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HF RFID Market Sees High Growth and 125m Order

While UHF RFID technology will eventually see enormous volumes from the supply chain and retail environments, those volumes have yet to materialize. In the interim it appears that the oft-neglected high frequency (HF) RFID is an exciting source of growth and demand.
Aug 29, 2006This article was originally published by RFID Update.

August 29, 2006—ABI Research of Oyster Bay, New York, today announced that the 2005 market for high frequency (HF) chips saw more growth than any other RFID segment measured by the company. From the first quarter of last year to the first quarter of this year, shipments of ISO 14443 chips doubled (ISO 14443 is the standard for HF RFID smart cards). ABI pegs the total number of HF chips shipped in 2005 at over 565 million.

This robust growth is due primarily to the increasing adoption of RFID-tagged personal identification documents and electronic passports. "Both are high volume, high growth applications," said ABI's Sara Shah. The future looks even brighter. In addition to the widely-publicized US e-passport initiative, which kicked off this month, some 27 other countries will be issuing e-passports by October. Beyond the initial spike in demand from these programs, there will be ongoing demand as e-passports need to be replaced and reissued. Non-passport personal identification documents tagged with RFID also drive demand. The most famous such initiative is that of the Chinese government, which intends to provide the entire Chinese citizenry with chipped ID cards over the next few years.

Lastly, ABI cites the increasing use of RFID-based contactless technology for payments and transit ticketing. The US saw a swell of activity in both arenas last year as major credit card companies issued sleek new contactless versions of their cards and cities like New York initiated contactless subway ticketing. Europe and Asia, which are ahead of the US in their adoption of contactless, are now seeing an increasing rate and scale of deployment.

As if to punctuate ABI's findings, Finnish RFID manufacturer Confidex will tomorrow announce what the company says is the largest RFID ticket order to date: China's Guangshen Railway Company has contracted the company to provide 125 million ISO 14443-compliant contactless tickets over the course of five years. In addition to being the largest RFID ticket order ever, it is also one of the largest RFID tag orders, according to Confidex. Its size is equal to the entire 2005 market for limited use contactless tickets. Confidex expects to realize economies of scale that will allow it to lower the price for RFID tickets, thereby spurring further demand in the market.

Deliveries of the RFID tickets are to start in October of this year, and Confidex will establish a Chinese subsidiary called XinTag to service the contract. The Guangshen Railway Company, which is part of the Ministry of Railways of China, the world's largest public transport operator, decided to transition to contactless tickets from barcode tickets in order to curb counterfeiting and increase passenger convenience. It is the first transport company in China to make the switch, although many others are expected to follow suit.

Confidex publicly launched about a year ago and is headed by Timo Lindström, one-time CEO of UPM Rafsec (see Startup Offers Outsourced Tag Production).
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