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Philips Enters Gen2 RFID Chip Fray

Philips Semiconductors has long been expected to enter the Gen2 silicon market, competing with the likes of Impinj, Texas Instruments, STMicroelectronics, and others to sell the microchips that power Gen2 RFID tags. It appears that the company's time has come.
Aug 18, 2006This article was originally published by RFID Update.

August 18, 2006—Philips Semiconductors has long been expected to enter the Gen2 silicon market, competing with the likes of Impinj, Texas Instruments, STMicroelectronics, and others to sell the microchips that power Gen2 RFID tags. RFID Update spoke with Dirk Morgenroth, marketing director for RFID at Philips Semiconductors, about the company's Gen2 chips and their status to market.

Morgenroth reported that a handful of inlay manufacturers are "on the brink" of selling inlays powered with the Philips Gen2 chip, called UCODE. He said that in fact the company had already "shipped many millions of pieces into the market" since March, when the company went into full production of the chips. Morgenroth cited RF Identics, RSI ID Technologies, UPM Raflatac, and OMRON among the inlay manufacturers that will shortly offer UCODE-powered inlays. Most of them are "pretty much up and running now," he said. Indeed, RF IDentics is actually taking orders for inlays with the UCODE chip, with delivery possible toward the end of this quarter.

Philips was actually the second company (after Impinj) to receive EPCglobal Gen2 certification for its chips, which occurred late last year (see the announcement). Between then and March, the company filled out its production capabilities, including undergoing internal quality testing. While the UCODE has been in the hands of certain inlay manufacturers since March, those manufacturers have not yet sold UCODE-powered inlays in production quantities. Now that Texas Instruments and STMicroelectronics have also entered the market, inlay manufacturers will expand their offerings beyond Impinj-powered inlays by incorporating the chips from the new market entrants, according to Morgenroth. This represents the end of Impinj's reign as sole supplier of Gen2 silicon, a role which the company has enjoyed for about a year.

The Gen2 chip space has seen a flurry of activity in recent weeks. First, Texas Instruments announced the launch of its Gen2 chip product (see Texas Instruments Announces Gen2 RFID Chips). Later the same week, STMicroelectronics went public with the availability of its competitive offering, the XRAG2 (see Gen2 RFID Chips from STMicro Hit Market). Impinj pushed back this week with its announcement of two new Gen2 chip offerings, one with factory-programmed product identification and the other with user-programmable memory (see Impinj Expands Gen2 RFID Chip Portfolio). And now the imminent production of Philips-powered Gen2 tags. As Morgenroth said with respect to the Gen2 chip space, "the battle is on."

Separately, Royal Philips Electronics, the conglomerate parent of Philips Semiconductors, announced earlier this month that it had signed an agreement to sell a majority stake in Semiconductors for EUR 8.3 billion ($10.2 billion) to a private equity consortium. The reason for the sale, according to the company, is Philips' strategic direction into high-volume, consumer-focused electronics and away from the cyclicality of the semiconductor market. Philips Semiconductors will be renamed "in due course," according to the announcement. Morgenroth was unable to comment when asked if he thought the sale would have an impact on the company's RFID business.
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