Competition heats up in smart-cards

LONDON — Competition in the smart card market remains as fierce as ever for applications including SIM cards, ID, access, payment & banking cards, transportation and pay TV, according to market research group IMS (Wellingborough, England).

The total market is said to have grown by a healthy 16.7 percent last year in terms of volumes. "This meant that there was plenty of room for companies to manoeuvre and try to gain some initiative with regards to developing new opportunities," commented John Devlin, research director in charge of financial and identification technologies at IMS.

Number three smart card manufacturer Oberthur Technologies SA (Levallois Perret, France) is said to have closed the gap on Giesecke & Devrient GmbH (Munich, Germany) in second place last year to less than one percent market share difference following its acquisition of XPonCard.

However, IMS says the German company, after reporting record turnover and profits in 2008, maintained its position as the second largest manufacturer of smart cards globally, behind market leader Gemalto (Meudon, France).

Sagem Orga (up 1.3 percent) and Watchdata Systems (up 1.5 percent) were the other two companies estimated to have made the biggest gains last year.

Gemalto continued to be far and away the market leader, accounting for more than the next three companies combined, and its growth into service areas is one that others are keen to follow.

Its dominance was increased with the acquisition of NXP Semiconductors' Mobile Services Business, giving it an extension of its contactless/NFC business and combining it with NXP's MiFare knowledge.

Other companies have also built out the service side of their businesses, announcing partnerships and acquisitions, such as Giesecke & Devrient’s purchase of SmartTrust this April.

Much of this development focuses on the mobile market since half of the smart cards in use last year were SIM cards.

"There continues to be an erosion of standard smart card ASPs, particularly in the SIM arena, as increased competition (particularly from China), economies of scale and a slight slowdown in growth rates means that price pressure continues to grow. However, a number of companies are innovating with higher-end products in this area in order to increase margins. Added-value features, such as A-GPS, accelerometers, smart card web-servers, personalisation techniques, green credentials, increased security and multi-application cards are being released," said Devlin.

**Separately, Gemalto said it has started supplying its UICC (Universal Identity Cryptographic Computer) and R-UIM (Removable User Identity Module) cards to the three major mobile operators in China, in preparation for the highly-anticipated 3G commercial launches this year. With deliveries made through its joint ventures in China, Gemalto says it is the first provider to support the different 3G wireless standards; CDMA EVDO, TD-SCDMA and WCDMA.

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