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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.
According to Alien's Everhart, the demand for RFID chips and inlays is just as strong in sectors other than retailing. That includes tags for tracking assets such as cattle, as well as employee ID badges, RFID-enabled ticketing and anti-counterfeit tags. "In the last week, we've seen tens of millions of units ordered, and none were in apparel," he says. Included in that number are chips used in the inlays Alien produces, as well as those it sells to other tag manufacturers. "The first week of this quarter, over half of the entire quarter's forecasted [sales] have already been ordered."
RFID tag and label maker Avery Dennison is enjoying a similar sales spike. In a Sept. 23 news article, the company's chairman and chief executive, Dean Scarborough, told Dow Jones Newswires that Avery Dennison is currently in discussions with nearly two dozen other retailers regarding RFID, though he declined to identify those companies until their plans become more definite. The firm's RFID revenue, the article reports, "is estimated at $50 million this year, possibly increasing to $150 million in 2011. Some analysts predict the company's RFID revenue will eventually reach $500 million to $1 billion a year. Avery's net sales last year were $5.95 billion."
According to Jack Farrell, VP and general manager for Avery Dennison's RFID division, sales this year are more than double what they were in 2009, and he expects that growth to continue, with more than twice the sales total in 2011, compared with 2010. Avery Dennison was prepared for this growth, since it had predicted the current surge in sales, Farrell says.
"We've been working very, very closely with global retailers, and so we saw the demand building," Farrell says. "For that reason we were able to anticipate some of this growth." To meet the demand, he says, Avery Dennison has invested in new production equipment, as well as offering a larger choice of RFID tag products specific for the vertical markets in which they would be used. Still, he adds, the high demand for chips has meant delays of ICs for the company. Farrell expects chip manufacturers' supplies to catch up with demand by the first quarter of 2011.
Currently, Liard says, the greatest growth is still in sales of simple EPC tags, but in the future, he predicts, there may be a need for tags with higher memory. "The applications will dictate that," he says. ABI Research has felt the increased interest in RFID, with a greater amount of traffic to its Web site. "That," Liard speculates, "is being driven, in part, by apparel."
Sami Nassar, the director of product marketing and business development at NXP Semiconductors, a manufacturer of HF and UHF RFID chips, is also forecasting greater demand for specialized EPC Gen 2 chips with added memory or security. That trend, he predicts, will be driven by companies seeking to prevent counterfeit goods from reaching the market. "Brand protection requires authentication that, in turn, require more sophisticated security algorithms," he states. "A wide range of industries, ranging from vodka and wine to fashion goods, are more concerned today about counterfeit products." What's more, he says, "We are seeing more applications requesting larger product-related information to be stored on the chip."
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