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Bloomberg
Back in 1972, engineers working at Osram Licht AG set their sights on developing applications for
infrared. The unit of Siemens
AG in southeastern Germany went on to develop an expertise in the light, used in night-vision equipment and galaxy-gazing
telescopes.
Almost half a century later, Osram is a stand-alone lighting company and infrared is one of its fastest-growing businesses, thanks in part to soaring demand for a component to scan human irises. The biometric identification system is now part of Samsung Electronics Co.’s flagship Galaxy S8 mobile phone, and promoted as a more secure way to unlock devices than fingerprint or facial scanning.
Osram is touting the product as a major step in its transformation into a high-tech company from making light bulbs within Siemens. The refocus has been contentious, leading to a boardroom clash over strategy and public spat with the German engineering giant, which remains Osram’s biggest shareholder.
While critics, including Barclays analyst David Vos, say prospects for iris scanners may be overdone, Chief Executive Officer Olaf Berlien says they are taking off, and within five years “every single mobile phone†will have one as will other devices like cash machines.
“The trend is there,†said Aldo Kamper, head of Osram’s expanding Opto Semiconductor division that makes the scanners. The importance of phone security will grow as devices are increasingly used to make payments for all kinds of goods and services, he said in an interview.
Already, Opto has the highest earnings before interest, taxes and amortization of Osram’s three divisions and twice the R&D budget. This is partly because of Osram’s decision — attacked by Siemens — to spend about 1 billion euros ($1.1 billion) on a Malaysian plant to make semiconductors for light-emitting diodes, or LEDs, the energy-efficient form of lighting overtaking classic incandescent bulbs.