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Philips Eyes Supply Chain Market

The Dutch semiconductor company sees supply chain applications as the engine that will drive RFID sales in the future.
Sep 30, 2002—Sept. 30, 2002 - One reason RFID technology hasn't taken off faster is because semiconductor companies could make more money focusing on the established markets for microchips, such as personal computers, handheld computer and mobile phones. But those markets are slowing, and RFID is reaching a new level of maturity, with the first global standard about to be introduced next year. Philips Semiconductors, for one, is now taking the RFID market very seriously.

"Our vision is of a totally connected world in which we at Philips provide silicon for all the locks and keys to that virtual (networked) world," says Katja Kienzl, manager of segment marketing for tags and labels at Philips. "That means we want to provide technology necessary for either people or objects to get access to networks."

Philips doesn't actually make RFID transponders. Instead, the company makes the microchips that act as the brains of smart labels and tags. It works with established players, such as Rafsec Oy of Finland, Omron Europe in the U.K., and Escort Memory Systems of the United States, which produce the RFID tag or finished label.

In May, Philips became the first semiconductor company to announce plans to produce microchips based on drafts for the GTag standard. GTag, which stands for Global Tag, is an initiative launched by EAN international and Uniform Code Council, two nonprofit organizations that represent users of bar code and RFID technology. Many companies have been reluctant to invest in proprietary RFID systems for fear their tags will be incompatible with supply chain partners or would quickly become obsolete.

"GTag is giving customers the confidence that what they invest in now will be the right choice," says Kienzl. "They can invest now knowing that everything that comes out in the future will be backward compatible with what they already have. And with standardization, they no longer have to rely on one supplier."

Philips is also a member of the Auto-ID Center, which is developing its own specifications for reading electronic product codes (EPCs) off of RFID tags and labels. Kienzl sees no conflict between supporting the two efforts. "Both initiatives are fully in line with our strategy to support globally standardized platforms," she says. "UCC/EAN are a major contributor to the work of the Auto-ID Center, and they are taking care to ensure that the EPC and ISO 18000/GTag will have the best fit."
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