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France-based chip supplier Inside Contactless plans to change its name to Inside Secure, as it continues to digest its purchase of Atmel Corp.’s smart card unit and seeks to broaden its market share.

Inside will announce the name change around the Cartes & Identification expo and conference next week in Paris, NFC Times has learned. The change comes as Inside attempts to finally turn a profit and– according to some observers–clear the way for an initial public offering.

But Inside will retain a strong focus on contactless and NFC, said sources, and today the company is announcing a new chipset for NFC phones, called SecuRead, combining a secure-embedded chip with Inside’s MicroRead NFC chip.

The new stacked chip, which uses a secure chip from Germany-based Infineon Technologies, enables Inside to tap in on surprisingly strong demand from handset makers for embedded secure elements in their planned NFC phones to store applications and credentials. In its announcement, Inside notes that a leading mobile phone maker has chosen SecuRead "for use in NFC mobile device products due out in 2011."

That handset maker is believed to be Research in Motion, which is planning to introduce NFC-enabled BlackBerrys in 2011. Inside declined to confirm that, however. But the chip maker indicated it would begin supplying the unidentified handset maker with volume quantities of SecuRead for more than one model beginning this spring. Inside said it would have the stacked chip available for sampling next month and production in April.

Emphasis on Security
Inside announced Oct. 1 that it had finalized its acquisition of Atmel’s smart card business unit, agreeing to pay $32 million, plus $21 million if Inside meets certain financial targets with the business. The Atmel unit was about twice the size of Inside’s in terms of revenue. Inside paid for the purchase and future development of the business with a new €50 million (US$68.1 million) funding round, including €3 million from Atmel itself.

Inside had €35.8 million (US$50.5 million) in sales for 2008 and lost €7.6 million. It again lost money in 2009, said sources. The company declined a request by NFC Times to make its 2009 financial results available. The figures also are not yet available on French public corporate registry Web sites, as expected. A source told NFC Times that Inside had an estimated loss of more than €6 million in 2009. Update: Revenue in 2009 was down somewhat from 2008, said sources. Revenue for 2010 is expected to be about $50 million, not counting the Atmel business. End update.

Among other things, Atmel gives Inside technology for dual-interface EMV chips for contactless bank cards outside of the United States–a key growth market. Inside already owns a dominant share of the market for relatively cheap chips used in contactless debit and credit cards issued by U.S. banks. Atmel also enables Inside to enter markets its larger rivals have been competing in for years, including contact-only chips for banking, ID, pay-TV and possibly SIM cards.

Inside’s executive vice president and chief marketing officer Charlie Walton said security is vital in all the smart card markets, but he declined to confirm the company’s name change to Inside Secure.

"The key thing here is we’ve always been about secure transactions, and certainly Atmel always has," he told NFC Times, adding that Inside has no plans to reduce its focus on the NFC and contactless markets. "Going forward, security and contactless (and) NFC is going to be a major, major push for us, without a doubt." 

With Atmel’s technology, Inside probably could supply its own embedded secure chip for the stacked SecuRead product. But with Infineon, it gains access to a licensee of Mifare-compatible chips. Mifare is by far the most popular technology for transit-ticketing cards worldwide. This could enable transit operators to put their applications in NFC phones using the embedded chipset. Infineon only has a grandfathered license for low-end Mifare Classic-compatible chips, but Mifare Classic is still the most used protocol by far in the Mifare product line, despite weak security.

Inside said NXP Semiconductors, which owns Mifare, refuses to license it the technology. NXP likely also denied Infineon a license to more-secure Mifare technology. As a result, Inside with Infineon and smart card vendors Giesecke & Devrient and Oberthur Technologies announced early this year they are launching an alternative protocol and security scheme to Mifare. It will be difficult, however, to establish the competing technology.

The Infineon secure element in the planned NFC chipset with Inside also carries a GlobalPlatform-compliant operating system from Germany-based Giesecke & Devrient, and the chip is approved by payments standards organization EMVCo. It also supports iClass credentials from U.S.-based HID Global. So besides transit ticketing, the chip could support bank payment and higher-end access control, among other applications.

The addition to Inside’s MicroRead chip of an embedded chip helps Inside keep pace with rival NXP, which already has supplied embedded chips for NFC phones and is introducing a stacked or bundled NFC chip of its own, the PN65. NXP is supplying Nokia with NFC chips for its Symbian-based NFC phones and likely is the supplier for the first Android-based NFC phones due out late this year or early next year.

Both Inside and NXP, along with Switzerland-based STMicroelectronics, also have NFC chips that support applications on the SIM, complying with the single-wire protocol. This SIM model is favored by most mobile operators, especially in Europe. STMicroelectronics is also expected to have a chipset combining NFC with a secure element.

Inside’s stacked MicroRead NFC chip could support applications either on the SIM or an embedded secure element or both in the same handset, according to Loic Hamon, vice president of products and marketing for NFC at Inside. The chips from NXP and STMicroelectronics might also support applications on either secure element. It would be left then to the market to decide which chip gets the secure applications.

Demand Strong for Embedded Chips
Hamon estimates that at least half of the 50 million NFC phones or devices that Inside projects will be on the market by the end of 2011 from all component suppliers will pack embedded secure chips.

"We are seeing definitely requests from handset manufacturers to have their own secure elements," Hamon told NFC Times. "They can definitely add value overall with solutions they are providing their customers."

Those customers could be mobile operators, which would control the embedded chips. But perhaps service providers would control the chips, or the handset makers or mobile platform suppliers might continue to hold the keys. An example of the latter two categories would be Research in Motion.

Though there is no official word from Inside about plans for an IPO, some observers see it as coming sooner rather than later–an inevitable end-game for the company’s long-patient investors and what enticed them to put up the additional money for the Atmel unit acquisition.

While 15-year-old Inside has not been profitable, it will enter 2011 with a new name and greater prospects for profits–with the long-delayed NFC market finally turning around and the need for security over networks and at the retail point of sale continuing to grow.