STMicroelectronics' Security Chip to Boost Mobile Payments

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STMicroelectronics N.V. STM in collaboration with Giesecke & Devrient (G&D) and FitPay has developed the world's first secure software and hardware solution for mobile payments on wearable devices such as smartwatches.

Notably, STMicroelectronics' trusted ST54E security chip has been utilized to develop the solution and is pre-approved for use by original equipment manufacturers (OEMs) in their wearable devices to facilitate integrated tokenized payments either through Visa or MasterCard.

The introduction of the solution will not only make card payments on wearables easier but will also enable wearable device OEMs to focus more on the developmental aspects of their products.

Moreover, it will also enable end users to register various payment cards from multiple banks and payment networks with the wearable device, paving the way for seamless contactless payment, irrespective of the operating system used by the receiving device.

STMICROELECTRON Price and Consensus


What Does this Mean for STMicroelectronics?

As per an IDC report, worldwide fitness wearables shipments are estimated to reach a whopping 213.6 million units in 2020 at a CAGR of 20.3%. Notably, watches and wristbands are projected to comprise the lion's share of wearables shipments with watches alone having a 52.1% market share followed by wristbands, eyewear, clothing and others.

Given the enormous growth potential the wearables sector has to offer, semiconductor companies such as STMicroelectronics look poised for steady growth.

We expect to witness greater adoption of the solution by large wearables manufacturers such as Apple AAPL , Fitbit FIT , Garmin and Samsung going forward.

Stock Performance Overview

Shares of STMicroelectronics have outperformed the broader Zacks Semiconductor-General industry over the last 12 months. While the industry generated a positive return of 32.1%, the stock returned a decent 67.6%.

The outperformance of the stock could be attributed to strong performance from the STM32 line of microcontrollers. Moreover, continuing design wins for high end smartphones as well as autos could have boosted the stock price.

Zacks Rank & Key Pick

At present, STMicroelectronics carries a Zacks Rank #2 (Buy).

A better-ranked stock in the broader technology space is NVIDIA Corporation NVDA , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Notably, the consensus estimate for NVIDIA's current year has improved to $2.43 from $1.86 over the last 30 days.

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APPLE INC (AAPL): Free Stock Analysis Report

STMICROELECTRON (STM): Free Stock Analysis Report

NVIDIA CORP (NVDA): Free Stock Analysis Report

FITBIT INC (FIT): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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