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Authentec sells Embedded Security Solutions division to Inside Secure

The sale suggests that Apple’s interest in acquiring Authentec lies with the company’s innovative combined fingerprint and NFC solution, which is not part of the division being acquired by Inside Secure, and will lead to renewed speculation that Apple will include NFC in future iPhones and other devices.

AUTHENTEC: Embedded Security Solutions division sold to Inside Secure

NFC and contactless chip provider Inside Secure is to acquire the embedded security systems division of Authentec, the fingerprint and secure solutions specialist which Apple agreed to buy for US$356m in July 2012. The transaction is valued at up to US$48m.

Authentec’s Embedded Security Solutions (ESS) division designs, develops and sells a range of embedded security solutions, centered on the use of encryption algorithms and security blocks to protect data and ensure confidentiality, integrity and availability. ESS offers three product lines: Content Protection, Security Toolkit and Semiconductor IP.

ESS products are used in hundreds of millions of mobile and networking products to ensure data privacy for businesses and individuals. Customers include Alcatel-Lucent, Cisco, HBO, LG, Motorola, Nokia, Samsung, Sky and Texas Instruments. ESS has 79 staff and sales of $25.3m in 2011 and $21.4m in the first nine months of 2012.

As well as the Embedded Security Solutions division, Authentec also has a TouchChip division, a Smart Sensors division and an Identity Management division.

The company’s smart sensors and identity management products have been withdrawn from the market but TouchChip products continue to be available — suggesting that Apple plans to retain ownership of, and make use of, the company’s fingerprint sensors and identity management solutions in future devices.

“This strategic acquisition will enable Inside Secure to reinforce its position as a key player in the fast-growing security solutions market”, says the NFC and contactless chip provider. “By leveraging the strong capabilities of Inside Secure’s existing mobile NFC and digital security businesses, the combined offer should lead to additional sales in high growth markets.”

“This transaction is an important opportunity to extend our position in the security value chain and reinforce our global offer in high-end security solutions,” says Rémy de Tonnac, CEO of Inside Secure. “It will enable us to complement our product and solution portfolio in mobile NFC and digital security and enhance our customer offerings in fast-growing markets. The talented ESS team who will be joining will contribute their know-how and expertise to advancing our innovative technologies, and help us address new security markets.”

The acquisition is expected to close before the end of 2012. Inside will pay $38m in cash at closing plus up to an additional US$10m “subject to completion of certain post-closing transactions”.

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