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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.
Recent sales reports from Alien Technology, which manufactures EPC Gen 2 RFID chips, inlays and readers, seem to confirm Liard's supposition. "The first part of 2009 was a difficult period," says George Everhart, Alien's CEO. That began to change in the second half of the year, he says, though it had been unclear whether that growth was simply a correction following the reduction in orders resulting from the recession. The company's fiscal year 2010, however, was at an all-time high, he says, adding, "we have sustained that level of growth each quarter." When it comes to predictions of future sales, he notes, "All of our business [tags, chips and readers] is so robust, we are forecasting based on capacity."
For the past six months, in fact, the RFID hardware industry has seen demand outpacing supply, which has led to some order-fulfillment delays (see RFID Hardware Supply Struggles to Meet Demand). Consequently, vendors indicate they have developed strategies to address that demand by increasing capacity, though neither Alien Technology nor RFID chip maker Impinj would comment on the details, citing competitive reasons.
Wal-Mart Relaunches EPC RFID Effort, Starting With Men's Jeans and Basics). He notes, however, that if Wal-Mart and other retailers begin tagging all of their products, the number of tags will rise even more dramatically. The market is preparing for such growth, he reports, with consumer goods manufacturers showing an interest by piloting RFID systems—and, in some cases, installing permanent RFID infrastructure for tagging product at their factories. That, Colleran points out, will reduce the cost of tagging items for the retailer.
"About six months ago," Colleran states, "we started seeing a dramatic change in the landscape (of RFID IC sales), and it was still unclear if this was just recovery." Still, he observes, the surge has continued—for the second half of 2010, Impinj's chip sales equaled the sales total for the previous five years. The company expects 100 percent growth in sales next year, compared with those in 2010. "If, two years from now, every item of clothing you buy has a tag on it," he says, "I wouldn't be surprised."
In fact, Colleran adds, if tags do become ubiquitous within the next few years, it would provide an ecosystem in which retailers can begin exploring other uses for those tags, such as using them for electronic article surveillance (EAS) systems, or at the point of sale. That could lead to more specialty tags with greater functionality, such as those with higher memory to store more data, or security options.
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