Radio-frequency ID: Asian impediments

Brian Bremner
11 Oct 2006
00:00

Asia's fabled image as the workshop of the world should augur a vibrant market for radio frequency identification (RFID) systems. After all, given the region's leading role in global manufacturing, these systems that enable data to be transmitted instantly by a mobile device, or tag, could radically improve the way inventories are managed and supplies are moved from manufacturer to user. It could even be employed to track poultry in a part of the world thought vulnerable to upheaval from a sudden avian flu outbreak.

Yet, compared with the U.S., major Asian economies have been slow to adopt these systems in a big way, though that is starting to change. The RFID tag market in Japan, South Korea, and China is estimated at about $200 million and is expected to reach $469 million by 2012, according to research outfit Frost & Sullivan. In North America, this market is already $1 billion and is on track to hit $4 billion by the end of the decade.

In the U.S. and Canada, growth in this tracking technology is being powered by demand for tighter security, improved manufacturing logistics, and more efficient supply-chain management. Those same needs exist in Asia, but slow adoption of workable standards and a dearth of necessary airwaves have been a huge impediment, particularly in China, where the RFID tag market was all of $60 million in 2005.

'The development of the Chinese RFID market is being restricted by inconsistent standards of frequency allocation that have created issues of interoperability between vendors,' says Parul Oswal, a senior research analyst with Frost & Sullivan. However, she sees that changing now that regional governments are waking up to the security and economic advantages of RFID technology.

HIGH-COST JAPAN.

HIT

) has developed chips for this market, and NEC (

NIPNY

) has developed reading machines. The Japanese units of IBM (

IBM

) and Hewlett-Packard (

HPQ

) are bolstering RFID tag-related businesses in the country, too.

One problem with RFID tags in Japan is cost, according Tektronix's Sega. Unit cost for RFID tags has fallen below 10 yen (or 8.5 cents) but really needs to be driven below 1 yen to be embraced in a big way.

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