NXP is enjoying great success getting its NFC chips designed into smartphones. But what are those NFC chips being used for?
LONDON -- NXP Semiconductors is on a run rate to record nearly $1 billion of annual sales revenue in identification chips. I did a double take when I saw that forecast.
In the second quarter of 2012, NXP's ID chip business unit wracked up $234 million in sales. That's 21.4 percent of NXP's total for the quarter, up 20.6 percent on the same quarter a year before. A significant part of the identification market is based on near-field communications (NFC) technology which builds on RFID technology.
The two technologies between them cover such applications as electronic passports, contactless bank cards, transportation ticketing cards, ID tags for retail, commercial and industrial applications along with associated readers and mobile applications. NXP claims it leads each of these markets.
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NXP (Eindhoven, Netherlands) reckons about 100 million cell phones will ship with NFC in 2012, according to Alexander Rensink, director of strategic marketing for NXP's identification business unit. Put another way, nine out of the top ten smartphone vendors are shipping NFC-enabled devices and NXP supplies eight out of the nine. The result is 90 percent penetration for NXP in NFC-enabled mobile handsets.
Rensink describes the market this way: Between 2011 and 2016, 2.2 billion NFC-enabled devices will be shipped and the largest sector by far will be handsets. NXP already has NFC chips designed into 200 smartphone models and tablet computers and only about 80 (40 percent) of them are in volume production, Rensink said.
Nice work if you can get it.
The big driver for NFC-enabled mobile phones is the prospect of using the cell phone for transactions; an application that so far has yet to pan out.
Rensink is adamant there is a lot more to NFC than just providing a means for transferring funds. "NFC can be used in coupling the physical world to the virtual," he said. Other applications include possibilities: stickers on posters and magazine ads that provide additional information and URLs when users scan codes with their phones; stickers on toys and action figures that can enable an online experience based on the physical toy; and NFC in white goods and smart clothing.