Dec 31, 2021The radio frequency identification industry is predicted to be worth $12.2 billion in 2022, according to a market research report from IDTechEx, signaling continued growth despite the ongoing COVID-19 pandemic and the resultant global supply chain challenges. That comes in the face of a semiconductor shortage that is causing some RFID companies to start raising prices. The report, titled "RFID Forecasts, Players and Opportunities, 2022-2032," is an annual analysis examining both passive and active RFID technologies across all vertical markets, with projections for the coming decade.
The group covered RFID tags, readers and software, and it gained insights from market research, interviews conducted with the companies that provide these products, and the technology's users. Included in the study were 125 kHz low-frequency (LF), 13.56 MHz high-frequency (HF) and Near Field Communication (NFC) technologies—compliant with the ISO 15693 and 14443 standards, respectively—and ultrahigh-frequency (UHF) RFID, as well as active (battery-powered) proprietary systems, real-time location systems (RTLS) and active RFID sensors. Other Internet of Things (IoT) technologies, such as Bluetooth Low Energy (BLE) and low-power wide-area networks (LPWAN) were discussed in the RFID research but were not part of the forecast.
Yu-Han Chang
IDTechEx has been tracking RFID trends for the past two decades. The forecasted growth for next year follows a 5 percent decline between 2019 and 2020. The firm found that the industry was valued at $11.6 billion last year. For 2022, the group identified that the RFID market has bounced back in the midst of the pandemic and supply chain problems. That has been led by the further adoption of UHF RFID technology for retail apparel and footwear, according to Yu-Han Chang, IDTechEx's technology analyst. The latest study finds that the retail apparel market alone will demand more than 20 billion RFID labels in 2022, she says, amounting to approximately 26 percent of the apparel market, meaning there is still considerable room for growth.
The demand for HF RFID is growing predominantly for contactless payment and transportation applications, Chang says, as well as for access control, with 2.6 billion HF- and NFC-enabled payment cards sold this past year. The LF RFID market has demanded 640 million tags for animal tracking in that same span of time. Altogether, the report finds that 28.4 billion passive RFID tags were sold in 2021. On the active side, battery-powered RFID tags are being used to track assets in industrial environments for manufacturing and aerospace applications. The continued growth of RFID in retail is being expanded from apparel to other products, Chang reports, such as cosmetics, electronics and food.
"We find that retail continues to expand well beyond apparel and footwear," she says, though the number of RFID tags in non-apparel retail is just 5 percent of those provided for apparel. She adds that some RFID companies are investing in the re-commerce or re-selling market in retail. Some of the growth is being fueled by the pandemic, IDTechEx reports, even after COVID-19 initially had a negative impact on RFID adoption. "There has not been a protracted recovery after COVID-19," she says. Instead, the RFID industry is returning to growth in 2021, though IDTechEx forecasts that the global chip shortage challenge will linger into 2022.
Initially, Chang says, the chip shortage didn't affect RFID business. "Many companies had prepared for that in terms of stockpiling," she explains, which has helped especially larger RFID companies meet customer demands. "What they have experienced in some cases is that supply is falling short," and companies have had to raise their prices. "It is hard to pinpoint when this issue will be resolved." The study anticipates that 2023 will see a resolution, while the market is now improving, and she speculates it will continue to do so. It's very dynamic, she says, and is subject to political and economic changes.
Active RFID use is also growing in industrial markets as IoT continues to accelerate. The technology has been a multi hundred-million-dollar business for several decades, Chang says, and has been used to track vehicles or personnel for safety purposes, or to monitor assets in smart-city deployments. Nevertheless, the report finds, active RFID faces competition from a variety of other IoT systems, including LPWAN technologies such as LoRa, Sigfox and NB-IoT, as well as 5G technologies and BLE.
IoT growth is creating technology demand, Chang says, but the number of different communication technologies competing for each use case is relatively wide. "We also see some national governments have support for IoT," she states. This includes China, which published a key performance indicator (KPI) plan aimed at driving the IoT connection rate above 200 percent. In terms of connecting devices, that means a larger demand and more competition. The IDTechEx report compares the attributes of proprietary active RFID systems with those of other primary IoT technologies.
Meanwhile, the RFID companies themselves have continued to reorganize, with acquisitions conducted throughout the past year as firms have purchased other businesses to expand their own offerings. Some companies that continue to regularly make acquisitions include HID Global, which has acquired three companies within the past year. Motivation is typically a matter of extending into industry verticals, consolidating market share or increasing market presence around the world, Chang says, in addition to augmenting portfolios. Their goal is to strengthen existing products and expand market presence.
The RFID industry can use several avenues to continue technology growth, the study found. For one thing, Chang predicts ongoing, application-specific standardization will help continue the progress of RFID adoption. For instance, the pharmaceutical industry is employing standards to track item-level drugs from the point of manufacture to a patient. Standards ensure that adoption by drug companies and distributors is interoperable. Similarly, the airline industry's International Air Transport Association offers standards related to baggage tracking, with UHF RFID tags being attached to luggage to track its movement from departure airport to destination site.
In retail, Chang says, "The business use cases are very well proven, so retailers are using a cookie-cutter approach to rollout RFID across stores." Education will be another requirement to drive further growth, she predicts. Consortiums such as the RAIN Alliance and the NFC Forum are poised to provide information required for potential users to understand the technology, as well as its costs and benefits. These days, many businesses might not understand the return on investment, Chang says, or how RFID could benefit their company.
According to Chang, marketing and education need to be driven by alliances and organizations, as well as by technology companies. "People are confused with so many wireless technologies out there," she states. "The interest is high," she says, but how much of that interest is directed to other wireless technologies is yet to be seen. "Some business cases take a long time to make decisions. Others may take up adoption faster."
