Tue, Apr 13, 2004 - Page 11 News List

New field promising for Taiwan

THE EDGE Taiwan is well positioned to succeed in the radio frequency identification industry, which has existed since the 1980s but is only now getting ready to take off

By Amber Chung  /  STAFF REPORTER

Because of the advantages it enjoys in several aspects of the chip industry -- design, manufacturing, packaging and testing -- Taiwan has the potential for rapid development in the evolving radio frequency identification (RFID) sector, industry insiders said yesterday.

"RFID is not a new technology but an evolving one," said Michael Wu (吳柏成), planning and business promotion director of the Industrial Technology Research Institute's (工研院) Center for Aerospace and Systems Technology.

RFID first appeared in tracking and access applications in the 1980s. The wireless automatic identification and data-capture system uses radio transmitters (readers) to decode data stored in transponders (tags) at distances ranging from a few centimeters to about 25m.

The technology can be used to track assets, manage inventory at retailers, authorize payments and -- increasingly -- serve as electronic keys for everything from cars to secure facilities.

RFID has been adopted in several fields, including livestock identification and automated vehicle identification systems, because of its ability to track moving objects.

Wal-Mart demanded last year that some of its suppliers adopt the technology.

Hewlett-Packard Co, which is considering setting up a research and development center in Taiwan, will follow suit by embedding RFID chips on its printers beginning next month and its notebooks in August.

As the cost of each tag can be as high as US$10, the technology is suitable for industries in which it is cost-effective, such as pharmaceutical management in hospitals or management of military goods, Wu said.

"The application of the technology could boom in the next two to three years," he said.

The demand for cheaper tags could boost research and development which in turn would help hardware makers prosper in the coming years.

"Some original equipment manufacturers of RFID tags and readers already exist in Taiwan ? with estimated annual production at NT$5 billion (US$152 million) to 6 billion," Wu said.

The industry veteran said he hopes local companies evolve as the technology takes off in the future.

ITRI announced last month that it had for the first time developed self-designed RFID chip and had received orders for 50 million tags from Japan.

It established an association, the RFID Research and Industrial Application Consortium, last month, to promote the development of the technology, attracting 135 enterprise members, including Tatung Co (大同) and United Microelectronics Corporation (聯電).

"Taiwan has formed an embryonic supply chain in this domain, eyeing the bright future of the technology," said Sophie Lin (林曉盈), a researcher at Taipei-based Topology Research Institute (拓墣產業研究所).

The global RFID tag and reader market is estimated to reach US$4 billion this year and is expected to grow to US$7 billion in 2006, according to New York-based consulting firm Frost and Sullivan.

The supply chain ranges from chip design to back-end system integration, Lin said.

Companies involved in the sector include Inmax Technology Corp (瑛茂) for chip design; Hon Hai Precision Industry Co (鴻海精密) and Wistron Corp (緯創), which manufacture chips for HP and IBM Corp; as well as system integration service providers like Acer Co.

"We predicted a bright future for the technology and made inroads into the sector around two years ago," said a product manager at RFID-reader maker Sunlit System Technology Corp who asked to remain anonymous.

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