EL SEGUNDO, CA — After years of development, China’s radio-frequency identification (RFID) semiconductor market is set to achieve prodigious size and growth during the next few years, with revenue set to more than double from 2009 to 2014, according to the China market research firm iSuppli, now part of IHS Inc. (NYSE: IHS).
The RFID market is poised to grow to $1.4 billion in 2010, up from $1.1 billion in 2009 or an increase of 22 percent. But this pales in comparison to the growth projected for the next few years. By 2014, the RFID market will reach $2.4 billion—more than double the total from 2009.
RFID employs radio waves to transfer data between a reader and an electronic tag attached to an object, allowing easy identification and tracking. Regarded by many as the successor to the ubiquitous universal product code (UPC) barcode system, RFID provides several advantages compared to UPC in logistical applications, such as eliminating the need for contact or line of sight in order to conduct the transfer of identification or tracking information.
The rise of China’s RFID market is the result of rising demand from applications in transportation, warehouse logistics, electronic payment, medical equipment tracking, food security systems, asset management and more.
At the same time, technology integration in the RFID market has been advancing. Many enterprises have begun to study technical innovations designed to broaden the applications for RFID devices, including mobile payment.
The cost of RFID remains a barrier to its acceptance, despite the technology’s many advantages compared to UPC. But thanks to the rapid development of integrated circuit manufacturing technology, RFID chip costs are continuing to decline, with the price for many Chinese high-frequency RFID cards now down to about one yuan Prices of tagged products are even cheaper and also are expected to drop further. iSuppli forecasts that as the technology matures, so will manufacturing of the devices, which will allow the devices to reach economies of scale. Red Tags
In 2010, the dramatic decrease of second-generation RFID shipments resulted in a sharp decline in tag sales, with the sales of readers surpassing those of tags to date. Thanks to the Shanghai Expo and Guangzhou Asian Games, however, the two projects have managed to account for 48 percent of the entire market.
Overall, China’s RFID industry will be driven by the Chinese government’s extensive investments in the so-called Internet of Things, which forms part of the country’s Twelfth Five-Year Plan. And though the RFID ecosystem is not yet mature in areas pertaining to standards, costs and suppliers, iSuppli believes the industry will develop quickly in the next four years.