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Smartrac Acquires UPM RFID, Becoming a UHF Tag Leader

With its acquisition of UPM RFID, as well as Neology and KSW Microtec, Smartrac has moved to the front of the market for passive UHF RFID tags and inlays.
By Claire Swedberg
Dec 22, 2011Dutch RFID transponder company Smartrac N.V. has acquired UPM RFID, a division of Finnish wood pulp, paper and timber provider UPM-Kymmene Corp., and plans to leverage the passive ultrahigh-frequency (UHF) technology company's manufacturing capabilities to position itself as one of the world's largest providers of UHF RFID inlays. The acquisition of UPM RFID follows Smartrac's purchase of two other companies within the past two weeks: Neology, on Dec. 8, and KSW Microtec, on Dec. 14. The three acquisitions represent Smartrac's interest in further penetrating the UHF RFID market by providing tags, as well as the inlays built into those transponders, and full RFID solutions.

With the UPM RFID deal, says Tanja Moehler, Smartrac's head of corporate communications, the company "will be able to seize the full potential of the market." UPM RFID is among the largest global providers of RFID inlays. Once the sale takes place, UPM-Kymmene will become an indirect shareholder of Smartrac, holding a 10.6 percent interest. The sale is expected to close sometime during the first quarter of 2012.

Historically, Smartrac has focused on providing high-frequency (HF) and low-frequency (LF) RFID inlays, including those used in passports and contactless credit cards, as well as for access control. More recently, the company has begun providing UHF tags, including the Smartcrate tag—a ruggedized UHF tag for tracking reusable crates and bins within harsh environments. With an interest in furthering its presence in the UHF market, Moehler says, Smartrac has not only offered its own UHF products, but has also sought opportunities for acquisitions that would enable it to access additional UHF manufacturing capabilities.

With its latest acquisition of UPM RFID, Smartrac will be "one of the top five suppliers of passive UHF components based on revenues," according to George Kraev, a senior analyst of security and identification at ABI Research. Michael J. Liard, the director of RFID at analyst firm VDC Research, estimates that UPM RFID alone has more than 40 percent of the UHF RFID inlay market, competing with inlay providers like Avery Dennison and Alien Technology. However, Smartrac is now poised to provide not only the LF, HF and UHF inlays, but also the LF, HF or UHF passive RFID tags in which those inlays are embedded, for such applications as access control, public transportation, automotive and animal identification. "It would seem that Smartrac is making itself stronger by being more self-sufficient," Kraev says, by offering full RFID solutions utilizing its own UHF inlays.

Worldwide demand for passive UHF RFID inlays has increased with the growing use of EPC Gen 2 tags at the item level within the retail sector. By acquiring UPM RFID, Smartrac will need not compete with the company for customers employing UHF inlays for item-level tagging, as well as for other UHF applications. In addition to UHF inlays, UPM also provides HF tags.

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