Thin Film Electronics


Thin Film Electronics is a Norwegian business that specialises in printed electronics. The company is developing a new processing technology to manufacture high volume, low cost near-field communications (NFC) and electronic article surveillance (EAS) tags.

Low cost NFC technology have the potential to establish a huge range of commercial applications, from underpinning the utilisation of blockchain technology through the supply chain, to empowering brands to engage directly with consumers directly at the point of sale, bypassing the ever-dominant online advertising channels.

The company is in the early-stages of scaling its production process to meet potential commercial opportunities.

Investment case summary

We have known Thin Film for many years, during which time the company has been advancing its technology, investing in a high volume manufacturing facility and expanding its network of commercial partners.

However, since our initial investment in 2016, the company has announced several delays to its new production facility and slower-than-expected adoption of its technology, which has led to a steady share price decline. Following a management change in November 2018, Thin Film is working hard to resolve these issues and we are confident that the long-term potential for its technology remains considerable.

Ask a question about our investment in Thin Film Electronics

Fund exposure
Income Focus Fund 0.05%
Equity Income Fund 0.18%
Patient Capital Trust 0.18%

As at 28 February 2019

Geography Norway
Industry Industrials
Themes Disruptive technology

Source: Woodford


Further delays

Another disappointing update from Thin Film Electronics, which includes the announcement of further delays to its roll-to-roll manufacturing facility. This is the world’s first example of the production of printed electronics in this way, so it isn’t surprising that the process is proving complex and challenging. Nevertheless, we are disappointed that the process and guidance had not been managed by the company’s prior management team more effectively. Meanwhile, there is no news on NFC Forum qualification process, which represents a key milestone for a more widespread market opportunity.

The company’s market cap now sits below its net asset value, reflecting the market’s scepticism that the business can fund itself through to commercialisation. It will need further capital in the near future. We will step up further our engagement with this business in an attempt to find an appropriate way forward. We have a meeting with the new CEO, Kevin Barber, later this month.

Harry Raikes
28 February 2019

Back on track

We’ve received some good news from Thin Film this morning – at Apple’s annual developers conference yesterday, it was revealed that the latest iPhones (XS, XS Max and XR) will, for the first time, support native NFC tag functionality. This means that these users will be able to scan tags without having to download a specific application. As we wrote in the previous commentary, in August, Thin Film experienced slower-than-expected market adoption of the its NFC technology, with brands being reluctant to commit to scaled volumes in the absence of cross-platform support. This announcement represents the first step in bringing the path to commercialisation back on track.

Most notably, this announcement sets out Apple’s approach to NFC, which until this point had been out of Thin Film’s control. Secondly, it marks the start of a potential path for existing in-market devices to be enabled for native NFC scanning through future iOS software releases. This represents a positive development and a faster resolution to this issue than we had anticipated. The next important step for Thin Film is to receive approval for its NFC protocol from the NFC Forum, which is currently expected in 2019.

Harry Raikes
13 September 2018

Disappointing half-year results

Last week the company announced its half-year results, highlighting a few short-term setbacks. The first was a delay in the establishment of its roll-to-roll (R2R) production facility. Albeit disappointing, such delays are not uncommon for industrial companies executing large capital intensive projects. The second set-back was a slower-than-expected market adoption of the company’s NFC technology, with some brands reluctant to commit to large volumes in the absence of cross platform support (NFC scanning is native in Android smartphones but not yet fully incorporated in Apple’s iOS). The solution to this issue depends on Thin Film’s tag protocol being accepted by Apple and included in a future iOS software release, so Apple users can scan the tags without having to download a specific application. Some analysts have suggested that this can happen over the course of next year.

Following the results, we met the company’s management. We believe that the team is doing what it can to resolve the delays and remain confident that the long-term potential of its proprietary technology is substantial.

Harry Raikes
21 August 2018

Major contract win

Thin Film Electronics has today announced a new customer in the form of British American Tobacco Global Travel Retail, which is launching a ‘connected’ edition of its Dunhill brand products using Thin Film’s NFC SpeedTap tags. These will sit on the Dunhill package cartons and integrate with Thin Film’s cloud-based platform to convert each physical product into a digital channel that facilitates direct brand-to-consumer connections.

The partnership will enable the brand to use Thin Film’s innovative technology to engage with its consumers in a unique way, delivering a digital experience through the tap of a smartphone. The company is able to measure the return on investment of these campaigns, and is demonstrating significantly improved returns over traditional interactions.

This is a major contract for Thin Film and, although financial details have not been disclosed, the agreement represents a significant validation of the company’s technology and should act as a catalyst for other brands to adopt.

Paul Lamacraft
6 February 2018

Woodford Investment Management Ltd is authorised and regulated by the Financial Conduct Authority (firm reference number 745433). Incorporated in England and Wales, company number 10118169. Registered address 9400 Garsington Road, Oxford OX4 2HN.

Woodford Patient Capital Trust plc is incorporated in England and Wales, company number 09405653. Registered as an investment company under section 833 of the Companies Act 2006. Registered address Beaufort House, 51 New North Road, Exeter, EX4 4EP.

© 2019 Woodford Investment Management Ltd.
All rights reserved.

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