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Infineon maintains pole position in smart card IC market
A strong presence in government ID and payment applications has helped chip maker Infineon to keep its top position in the market for smart card ICs. A study of market research company Frost & Sullivan names drivers and restraints in this competitive market.
According to Frost & Sullivan, Infineon led the market in 2008 again with a share of 25.5 percent by revenue, slightly ahead of Samsung with 22 percent. Renesas and NXP followed with 15.3 percent and 14.5 percent. STMicroelectronics and Atmel achieved market shares in the single-digit percentage range with 9.6 percent and 6.2 percent respectively.
Market drivers were SIM cards, in particular in implementations with high-capacity memory for smartphones, and government applications where electronic passports and identity cards boosted demand. Also the increasing trend towards internet-based transactions was a factor that had positive effects on demand, Frost & Sullivan says. Infineon sees an additional market driver: The replacement of conventional payment cards with magnetic stripe against smart card-based solutions is underway, albeit the financial crisis led to major delays in the roll-out process. In emerging countries, the combination of micro payment cards with biometric technologies also promises strong growth, the market researchers say.
Factors that potentially impede market growth are the high costs. Despite continuing decline in manufacturing costs, smart cards still are more expensive than conventional cards. For this reason, business cases have to be tailored carefully.
The notions about price stability however are drifting apart. While Frost & Sullivan believe that SIM cards for mobile phones still are dominating the market and proved to maintain their growth potential irrespective of the economic environment, sources from Infineon said price pressure in this segment is continuing. According to Infineon, margins are highest in government applications where high security level is critical. Also from Frost & Sullivan's perspective, government projects are the place to be for market participants to secure growth.
In terms of regional distribution, Frost & Sullivan sees Europe clearly ahead of other regions: Almost 60 percent of the world's smart card chip revenue of $2.4 billion has been achieved in the EMEA region, followed by Asia Pacific (36.1 percent). The Americas lag with 4.1 percent of the world's revenue.