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The total RFID market worth is predicted to reach some US$7.26 billion in 2008, according to new research from IDTechEx, which examines the current and future RFID market up to 2015, and analyses the development and application of RFID, smart packaging, and printed electronics during that time.

The report, 'RFID Forecasts, Players & Opportunities 2005-2015', revealed some surprising new disruptions for the industry. The bottom line is that 2005's global market for RFID including tags, systems and services rests at US$1.94 billion but that it will be driven by demand and new laws to some US$26.90 billion by 2015.

Already to date some 1.8 billion RFID tags have been sold worldwide, with the heaviest volume applications for the technology being in markets such as access cards for the financial, security and safety markets, and for the automotive and passenger transport sector. Smaller markets included leisure, libraries, laundry and healthcare.

Chip/chipless tag sales
Most of the tags sold had a silicon chip in them, making them clever but delicate - and relatively expensive in many cases. Sales of chipless tags however, have been relatively small when compared to sales of chip tags. A breakdown of RFID sales by tag type (to the end of 2004) can be seen in Table 1:

Tag type	Cumulative global sales (billion)	Highlights
Chip	1700	Cards; Car clickers
Chipless	100	HID secure access cards; AstraZeneca labels on syringes

Active/passive tag sales
Another way of looking at the sales of RFID tags is to consider those that have a battery in them (active tags) versus those without a battery (passive tags). Table 2 shows a breakdown of this split. Most of the active tags have a coin cell battery in them, otherwise called a button battery, and are not really suited to reel-to-reel production.

Tag type	Cumulative global sales (billion)	Highlight
Active	410	Car clickers
Passive	1390	Cards

Future applications
The future looks very different from the past, according to the IDTechEx research, which suggests rapid growth in RFID technology. Table 3 shows the projection for RFID tag growth leading up to the year 2015:

Application	2005 (billion)	2010 (billion)	2015 (billion)
Item level	0.5	27.0	1,000.0
Pallet/case level	0.4	30.0	35.0
Other	0.4	5.7	12.5
Year's total	1.3	62.7	1,047.5

Emerging markets
After addressing technical problems with UHF technology, 3.1 billion tags are expected to be used for pallets and cases in 2006. Item level tagging (especially by pharmaceutical suppliers) and tagging of baggage, animals, books, tickets and other non retail markets are also growing in value: in 2008 some 6.8 billion tags are expected be sold for these applications, and 15.3 billion tags for pallets/cases - but the former value will be higher than that of pallet/case applications.

The market for RFID interrogators is forecast to reach US$1.14 billion in 2008 for EPC interrogators and US$0.75 billion in the same year for other interrogators (such as Near Field Communication interrogators) - a total value for 2008 of US$1.89 billion in RFID interrogation devices.

Forecasts by region
Forecasts by territorial region show that, by 2010, 48% of RFID tags (by numbers sold) will be in East Asia, followed by 32% in North America. Deliveries and orders in 2004 were significantly up on the year before. Even if one (incorrectly) considers the RFID tag to be nothing more than a barcode replacement, such figures are not necessarily unrealistic because there are somewhere between 5 and 10 trillion barcodes printed in the world every year. However these tags will not reach the 10 trillion level before 2020 at the very earliest, where they will need to cost less than US$0.01 each, and be entirely printed (like a barcode is today).

Disruptions, not trends
The growth curves do not extrapolate indefinitely. The research showed that the highest volume applications of RFID will mimic barcodes (where the 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, mainly because of strong price erosion. IDTechEx foresees the same problem happening with RFID but on longer timescales, and with one important difference: the printed radio barcodes will not use the same ink as the graphic printing, in contrast to directly printed barcodes. There will be a growing and lucrative market for the electronic inks used to print RFID tags onto labels and directly onto products and packaging.

Tag prices
Researchers at 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. They believe instead that technology giants such as IBM, Xerox, Dai Nippon Printing and Samsung (which are developing chipless alternatives, such as polymer transistor circuits and Surface Acoustic Wave devices) may be on a better tack for the long term.

However, US$0.05 tags are 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 (potentially accounting for trillions of tags each year), postal packages (potentially 650 billion each year) and books at manufacture (some 50 billion each year) mainly use one cent and sub-one cent chipless tags in due course.

Chip makers revolt
IDTechEx says that several RFID chip manufacturers have already said that they have no interest at all in producing the required sub-one cent chips for the much sought-after five cent tags, but that they are looking for less price sensitive, more sophisticated and larger niche markets to supply. The report goes into significant detail on these suppliers and potential markets.

So what are these billion dollar, billion tag niches? Such opportunities run into at least tens of billions of tags each year, and disproportionately large sums of money are needed for 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 anti-counterfeiting.

The report also covers the timelines for these niche markets, and many examples of "legal push" are also examined, such as the probable tagging of one billion vehicle tyres each year using embedded RFID devices that can also sense the tyre's air pressure. The report also looks in some detail at potential under- and over-supply in all parts of the RFID value chain. Industry is not responding in to the challenges in a way that evenly addresses all needs.

Item-level's near future
The report predicts that item level tagging, particularly of drugs, will rival the output of pallet and case tagging in 2005, despite hype over the latter programmes. With the world's leading technology companies such as Hewlett Packard, IBM and Samsung working on UHF problems, they will be solved soon enough - 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.

Battle of the bandwidths
By contrast, Pfizer, GlaxoSmithKline and other major pharmaceutical companies decided to start tagging certain products on a permanent basis in 2005. Their tags are not all based on UHF and some favour the better-proven 13.56MHz waveband used with almost all item level tagging and contactless smart cards to date (there are around 1 billion such items globally, all working perfectly well). The range of UHF is rarely needed at item level. Indeed, the global courier DHL has recently ordered its first million tags for postal packages, operating at 13.56MHz.

For information about obtaining the report, contact IDTechEx directly.

More Info:

http://www.idtechex.com

Source: IDTechEx