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ID Cards Drive RFID Demand in China

News Factor | August 30 2005

Analysys International considers mastery of core techniques to be a critical direction at this stage, one which will provide possibilities for further cost reduction and product differentiation in the future.

Rapid growth in China's radio frequency identification market continues with a Beijing firm saying second-quarter 2005 sales of US$27.9 million were twice those in Q2 2004.

In its recently released report, "IT product and service, Chinese RFID Market Data monitor for Q2 2005," Analysys International said government-sector purchases are driving the product segment.

The firm says the nationwide launch of second-generation national identification cards in China is the most important reason for rapid growth in 2005. ID cards and related products accounted for 38 percent of the RFID market in the second quarter.

Analysys International notes RFID applications have reached a good momentum in fields where it is currently applied on a large scale, including public transportation, the second-largest sector of demand with 14 percent of the market. School campuses ranked third with 11 percent, followed by property/residential use at 8 percent and both highway use and e-ticketing sectors each taking 7 percent.

At a time when RFID applications are starting to expand, the Beijing-based consultancy believes market development is still restricted by many factors, including sustained high costs, lack of a unified standard and immature supply chains and support links. All these problems are still unsolved, creating barriers for large-scale acceptance of RFID.

Bryan Chen, an analyst with the company, believes that a series of unsettled bottleneck problems remain and that RFID product and service providers need to focus on developing closed-loop products without defined standards in order to accumulate project and product experience as well as budget resources for further development.

The company considers mastery of core techniques to be a critical direction at this stage, one which will provide possibilities for further cost reduction and product differentiation in the future.

In a press release the company said, "Structural changes in application fields are also changing the percentage of RFID products in each frequency band, among which the high frequency products, represented by 13.56M for the second generation ID cards, increased greatly."

Meanwhile, low-frequency products that are comparatively more mature in application are expected to maintain relatively stable growth. Ultra-high frequency products, quite small in terms of market percentage, are adopted for application gradually, based on advancements in high-speed and long-distance recognition, the firm says.

Analysys International is predicting the RFID market will grow sharply during the third quarter, spurred by more ID cards being issued and seasonal demand such as new students returning to school.

 

 

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