Outlook Seen Positive for RFID Market Despite Downturn

Market projected to reach $5.35 billion this year, $7.46 billion by 2014, ABI forecasts; among supply chain applications, greatest growth seen for RTLS, item-level tagging in apparel, retail

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New York — March 15, 2010 — The outlook is good for steady growth in the radio frequency identification market through the next five years, despite the economic doldrums that required downward adjustments to forecasts for RFID sales in 2009 and 2010, according to new market data just released by ABI Research.

"We expect the overall RFID market to exceed $8.25 billion in 2014, or approximately $7.46 billion with automobile immobilization excluded," said Michael Liard, RFID practice director with ABI. "That would represent a 14 percent compound annual growth rate (CAGR) over the next five years."

This year alone, the RFID market appears set to reach $4.47 billion, without automobile immobilization, 15 percent more than the adjusted 2009 figure. Automobile immobilization is the largest single RFID application and has a low growth rate, which impacts overall market size, so it is often excluded when examining market trends.

"Not all segments of the RFID market are created equal," adds Liard. "To 2014, the greatest growth will be found in real time location systems (RTLS), baggage handling, animal ID and item-level tagging in fashion apparel and retail."

Other key opportunities include electronic vehicle registration, continued penetration of RFID-enabled e-ID/e-government documents (including health cards), and continued expansion of library systems. Also worth watching: slowed but continued progress in retail consumer packaged goods (CPG) supply chain management and multiple flavors of asset management that leverage RFID technologies, including specialty passive UHF tags.

"Modernizing" applications for RFID will grow more rapidly than their "traditional" predecessors such as access control, automobile immobilization, electronic toll collection and others that account for slightly more than 61 percent of the total market today, according to ABI. These traditional applications are expected to grow 6 percent compounded annually from 2010 through 2014.

In contrast, modernizing applications — animal ID, asset management, baggage handling, cargo tracking and security, POS-contactless payment, RTLS, supply chain management and ticketing — are forecast to grow roughly 19 percent in the same time period.

ABI Research's report "Semi-Annual RFID Market Data" presents the firm's latest RFID market segmentation and forecasts for revenue, unit shipments and applications. It includes coverage of IC revenue and unit shipments by frequency and by region. Information also is provided about RFID software and services revenues sorted by region, vertical market and primary application.

The report is a component of the RFID Research Service.