New banking technology and shifts in
telephone mean worldwide sales of cards containing microprocessors
are set to outstrip sales of memory-only cards for the first time
next year, according to card manufacturers association
Eurosmart.
The telecoms industry has traditionally been one of the largest
buyers of smart cards - until now mostly in the form of memory
cards for stored-value applications such as prepaid phone cards for
use in pay phones. That is changing, though, as the mobile phone
industry expands. Many mobile phone networks use smart card
technology for the SIM (Subscriber Identity Module), the part of
the phone which associates calls made with the person who pays the
bill.
Eurosmart predicts the switch will push sales of microprocessor
cards from 430m units in 2002 to 570m in 2003 and 635m in 2004. By
comparison, 950m memory-only smart cards were sold to telecom users
in 2002, and around 850m will be sold this year, according to
Eurosmart figures.
In the financial, retail and loyalty card sector, Eurosmart
predicts microprocessor smart card sales will grow from 175m in
2002 to 185m in 2003 and 235m in 2004.
The association's prediction for 2004 is all the more remarkable
because it runs against the cyclic nature of the German
card-issuing industry, one of the biggest buyers of smart cards for
financial applications, said Eurosmart chairman Olivier Piou.
Geldkarte, an electronic purse introduced in Germany in 1996,
has a three-year renewal cycle, according to Piou. In 2002, the
majority of cards issued in the former West Germany were renewed,
making it a good year for smart card manufacturers. This year will
be a medium year, as cards issued in the former East Germany are
renewed, while next year only a few Geldkarte cards will be issued,
to new users or to those whose renewal dates have changed because
they have lost cards, he said.
The sharp growth in financial applications of microprocessor
smart cards predicted for 2004 will be driven by adoption of the
EMV (Europay-Mastercard-Visa) secure credit card system in
countries such as the UK, Japan, Taiwan and Brazil, Piou added.
Eurosmart expects strong growth, albeit from a low base, in the
use of microprocessor smart cards for corporate security next year,
predicting sales will rise from 7m cards this year to 10m next
year. However, the association's optimism may be ungrounded: it
made the same prediction last year.
Overall, 461m memory-only smart cards were sold in the first
half of 2003, compared to 424 million cards containing
microprocessors, according to Eurosmart. For the full year, it
predicts 961m memory cards will be sold, compared to 867m
microprocessor cards.
This is the first time in years that sales of memory smart cards
have dipped below a 1bn. Next year, Eurosmart predicts, sales of
microprocessor smart cards will top 1bn.
The association compiled its figures from data provided by card
manufacturers, which buy semiconductors to make the cards, and
checked them against sales figures provided by the semiconductor
manufacturers. The two sides of the equation balanced to within a
few percent, said Piou, ruling out any hype on the part of card
vendors.
Peter Sayer writes for IDG News Service.