Chip makers still uncertain of plunge into NFC

Paris — With the backing of such leading cell phone suppliers as Motorola, Nokia and Samsung, Philips' Near Field Communication (NFC) short-range wireless technology appears poised for widespread adoption. Each of the three handset suppliers is preparing to introduce commercial or prototype versions of NFC-capable mobile phones this year or next, enabling a range of capabilities such as ticketing, e-shopping or the configuring of other, longer-range wireless communication protocols. But one thing is missing from the NFC bandwagon and could derail its momentum: No chip maker aside from Philips Semiconductors has yet agreed to supply NFC chips.

Even the urging of Nokia Corp., which showed its first commercial mobile phone with an "NFC shell" attached to the back at the Cartes & IT Security conference here earlier this month, has not convinced Infineon Technologies AG to become a second source. "We still have doubts about some NFC application scenarios," said Axel Deininger, the head of product-marketing security at Infineon.

But a number of IC companies, including Infineon, Matsushita, Renesas and STMicroelectronics, are intently looking at NFC, sources said last week at the Electronica trade show in Munich, Germany. While none has publicly committed to NFC as yet, several industry sources said, negotiations are under way as companies jockey for position in an emerging market.

Still, some chip makers were described as having lingering doubts about the technology. Specifically, they expressed concern with the proprietary, Philips-defined interface between NFC chips and smart-card controllers. Other trouble areas included NFC's scant support from consumer electronics equipment and the technology's use of both active and passive reading modes.

ABI Research projects that shipments of NFC-capable handsets will increase from 50 million units in 2006 to 200 million units by 2009. NFC offers handset makers a contactless link to the established smart-card infrastructure, a feat that could turn each NFC-enabled phone into a contactless payment and ticketing device.

Handset makers are particularly hopeful that peer-to-peer NFC will allow two devices in close proximity to automate a connection setup and, possibly, make services available. NFC would configure and initialize other wireless protocols without requiring a user to navigate complicated menus, proponents say. This would sidestep the difficulties that protocols like Bluetooth or Wi-Fi have in selecting the correct device and providing the proper connection parameters. NFC simplifies the procedure because one device need only touch another, according to Nokia.

Ten to 15 percent of mobile operators' revenue today comes from consumers downloading ring tones or small Java-based games, Nokia said. But gaining access is neither easy nor intuitive for most consumers, and often requires numerous keystrokes and much scrolling on a tiny screen. NFC could be the answer, Nokia said.

The company is convinced that "a new touch paradigm" — in which a consumer holds an NFC-capable handset up to an NFC-based tag or object — "is a key element for bringing relevant data and services to the masses," said Heikki Huomo, director of technology development at Nokia.

Some semiconductor companies see a red flag in the proprietary interface between an NFC chip and a smart-card controller chip. Despite a promise by the NFC Forum — an industry alliance founded by Philips, Sony and Nokia — that NFC licensing will be open and nondiscriminatory, nonmember companies complain of difficulty obtaining detailed technical specs for the interface. "We see a potential pitfall in such a proprietary interface," said Infineon's Deininger.

Skeptics also see NFC's support of both active and passive communication modes as a possible drawback. For active communication, two NFC devices generate their own RF field to carry data. In passive mode, one device generates the RF field while the other uses load modulation to transfer data. The NFC protocol specifies that the initiator device generates the RF field.

Infineon believes the active-reader function may not be necessary at this time because no TVs, PCs, cameras or set-top boxes using NFC exist on the market. Without other NFC-capable devices with which to exchange data, "Why do we need an active-reader function?" Deininger asked. If anyone wants to use an NFC-capable mobile phone for payment and ticketing, for example, "incorporating an RFID antenna and a dual SIM [subscriber identity module] — capable of contactless and contact communications — in a handset is enough."

Further, mobile money applications with smart Visa cards or MasterCards, for example, are already protected by clear security requirements, Deininger said. So when two NFC devices want to exchange data, "security functions are not necessary," he said. "You shouldn't mix two different applications under one NFC technology."

Semiconductor companies with a strong presence in the RFID and smart-card controller IC markets are natural candidates to supply NFC chips. One potential supplier, Renesas Technology Corp., is "watching NFC carefully," said Nicolas Prawitz, segment marketing manager for the mobile-security business group at Renesas Technology Europe.

Maximilian Humber, president of Sharp Microelectronics Europe, said last week at Electronica that Sharp is not likely to get into NFC chips. "It's going to be a very crowded market soon," he said. "It would be difficult for us to become one of the top three vendors in that segment."

The NFC shell on the mobile phone Nokia demonstrated at Cartes & IT Security places Philips Semiconductors' NFC chip and SmartMX smart-card controller chip on the same printed-wiring board. The two chips are connected via Philips' proprietary S2C interface. If a handset vendor other than Nokia wanted to implement the NFC chip and establish an interface with a SIM card — already installed in today's GSM phones — no standardized interface spec is available to connect the two.

Holger Kunkat, manager of products and NFC with the Mobile Secure RFID Solution Program of Philips Semiconductors, defended use of the proprietary S2C interface "for competitive reasons." Nevertheless, "sooner or later, we will need to open that up," he said.

Philips Semiconductors sells NFC chips in two flavors. The PN511 offers a pure analog function for NFC, while the PN531 integrates Philips' 8051 microcontroller, allowing the NFC chip to support low-level NFC protocol layers to a host CPU in a handset.

Renesas' Prawitz observed that the potential beauty of NFC is that it can remove analog-design issues from the equation when combining an RF antenna and a dual-interface SIM card in a handset. "NFC makes the interface between the two pure digital — making the life of a handset designer simpler." Without a standard like NFC, he said, each SIM-card IC may need an antenna closely coupled with its very silicon. That could be a nightmarish scenario for service operators and mobile-phone users who may want to mix and match their SIM card with a different NFC-enabled handset.