Demand for Gothenburg-based FPC's products has continued torocket, sending its shares up over 1,000 percent in 2015 alone and catapulting it to the forefront of a booming industry in biometric sensors for smartphones, tablets and credit cards.

Many users find an instant sign-in with fingers or thumbs more convenient than typing passwords and a rise in mobile payments is expected to further fuel demand.

FPC's clients have multiplied from only two to twenty in a year but competition in the sector is increasing as main rivalSynaptics looks for more business outside its key smartphoneclient Samsung. Newer rivals in Asia and Norway are emerging,amid pressure on prices from cost-conscious smartphone makers.

"They have a window now as they deliver because competitorshave not yet caught up with them, but the market always does inthe end," said Gustav Sjogren, fund manager at Norron AssetManagement.

"There will of course be increased competition and pricepressure here as well."

Founded in 1997, by Lennart Carlson who thought there would one day be a huge market for technology based on an old Swedish fingerprinting patent, FPC has a headstart on newer rivals.

But it waited for years for demand to materialise with its board even considered closing the company in 2005 before a Japanese investor came to the rescue. FPC has also survived on share issues totalling around 700 million crowns, much ofwhich was ploughed back into product development, and smallsales of sensors to a number of clients.

The breakthrough finally came in 2012 when trendsetterApple bought mobile security firm AuthenTec, signalling thatfingerprint identification would soon become a must-have feature which other smartphones must match.

As FPC already had a good touch sensor technology and introduced its first touch sensor for smartphones at the end of 2013, investors started buying the Swedish company's shares. It has since bagged deals from some of China's biggest smartphone makers and U.S. tech giant Google.

"FPC was early out with a good touch sensor technology. When Apple bought AuthenTec and later launched its iPhone with a touch sensor in 2013, FPC made a strategic decision to focus on the touch sensor technology," said Carnegie analyst Havard Nilsson. FPC's Scandinavian location has also given it an edge inChina.

"It's also easier for a Chinese OEM (original equipment manufacturer or smartphone maker) to go with a non-U.S. company. Once chosen, it was a safe choice for other Chinese OEMs, because its technology had been proven and FPC had allocated capacity for large volumes," Nilsson said.

FPC has also benefited from being close to Finland's Nokia and Sweden's Ericsson, once the main stalwarts of the global mobile phone industry. FPC has snapped up top engineers and managers as the handset businesses of the two telecoms giants went into steep decline.

Current CEO Jorgen Lantto was previously executive vice president at ST-Ericsson, a now disbanded chip-making venture between mobile network maker Ericsson and STMicroelectronics, the Franco-Italian chipmaker.

VALUATION QUESTION

Fingerprint forecasts a 50 percent market share outside ofApple for touch fingerprint sensors in smartphones in 2015 andhas raised its sales outlook four times this year. It expects2015 sales to grow at least around 1,000 percent to over 2.5 billion Swedish crowns ($294 million).

But with FPC shares soaring, some investors have started toquestion its valuation.

"We have chosen not to invest in Fingerprint as we think the valuation is way too high," said Sjogren.

"To think they can keep such a market share, that just about never happens, I have experienced that so many times before."

FPC's own market forecast implies it would be at least as big as Synaptics this year in touch fingerprint sensors but Synaptics, which entered biometrics when it bought Silicon Valley firm Validity in 2013, says it is the overall market leader and some analysts agree.

Synaptics has also recently taken more contracts, winning business from China's Lenovo this year, and is set to announcenew deals shortly.

"You should expect to see several new products in the marketby early 2016," promised Alfred Woo, director of ProductMarketing at Synaptics' Biometrics Product Division.

Newer entrants are also hoping for a slice of the market share including two Norwegian firms, IDEX, which inrecent years has lured key staffers from AuthenTec andSynaptics, and Next Biometrics, both of whose stockshave jumped around 200 percent this year.

They are joined by China's Goodix and Taiwan's EgisTechnology, while U.S. chip giant Qualcomm is alsodeveloping a sensor.

"We will ramp up significantly next year," said IDEX CFOHenrik Knudtzon. "In 2016 we expect to start having a meaningfulmarket share."

But FPC believes it can stay ahead of its newer rivals.

"First they need to catch us, and then they need to affordto invest in order to be bigger than us. That's a challenge whenyou are not making money," FPC CEO Jorgen Lantto told Reuters.

"This is an opportunity to extend our lead."

(Additional reporting by Eric Auchard and Johannes Hellstrom; editing by Niklas Pollard and Anna Willard)

By Olof Swahnberg