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InvenSense's time may be coming +3

My last note on InvenSense should have made it clearer that the Apple patent application discussed cites a different fingerprint solution than the one being developed by InvenSense.  The potential for such a sensor under glass, or other materials, is what's important here, as it reduces manufacturing cost while increasing performance, at least in the InvenSense implementation. 

Innovation is what gave InvenSense its start, and what will make or break it going forward.  An exhibitor at the InvenSense Developer Conference showed that better than any patent application ever could.  Intrinsic-ID is partnering with InvenSense to implement the physically unclonable function (PUF) on the Firefly platform.  This will provide individual chip-specific cryptographic security for IoT applications, and will be available in early 2016.  As a result, I expect that we will eventually see InvenSense offer industrial IoT data management platforms just as it has for fitness data with Coursa Sports.  Plans like that would dovetail very nicely with management statements that 80% of new design wins are outside mobile and the revenue potential of such offerings could be truly transformative.

I think timing is critical and dangerous here as the transition from Samsung to other markets may not coincide smoothly.  Additionally, readers already know that I am quite cautious about the broader market, and INVN may continue to see vulnerability to that.  Nonetheless I think long-term upside is finally starting to outweigh near-term risk, which may be mitigated by slight rises in both shorted float and rebate rate.  I've long said that INVN investors might have to wait until 2016, when Firefly starts seeing adoption, for the stock to see a real rebound.  Nothing is assured, but that time is almost upon us.