'RFID carries unconditional guarantee of success' - Study

07 Feb '09

17 min read

In regional terms, North America still contributes a considerably larger share of revenues than Europe, and far more than Asia. However, with the shift in market shares of individual RFID components and the exodus of production of less sophisticated products from the high-wage countries, Asia may be able to surpass not only Europe in terms of RFID turnover by 2016, but also the US.

Summary:
All things are in flux. RFID heading for new shores:
To be able to hold their own in international competition, producers, transport service providers and traders have to keep close contact and exchange relevant information along the worldwide value chain. RFID radio chip technology will play a key role in the job of securing their competitiveness. Accordingly, more and more companies are considering their options for using RFID in their line of business. The projects implemented in production, trade and the transport industry highlight the potential that can be realized with RFID in the private sector – initially for the company applying it itself, but subsequently also for the economy as a whole.

RFID is leading to the development of a multitude of innovations in the economy – process innovations in particular. But by no means will every RFID project driven by a technological vision necessarily become a commercial success for the user. Besides the much discussed significance of falling chip prices a raft of other factors will be instrumental long term in shaping the commercial success of RFID.

These challenges will not be mastered as quickly as originally anticipated. The progress achieved over the past few years is still pretty minor in respect of many different issues. This suggests that the market was unable to achieve the astounding growth rates forecast by some research institutes only a few short years ago. Nevertheless, because of the enormous interest on the demand side we expect RFID suppliers to flourish. In this favourable environment RFID turnover is set to grow by 19% p.a. on average in Germany between 2006 and 2016, and in fact by 25% p.a. worldwide.

With the shift in market shares for individual RFID components and the exodus of production of less sophisticated products from the high wage countries, Asia is likely to contribute an ever increasing share and become the continent with the highest turnover by 2016.

Deutsche Bank Research

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