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February 5, 2008

RFID Gains Momentum From "E-Passport" Initiatives

IC market segment to exceed $1 billion in 2009, says new IC Market Drivers report

Demand for radio-frequency identification products continue to show strong growth as RFID technologies take hold in more applications worldwide. Growing concerns about national security and personal-identity theft along with ongoing efforts to improve inventory tracking and logistics in business sectors are sharply driving up the use of RFID transponders and contactless smartcards that employ radio-frequency identification links, based on findings in the 2008 edition of IC Insights’ IC Market Drivers report.

Between 2006 and 2011, unit shipments of integrated circuits used in RFID applications will increase at a compound annual growth rate (CAGR) of 63% per year and exceed 26.1 billion devices worldwide in 2011 (Figure 1), according to the new IC Market Drivers report. Smartcard IC volumes are expected to rise at a CAGR of more than 21% in the forecast period and reach 4.9 billion units in 2011, based on IC Insights’ new forecast.

Figure 1

Revenues for ICs in RFID applications (including RF ICs as well as logic devices for tag readers and scanners) are forecast to reach $2.3 billion in 2011, compared to $790 million in 2007, which represents a CAGR of 32% per year, according to the new report. RFID IC sales are forecast to exceed $1 billion for the first time in 2009. Meanwhile, smartcard IC sales are expected to grow from about $4.1 billion in 2007 to $5.6 billion in 2011, which represents a CAGR of 9.0%.

For decades, RFID technology that has been used in tracking, identifying, and monitoring applications, but widespread adoption in many high-volume applications has proven to be allusive for a variety of reasons until recently. Steady advancements in miniaturization, cost cuts, and greater transmission efficiencies have enabled RFID transponders (or tags) to overcome most technical hurdles, while standards in systems and software implementations have encouraged greater adoption of the technology as a replacement for printed barcodes and traditional paperwork.

The RFID market is getting a boost from governments programs aimed at replacing conventional paper passports and plastic ID cards with electronic passports and smartcards that use contactless chip technologies. More than 50 governments worldwide are now aggressively pursuing e-passport and ID initiatives. The U.S. Passport Agency, for example, expects to complete the phase-in of wireless RFID-based passports during the next 10 years. IC Insights believes the sale of transponders for "e-passports" and national ID programs could reach $500 million by 2011.

Report Details

Details of the RFID market can be found in the 2008 Edition of IC Market Drivers—A Study of Emerging and Major End-Use Applications Fueling Demand for Integrated Circuits. Besides RFID, the report identifies numerous existing end-use applications such as PCs, cellular phones, automotive systems, and wireless networking, and newly emerging applications that offer great potential to propel the IC market through 2011. Binder plus CD-ROM copies of the report are available for $2,885 with a multi-user corporate license available for $5,690.

For more information, please visit www.icinsights.com/prodsrvs/marketdrivers/.

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About IC Insights

IC Insights, Inc., based in Scottsdale, Arizona, is dedicated to providing high-quality, cost-effective market research for the semiconductor industry. Founded in 1997, IC Insights offers coverage of global economic trends, semiconductor market forecasts, capital spending and fab capacity trends, product market details, and technology trends, as well as complete IC company profiles and evaluations of end-use applications driving demand for ICs.

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