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Industry ranking still unclear

Week 20, 2008

Almost twoyears ago, these two companiesmerged, giving Gemalto. Even ifGemalto's market share is lower thanthe sum of Gemplus and Axaltomarketshares, there is little doubtGemalto is the world leader in thisindustry. But if the #1 is perfectlyidentified, we now witness a struggleto be recognized as the second in theindustry.

Both Giesecke & Devrient andOberthur are going through acquisitionprocesses in a race to critical size.Oberthur has recently completed theacquisition of XPonCard (cf. SmartInsights #08-16), and Giesecke &Devrient is currently in the process ofacquiring a majority stake inBundesdruckerei (cf. SI #08-17).

2007 results can help us understandingthe real rankings in the industry.

  • Oberthur Technologies sales reached EUR 734 million in 2007, of which EUR 591 million came from Oberthur Card Systems activities,
  • Giesecke & Devrient sales reached EUR 1,551 million in 2007, of which EUR 577 came from "cards & services" activities.

Unfortunately, at least from theanalyst standpoint, not everything isso clear. Both Oberthur Technologiesand Giesecke & Devrient have foundsynergies between their traditionalsecurity printing activities, and theirsmart card involvement. A part ofsales relating to ePassports, and othersecure documents may be affected toother divisions. Also, both Giesecke &Devrient and Oberthur Technologiesevolve towards the systems integratorposition, and as an external analyst,we have little means to know wheresystems integration relating to smartcards and electronic transactionsactivities are accounted for.

This struggle for the #2 position in theindustry should not be our singlefocus. For the time being, Gemaltosales, EUR 1,631 million, appear faraway from it contenders. But,Gemalto sales were down by 4% in2007, at a time when OberthurTechnologies sales grew 14% andGiesecke & Devrient sales grew 19%.Also Chinese and Indian companies,which now appear as challengers onthe market, may have a quick growth,fuelled by their domestic market.

The Gemplus – Axalto fusion, and theongoing acquisitions by its followers inthe industry, do not mean the rankingsare frozen for ever. On the contrary,our smart industry is more dynamicand changing than ever.

Thierry Spanjaard
Chief Editor
Smart Insights