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Sales of EPC RFID Tags, ICs Reach Record Levels
A surge in item-level tagging by apparel retailers has meant a banner year for RFID tag and chip vendors such as Impinj and Alien Technology.
Oct 19, 2010—A surge in item-level tagging in the retail apparel industry has fueled an unprecedented growth in sales of RFID passive ultrahigh-frequency (UHF) EPC Gen 2 (ISO 18000-6C) integrated circuits (ICs), inlays and tags over the past few months. Chip and tag vendors report that while EPC Gen 2 passive RFID tag growth in such sectors as aerospace and defense, transportation and manufacturing has been more moderate, a recent uptick in the tagging of apparel and other items by retailers has increased the quantity and size of orders. In fact, according to Michael J. Liard, the director of ABI Research's RFID practice, this year's UHF IC sales volume is expected to exceed one billion units. (The consultancy declines to divulge its market forecast in terms of dollars.)
In 2010, the worldwide market for UHF Gen 2 chips, also known as integrated circuits, rose by more than 200 percent from the year prior, following tepid sales for 2008 to 2009, during the economic recession. Next year, however, growth in chip sales is expected to continue sharply upward, by about 65 percent. For RFID transponders (tags and inlays), the growth rate was at 125 percent for 2009 to 2010, and is expected to be 105 percent for 2010 to 2011. For both chips and transponders, Liard says, the majority of that growth is being powered by purchases in the apparel industry.
The rise in tag sales is being driven by what Liard calls explosive growth in retail tagging—that is, tagging individual items, such as garments. Wal-Mart Stores plays a significant role in that growth, he notes, but in addition, "lots of big powerful retailers are stepping in," applying RFID tags to some of their clothing lines, all of which is being closely watched by apparel makers, who may ultimately take on the responsibility of tagging items at the point of manufacture.
At the same time, shipments of high-frequency (HF) 13.56 MHz passive RFID chips is expected to increase between 2009 and 2014, at the less vigorous pace of 16 percent compounded annual growth rate. Passive HF tags are typically used in such applications as access control, library management and, in many instances, ski-lift tickets. "If current demand for passive UHF in apparel, in particular, holds, and anticipated RFPs [requests for proposal] from additional retailers are realized and fulfilled," Liard says, "it is possible that passive UHF IC production, on an annual basis, could begin to outpace HF by 2013 or 2014."
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