RFID Changes Course
The main emphasis of RFID use and supply has radically changed course. That was the message of the large IDTechEx RFID Smart Labels USA event in Boston in February. The business is booming in just about every sector other than the supply of pallet and case tagging to retailer and military mandates, where there are two problems. A severely uneconomic price level has been established by suppliers for the tags, readers and chips and they still do not work reliably on obscured cases in a pallet load, where wet, metallic and glass items are involved ie most of what is sold in a supermarket. Yet users Michael Okoroafor of Coca-Cola and Leslie Hand of Ahold declared that they are determined to solve the problem somehow.
China leaps ahead
For the first time this year, the US is no longer the biggest RFID market. It is China, thanks to huge orders for HF RFID card systems for National ID and e-cash in cities and orders for secure access at LF. Animals are also a big emerging market out there, with legal push highly likely soon. Despite almost the whole of the rest of the world standardizing on LF for animals, Sparkice of China described pig tagging at HF because its HF tags for this purpose are 35 cents and will be 17.5 cents within one year - a far cry from the $2 LF animal ear tag in Australia and the West.
HF still the most popular frequency
HF is also rapidly replacing LF for laundry and very metallic objects such as beer kegs and gas cylinders, again on price, with TAGSYS, now headquartered in the US, being a leader. Masterclass delegates visited their facility. Indeed Ahold reported 100% reads for TAGSYS tags on Pfizer drugs, where it is currently the exclusive supplier. Where HF is replacing LF for secure access and race timing, DAG System of France is a leader. All delegates used its access gate. HF remains by far the most popular frequency by money spent and profits made.
Chinese suppliers gear up for exporting later
IDTechEx noted that several Chinese RFID suppliers have now entered the top ten in the world and, gorging on the huge Chinese market, they will be ready in a few years to take on exports with massive economies of scale already in place. This year, China may order as many HF library tags as the rest of the world combined and it has already placed a large order for HF RFID tickets (potential 3 billion yearly). For now, the orders are being placed very widely across Chinese industry but Watchdata and Datang Telecom are among the leading Chinese suppliers. Despite Huahong and other chipmakers getting some of the action it is the European NXP that makes most of the chips for RFID in China - mainly HF. Motorola is having success selling UHF RFID systems into China, notably to China Post.
Successes at UHF
UHF is making inroads elsewhere. The presentation by the leading UHF chip company Impinj particularly impressed the audience. The IATA UHF standard for baggage tagging has resulted in satisfactory RFID implementations in many airports, said Andrew Price of IATA, so much so that IATA will now mandate its use by leading players in the industry, powering this to a two billion tags a year market.
The biggest apparel tagging orders are still being placed in the UK, not America, and it is the Japanese that are close behind.
The Netherlands continues to lead in tagging books in bookshops and all these applications are easy with UHF because there is no dense reader environment, no water and little metal to contend with.
Odin technologies, flushed with its $15 million military UHF order, was a talking point at the exhibition.
Marubeni described Yodobashi stores in Japan mandating over 30 suppliers to UHF tag pallets and cases. This is the largest UHF project in Japan. Marubeni’s use of HF on medical waste may be superceded by a UHF solution. However, 40 libraries have HF tags on books and that expansion will continue.
Incheon Airport in Korea was reported as using UHF on freight now and Gaesong Industrial is putting RFID on people, vehicles, freight and medical waste, mostly at UHF, 57 major hospitals being involved.
Rolls Royce said it got 100% reads with RFID when the tag was carefully orientated on cases and not obscured and Alien readers and tags were used.
Real Time Locating Systems
Real Time Locating Systems RTLS came up as a booming market. For example, oil company BP described a nice application for personnel evacuation using the new Ultra Wide Band RFID from Multispectrum Solutions. However, this form of active RFID is now mainly at 2.45GHz. Indeed the whole active RFID stream at the conference attracted great interest. Caterpillar described tracking karts with 433MHz Wavetrend systems.
Coping with multiple frequencies
BP uses most of the RFID frequencies as appropriate in a wide variety of applications from secure access to hazardous chemicals. Strangely, for the second year running, major blue chip users of RFID were again pleading for universal multi-frequency readers and still there seems to be no supplier that is listening. Indeed, the inconsistency of wanting to create a billion dollar RFID supply company yet sticking to only one frequency has yet to dawn on many suppliers.
Replacing the silicon chip
Another hot topic is chipless tags, with many now abandoning hope of tags with a chip in them ever sustainably achieving less than a few cents in price and therefore more than 100 billion units yearly in sales. Here, two new chipless tag technologies were announced that work at 60 GHz and others at frequencies that are secret. By contrast, the printed transistor option described is being launched this year at the world’s most popular frequency HF. However, none can meet the complex Gen 2 UHF and planned EPC HF specifications in full and there was much talk of these specifications being overkill for the mass market. Promised chipless tag prices were often in the 0.1 to one cent region but technical problems remain such as multi-tag reading and sensitivity to orientation at microwave frequencies. There is now talk of writing chipless tag specifications, with the printed transistor “plastic chip “ people such as PolyIC, who presented, in the lead.
Chasing success
Other hot topics were the race to make mobile phones act as RFID tags and readers, where Japan leads and HF is the global standard but the Koreans told us they use UHF. Supplier Motorola described the scene. Clearly the race is going to the adaptable RFID suppliers with global reach. The largest recent RFID orders that were reported included such curious things as ten meter LF readers for counting salmon in US rivers, HF card systems for mass transit in the Philippines, HF rail tickets for Russia and tagging rail trucks in South Africa. Contrast the disappointments in other areas with the FDA refusing to decide on the frequency and other characteristics of drug tagging, crippling that nascent market and Michelin reporting that, at customer request, they have to retain up to 14 paper labels on tires even though RFID can replace them. They now see this RFID opportunity in tires being confined almost entirely to trucks for the foreseable future.
Wealth being created
Nevertheless, there are so many excellent exits occurring for investors in RFID companies and there is so much evidence that billion dollar suppliers will emerge that fund raising and searches for investment targets are roaring ahead. The Investment Forum at the conference was a huge success.
No one doubts that $5 billion is being spent on RFID this year and that that figure will more than quintuple by 2017. Of the 2007 figure, IDTechEx sees 40% in China. Indeed Sparkice of China independently said 30-50% ongoing. To cut it another way, IDTechEx calculates that 40% of sales come from only eleven companies and, in the main, these are not famous in the RFID industry. They include Assa Abloy (secure access and ID), Lockheed Martin (Military and heavy logistics), ERG (mass transit), Allflex (cattle), Mark IV Industries and TransCore (road tolling and heavy logistics), NXP and the Chinese suppliers we mentioned earlier. RFID has changed course. Many of the 1000 other suppliers that share the remaining 60% of the market need to reconsider where the market is leading them.
By Dr Peter Harrop
To learn more read RFID Forecasts, Players, Opportunities 2007-2017 by IDTechEx and attend Printed Electronics Europe Cambridge UK April 17-18, RFID Europe 2007 September and Active RFID and RTLS USA December 2007 www.idtechex.com.
