Continued Growth: IDTechEx's Latest Analysis of the RFID Market
Recently, the UK's leading research firm IDTechEx disclosed the latest edition of its RFID industry research report, which shows that the radio frequency identification (RFID) industry will continue its current growth trajectory, with the market value expected to reach $14 billion in 2023, up from $12.8 billion last year. This market value includes paper labels, cards, smart keys and tags, as well as readers, software and solutions for active and passive RFID technology, the company said. Of these, IDTechEx says the RFID tag segment accounts for the largest share, about more than half of the overall RFID market.
IDTechEx reports that the UHF RFID market is primarily driven by the footwear and apparel sector, which accounts for 64% of the market share by number of tags and approximately 72% by value. The company also says that nearly 24 billion RFID tags are expected to be used in footwear and apparel retailing by 2023, while the total potential market for footwear and apparel is expected to reach approximately 80 billion tags per year, which also suggests that the footwear and apparel industry has plenty of room for growth. According to IDTechEx, the maturity of the ecosystem in the footwear and apparel sector and quality solutions from solution providers are critical to the successful adoption of RFID technology.
In addition, low cost, quality infrastructure, and other advantageous categories such as improved inventory monitoring, better customer service, and access to new marketing information are also contributing to the widespread adoption of UHF RFID technology in footwear and apparel applications. And other retail sectors, such as electronics, soft furnishings and home appliances, are also expected to show strong growth in RFID tagging, largely driven by Wal-Mart.
While other industries have been relatively slow to roll out RFID technology compared to tagging retail apparel, growth is also expected in the supply chain and logistics sectors, which IDTechEx says will account for 22% of the market share by tag volume and 14% by market capitalization. This is largely due to the accelerated adoption of UHF RFID technology as a result of the outbreak, the increasing digitization of industries and the continued reduction in the cost of tags are all contributing to the growth of the UHF RFID market.
The IDTechEx report also states that the RFID market is expected to continue expanding in the coming years, driven by various factors. These include, but are not limited to, epidemics, cost reductions, and lighthouse programs that demonstrate the potential of RFID technology to improve operational efficiency and productivity. However, the company also objectively pointed out that the UHF reader network is still in a commercial tool, and the cost of smart readers is mainly aimed at industry use, rather than consumers.
Next, IDTechEx talked about the HF RFID space. The company said that HF RFID is being used in areas such as secure access, transportation applications, and electronic payments, and that it expects to sell about 5.1 billion HF tags this year, which equates to a market value of $5.2 billion. Despite the smaller size of the tags, the HF tag market value is greater than the UHF tag market value due to the higher average selling price (ASP) of HF tags. Meanwhile, contactless cards and remote keys are dominating the HF market, but this market is expected to decline in the medium term as emerging digital methods such as mobile payments and QR codes rapidly gain popularity. The second largest market for HF tags by value is passports.
IDTechEx predicts that near-field communication (NFC) applications outside of payments will continue to grow to hundreds of millions of tags in use by 2023, although the majority will still be relatively small deployments in many programs such as Bluetooth pairing, gaming, and smart packaging, the latter of which is projected to have the highest number of shipments. However, the company noted that no NFC provider has yet demonstrated sufficient return or value for large-scale deployment of NFC on smart packaging at current NFC tag prices. NFC tags are said to need to be priced at less than 1 cent per tag before they can be widely used in packaging, compared to the current price of around 6 cents.
Overall, the RFID market is expanding year-on-year, even though it is currently facing various hurdles, including global supply chain issues and macroeconomic conditions.IDTechEx found through interviews that most companies believe the situation will improve by early 2024. The recession has caused some industries to reduce their purchases of RFID tags, especially in some innovative projects, which could slow the market's growth. Additionally, the RFID industry must address its shortcomings for continued improvement, including reductions in areas such as education, regulation, and ecosystem building, as well as costs, to ensure sustainable growth.
