A new market research report covering RFID from 2006 to 2016, researched by IDTechEx, reveals some surprising new disruptions. The bottom line is that this year's global market for RFID including tags, systems and services is $1.94 billion but it will be driven by demand and new laws to $24.50 billion in 2015.
1.8 billion RFID tags have been sold to 2005. Key volume applications for RFID technology have been in markets such as access cards for the financial, security and safety markets, or for the automotive and passenger transport sector, with smaller markets in leisure, libraries, laundry and healthcare.
Another way of looking at the sales of RFID tags is to consider those that have a battery in them, called 'active tags' versus those without a battery, called 'passive tags'. This is split as follows. Most of the active tags have a coin cell battery in them, otherwise called a button battery, and are not exactly suitable for reel-to-reel production.
Active tags: 410 million (highlight: car clickers)
Passive tags: 1390 million (highlight: cards)
The future is very different from the past
After addressing technical problems with UHF, 3.1 billion tags will be used for pallets and cases in 2006. Item level tagging (especially by pharmaceuticals) and tagging of baggage, animals, books, tickets and other non retail markets are strongly growing in value - in 2008 6.8 billion tags will be sold for such applications and 15.3 billion tags for pallets/cases, but the former tag value will be higher than that for pallets/cases.
The market for RFID interrogators will reach $1.14 billion in 2008 for EPC interrogators and $0.75 billion in the same year for other interrogators, such as Near Field Communication interrogators.
Forecasts by territorial region show that by 2010, 48% of RFID tags by numbers will be sold in East Asia, followed by 32% to North America.
Deliveries and orders in 2004 were sharply up on the year before. Even if one wrongly considers the RFID tag to be nothing more than a barcode replacement then such figures are not necessarily unrealistic, because there are somewhere between five and ten trillion barcodes printed in the world every year. However, these tags will not reach the ten trillion level before 2020 at the very earliest, where they will need to cost less than one US cent and be entirely printed, like a barcode is today.
Disruptions not trends
The curves do not extrapolate up and up. The research showed that the highest volume applications of RFID will mimic barcodes where a market for barcode labels grew then declined as barcodes were printed directly onto products and packaging. The value of that label market peaked before the annual numbers sold reached a peak. That was because of strong price erosion. IDTechEx sees the same occurring with RFID but on long timescales and with one difference. The printed radio barcodes will not use the same ink as the graphic printing in contrast to directly printed barcodes today. There will be a growing and lucrative market for electronic inks used to print RFID tags onto labels and directly onto products and packaging. IDTechEx estimates these timescales and volumes.
One cent tag controversy
IDTechEx doubt that the necessary one cent tags needed for tagging everything in the supermarket - the largest volume potential for RFID - will be profitably achieved with silicon chips within ten years if ever. It believes that giants such as IBM, Xerox, Dai Nippon Printing and Samsung that are developing "chipless" alternatives such as polymer transistor circuits and Surface Acoustic Wave SAW devices may be on a better tack for the long term.
Five cent chip tags seen as a certainty
Chip tags are certain to get down to five cents as orders approaching ten billion tags are placed. Chip tags can also address enormous secondary markets, even if Consumer Packaged Goods (potential trillions yearly), postal packages (potential 650 billion yearly) and books at manufacture (50 billion yearly) mainly take one cent and sub one cent chipless tags in due course.
Several chip manufacturers have approached IDTechEx saying that they have zero interest in producing the required sub one cent chips for five cent RFID tags but they do seek less price sensitive, more sophisticated large niche markets in RFID. The new report gives great detail on these.
Billion dollar, billion tag niches
Such opportunities run into at least tens of billions of tags yearly and disproportionately large sums on infrastructure and services. The large niches are often new RFID markets coming from nowhere, not extrapolations of past trends. They include:
- The South Korean Ubiquitous Sensor Networks USN projects backed by the South Korean government for monitoring natural disasters and for many other uses
- The tagging all patients, staff and assets in healthcare facilities worldwide for error prevention and other reasons
- Antiterrorism measures in global logistics
- Meat and livestock tagging in the face of new legislation against disease
- Tagging of high value banknotes and drugs for anticounterfeiting
Timelines are given for all of these. Many examples of legal push are examined such as the probable tagging of one billion tires yearly with embedded RFID devices that also sense pressure.
Item level coming sooner than realised
IDTechEx believes that item level tagging, particularly of drugs, will rival the output of pallet and case tagging in 2005 despite the hype about the latter programs. With the world's leading companies such as Hewlett Packard, IBM and Samsung working on the UHF problems, they will be solved but any forecaster must reflect the fact that Gillette and others see the physics being so tough that they must redesign the geometry and materials of a significant percentage of their cases and their contents to make them "UHF" friendly while the systems are being optimised. Such nuclear options are neither cheap nor rapid.
By contrast, Pfizer, GlaxoSmithKline and other major pharmaceutical companies have decided to start tagging certain products on a permanent basis in 2005. They are not all hooked on UHF and some favour the more proven 13.56MHz waveband used with almost all item level tagging and contactless smart cards to date - about one billion items out there and working well. The range of UHF is rarely needed at item level. Indeed DHL has ordered its first million tags for postal packages and they work at 13.56 MHz.
In such a frenzy of success and failure, forecasting is a risky business. Who predicted that only modest quantities of pallets and cases would be tagged in 2004 but orders for over 150 million RFID air baggage tags would be placed? Who in the West noticed that 50 million RFID tickets were delivered against just one order in Japan? It will be interesting to see if IDTechEx has picked up once again more of what is really going on and has produced more useful forecasts in this notoriously changeable field.
For further information, see the new IDTechEx market research publication, which this data is also taken from, RFID Forecasts, Players & Opportunities 2006-2016 at www.idtechex.com, published in January 2006.
Learn more at the next leading event on the topic: Printed Electronics USA 2019 on 20 - 21 Nov 2019 at Santa Clara Convention Center, CA, USA hosted by IDTechEx.