, saw its share of revenue drop to 17.4% in 2004, versus 19.5% in 2003. Gemplus, Axalto and Oberthur are all based in France.
Germany-based Giesecke & Devrient was the last to disclose its 2004 sales. The company, the only one of the four that is privately held, reported last month a 24% rise in card-related revenue in 2004, compared with the previous year, and predicted another good year in 2005. G&D, which also prints bank notes and securities, reported total 2004 sales of 1.16 billion euros (US$1.47 billion), up 10.5%. Earnings were 69.7 million euros, and net profit was 38.4 million euros, a 36% increase over 2003. Net profit is earnings after subtracting such items as interest and taxes.
Company executives said the card segment generated 568 million euros in revenue, driven by strong sales in telecom and banking. The company said it increased its market share in banking by 6% last year and had strong sales to UK banks, which are in the process of converting their 140 million credit and debit cards to chip cards.
For this year, the card group expects growth in the United States from government ID cards and anticipated rollouts of contactless MasterCard PayPass contactless payment cards, as well as from sales of inexpensive, limited-use contactless chip cards to transit agencies, a spokesperson says.
The company also expects to generate 50 million euros from the rollout of 8 million smart cards in Austria, where Giesecke & Devrient has won a contract to supply a new electronic social insurance card.
Axalto's Fast Start
Earlier, Axalto had reported sales for the first quarter of 2005 that were up 17% to $237.3 million. The gain came mainly from higher shipments of subscriber identity module cards for mobile phones, which represents nearly 60% of the vendor's revenue.
The vendor says SIM sales grew by 28% to $135.1 million. Unit shipments soared by 50% to more than 73 million, and growth was especially strong in Eastern Europe, the Americas and Africa.
Sales were sluggish in Asia, which accounts for a third of the vendor's SIM card sales. They grew by just 1%. Overall SIM prices dropped by 13% compared with 2004. At the same time, Axalto says it doubled the share of high-end cards it shipped, to 34%.
Meanwhile, Axalto reported sales of banking smart cards dropped by 10% during the first quarter, reflecting a slowdown in orders of credit and debit cards that comply with the international EMV standard. The vendor blamed the fall on abnormally high sales of EMV cards during the first quarter of 2004, which marked the peak of the rollout of EMV cards by banks in the United Kingdom.
Axalto says it had sales of $44.5 million in its financial cards unit on shipments of 15.4 million chip cards during the first quarter of 2005. The unit shipment figure was down 17% from the same period in 2004.
Taking out sales from Axalto's unit that produces point-of-sale terminals, Axalto's revenue for the quarter rose by 13% to $216.5 million.