CCID Consulting, China’s leading research, consulting and IT outsourcing service provider, and the first Chinese consulting firm listed in Hong Kong (Hong Kong Stock Exchange: HK08235), recently released its report on China’s smart card market.

    In 2008, although mobile communications cards’ shipment exceeded that of 2007, with the gradual maturity of the ID card market, the number of new cards issued has been decreasing sharply which limited the market’s growth. Affected by this, the sales volume of China’s smart card market had negative growth in 2008, which was the first time for the market to have negative growth in the past five years. In terms of application, mobile communication cards were still the largest application field in China’s smart card market, and would remain the most important sector in the long run. In non-telecom field, traffic cards and social security cards were picking up fast, and social security cards became the main driving force for CPU card market’s salesrevenue to a certain degree.

 Mobile Communications Cards Experienced Product Shift in 2008

    In the past few years, mobile communications cards occupied the largestsegment of smart cards, comprising SIM cards, UIM cards and PIM cards. SIMcards occupied a mainstream position among them, which were widely applied inthe G network. In 2008, with the restructuring of China’s telecom industry,China Unicom’s C network merged into China Telecom, with China Telecom’s PHSusers being gradually transferred to CDMA. However as China’s C network’susers was already shrinking in 2008H1, these new PHS users failed to drive asignificant growth of UIM cards’ shipment as expected.

    Compared with 2007, the largest change in China’s mobile communicationscard market was adding USIM cards, which are applied in TD network. BecauseChina’s 3G network were still in its trial period, currently, only a fewcities started to provide 3G network services. Although USIM cards’ shipmentis not large, it broke through China’s mobile communications card market’s oldstructure.

    ID Cards Market Brought Opportunities and Challenges to Local Manufacturers

    By the end of Sep. 2008, the second phrase of smart ID cards’ had reached750 million sets since Mar. 29, 2004. The promotion and application of secondgeneration ID cards conformed to the trend of social informatizationconstruction. This project not only injected vitality into China’s smart cardmarket with rapid development in the past two years, but also providedpowerful platform for China’s smart card industrial development. Because ofthis project, China’s domestic IC card design, manufacturing and assemblyenterprises acquired enormous opportunities. IC design enterprises such asDatang Microelectronics Technology, CEC Huada Electronic Design, TongfangMicroelectronics Company and Shanghai HuaHong benefited from ID cards project,with surging sales revenue in the past two years. With regard to smart cards’module assembling enterprises, Datang Microelectronics Technology, ShanghaiChang Feng Smart Card, China Electronics Smart Card, and Shandong ShanlvElectronic Technology also benefited from ID cards project. Besides, ID cardsproject’s promotion brought rare opportunities for China’s local smart cardsread and write equipment manufacturers.

    Although ID cards’ smart cards’ project’s promotion brought huge profitsto manufacturers in China’s smart card industry chain, with the market’smaturity, many enterprises were affected by this situation, which consideredID cards project as support business, even some enterprises’ sales revenue haddecline. ID cards project won business opportunities for China’s localenterprises; meanwhile, it also brought new challenges to these enterprises.

The technical trend of smart cards in the future: better technology, more features

    Currently, mobile phone is not only a simple communicator; thestrengthening of data service functions and multi-media functions speed up newrequirements for storage ability. As operators’ provide more services throughtheir platforms, smart cards are very important for mobile phone users. Theincrease in storage capacities allow operators to integrate more customizedservices to smart cards. Smart cards using flash technology have theadvantages of bigger capacity, faster speed, lower cost and power consumption,compared with intrinsic EEPROM storage unit technology.   Flash technology hasbecome mainstream technology of smart card chip manufacturing. With regard tochip manufacturing process, 0. 13 um has been mainstream technology, andsmaller size technology has been used in smart card ICs. For example, 65nm and45nm technologies are used in NOR flash in high density SIM card solutionsjointly developed by Intel and Infineon.

    As smart card technologies and applications becoming more mature, smartcard technology with single function and no compound product and integratedsystem integration solutions is unlikely to get a firm foothold in the market. Smart card with multiple functions has been the focus of major smart cardcompanies. Function integration lies in the integration of smart card andmobile payment. Mobile phone will be the major application platform to smartcard, and mobile payment will be an important part of mobile phone payment,which will not only promote the convergence of smart card and electronicmoney,but also bring new opportunities to smart card companies. On the other hand,security-monitoring and OA will be important applications. Smart cardapplication will extend to personal identification and automatic management tofacilitate enterprise informatization.

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Article Source:China Sourcing Blog

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