PARIS " Royal Philips Electronics and IBM Corp. have announced an alliance to jointly pursue the growing market for RFIDs and smart cards, with Philips Semiconductors providing smart-card controller ICs and RFID chip technology while IBM supplies its consulting, project management and implementation skills.
The partners hope to convince mainstream players in supply-chain management, retail and logistics markets that RFIDs are a viable technology that can enhance profitability. The two companies will also pitch smart-card solutions for finance, e-government, transportation and ticketing.
As large-scale RFID and smart card implementations roll out on a global basis, "Our relationship with IBM will mean stronger time-to-market, improved customer confidence levels and the opportunity to leverage each others' brands and expertise," said Scott McGregor, president and chief executive officer, Philips Semiconductors.
As a part of the collaboration, Philips Semiconductors will use an RFID system built by IBM Global Services for its manufacturing and distribution facilities. Initially, wafer cases and containers will be tagged at Philips Semiconductors' Kao Hsiung manufacturing site in Taiwan and the division's distribution center in Hong Kong.
The new RFID system, which will replace bar codes at Philips Semiconductors' operations, will require "far less manual handling," said Dirk Morgenroth, segment marketing manager for transport and logistics at Philips Semiconductors. "You don't have to worry about the orientation of tags. RFID allows you to do bulk reading. You don't need to take packages out of a box." As a result, more control points " RFID readers " can be added in the process so that more on-time, online information will be available.
Neither Philips nor IBM disclosed the cost to install such a system. However, Morgenroth said, "We are confident that we will receive within two years a return on investment of twice as much money as our initial investment." After running the RFID system in East Asia for 20 weeks, Philips and IBM will conduct a review before implementing the system in the rest of Philips' manufacturing and supply chain.
Philips Semiconductors has already tapped IBM's expertise to gain design wins for its RFID and smart-card chips in a variety of large-scale projects. While Philips Semiconductors supplies RFID chips, IBM, for example, has served as a business consultant and system integrator for deploying RFID technology in supermarkets in Germany, The RFID technology is used for automatic product identification, anti-theft and real-time inventory control.
The partners are also wooing retail giant Wal-Mart, which will require its largest suppliers to use RFIDs on all pallets and cases delivered to all Wal-Mart stores in the U.S. by the beginning of 2005. IBM and Philips have teamed up to target as many of the top 100 suppliers as possible.
"We feel comfortable in delivering high-volume RFID and smart- card controller chips and underlying technology," said Morgenroth. "Meanwhile, IBM can provide customers with complete solutions including reader solutions and software."