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RFID: The Next Big Thing in China’s Semiconductor Industry

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.

Cost Barrier
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.

iSuppli

7 comments on “RFID: The Next Big Thing in China’s Semiconductor Industry

  1. prabhakar_deosthali
    December 25, 2010

    RFID tags seems to have gone out of discussion nowadays. In the supply chain context RFID tags assume a significant importance. I am interested to know what is the status of  the usage of this technology in the developed  countries like USA, Europian countries.  Is this technology poised to replace those bar codes  universally?  So far as my experience in India is concerned I have yet to see a RFID enabled warehouse.

  2. Hardcore
    December 25, 2010

    Not too sure about the rest of the world, but RFID id is big in Hong Kong , staff ID cards product identification etc.

    You can pick up a 13.56MHZ rfid reader/writer in China for about 15$us the  125khz readeres/writers are even cheaper.

    So really it is not the technology of readrers/writers holding things up, I guess it needs to hit a break over point , the  manufacturers  don't want to add cost to the product and complicate their current supply chain with the equipment needed, and the resellers etc don't want to buy the equipment because RFID is not fully implemented yet.

     

    Once it hits a break over point there will be a massive rush to get the technology fully implemented, It reminds me of the  Security stickers to prevent shoplifting, that seemed to go through the same curve, now some big retailers insist that all products supplied above a certain market value come pre processed from the suppliers with the correct tags for thier RF security systems.

    Used to be the Retailers did the attaching of the tags

     

     

     

  3. prabhakar_deosthali
    December 26, 2010

    Thanks Hardcore for providing this information. Regarding the pricing you have mentionsed that a reader/writer set cost around US$ 15.  Can you tell me what is the cost of the tag itself. If  the tag cost is minimal then a warehouse can easily afford to implemnt a RFID based inventory tracking system.

  4. Hardcore
    December 26, 2010

    Hi,

    The cost of the tag varies on the enclosing medium and the functionality, IE  the embedded memory of the tag. Prices are still being quoted over 50 cents for volume.

    But I'm having a hard time believing some of the costs associated with the tags, there seems to be some significant resistance to price decrease (which is only natural, since no one is going to get rich if the cost is a few cents for each tag)

    The key is going to be the China market, I'm starting to see embedded tags appearing on more 'high value' products. Used to be they would pay staff to follow you around, but that is very much reduced now in stores where tags are being used.

    Currently they seem to be attaching 'reusable' tags onto product over 40RMB, more for security than for actual data collection, it just seems an 'odd' way to implement security, unless it is a combined tag with an RF security antenna AND an RFID tag, in some cases it appear the 'market' for tags is not smart enough yet to decide on the equipment they are installing and for what purpose.

    Once they get the 'issues' related to why they are installing the equipment sorted out and the supply chain requirements start to cut in (its only a few years ago that KFC & Mc Donald's started using 'real' trucks to deliver materials in smaller  towns and cities) and seeing refrigerated trucks in China is still a rarity, its even rarer to see the refrigeration plants turned on instead of blocks of ice inside. (and i STILL see MC Donald's delivering stuff via the MTR in Hong Kong)

    In many respects China still lacks the infrastructure to deal with much of the need for RFID, certainly from a computing viewpoint.

     

     

     

     

  5. prabhakar_deosthali
    December 27, 2010

    Thanks again Hardcore for satisfying my queries. As you rightly say, security is not the main purpose of RFID technology as is being used in China currently. RFID can play a major role in the warehouse managment and I hope most of the supply chain managment software has provided hooks to interface RFID based inventory tracking. My experince at a large shoe store where a large inventory of the shoes is kept in the backside of the store and only sample designs and sizes are kept in the showroom.  Everytime you ask for  something to be tried the salesman shouts to the back end person to search and bring the required design and size. Its a lot of to-and fro- time consuming  activity to serach for the right siza and right design.  With RFID tracking  it can just be achieved by pressing of few buttons on the PC. Another couple of years and I hope to see RFID being widely used in all departmental stores

  6. hwong
    December 31, 2010

    While RFID seems like it is gaining popularity, I still do not see widespread adoption for the “internet of things” realm. We often have to think very hard to come up with how RFID can improve our lives. But in reality, we are thinking too hard to make this application worthwhile.

    I have heard that China may implement RFID readers at the school vicinity so that the parents can keep track of where their kids are given that there are increasing kidnapping involved

  7. Backorder
    December 31, 2010

    I agree. Although RFID does have some critical applications, majority of the new applications seem to be driven mainly by the manufacturers of RFID chips. I dont really find the concept of the internet of things to be much exciting as the complexity involved in actually making it work will never allow this to be market friendly.

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