Philips, IBM Join Forces

To present offerings in the RFID and Smart Card marketplace

To present offerings in the RFID and Smart Card marketplace

San Jose, CA — January 26, 2004 — Royal Philips Electronics and IBM today announced an initiative to jointly develop customer systems for radio frequency identification (RFID) and smart card applications. Working together, Philips and IBM said they would combine their industry expertise to address the growing need for high-security smart cards and RFID technology in day-to-day business processes, operations and consumer lifestyles.

The key end-application areas that the companies plan to address are RFID solutions for supply chain management, retail and asset management, as well as smart card solutions for finance, e-government, transportation and event ticketing. Within the scope of the joint cooperation, IBM Global Services will also build an RFID system for Philips Semiconductors division manufacturing and distribution facilities in Taiwan and Hong Kong.

The first joint project between the two companies is the development and implementation of an RFID solution within Philips' Semiconductors division to improve the business processes within the manufacturing and distribution supply chain, inventory management and control as well as to enhance customer satisfaction. In a first step, wafer cases and carton packages will be tagged at Philips Semiconductors' Kao Hsiung manufacturing site in Taiwan and the division's distribution centre in Hong Kong. The project started in November and will be fully live during the course of 2004.

The companies said the supply chain management, retail and logistics markets are looking for ways to enhance their profitability, reduce costs through automation and improve response times in inventory management. Philips and IBM said they believe these customers are seeking committed blue chip organizations that have a reputation for delivering reliable and tested solutions to meet their needs.

As Philips extends its RFID business from early adopters to the mass market, its business is moving toward large-scale projects that require global reach, project management and system solutions. By teaming up with IBM, the electronics company said it would move toward offering integrated solutions for major retailers, consumer goods manufacturers and couriers.

"Our relationship with IBM will mean stronger time-to-market, improved customer confidence levels and the opportunity to use each others' brands and expertise," concluded Scott McGregor, president and CEO, Philips Semiconductors. "It is Philips' mission to continue bringing greater benefits to both companies and today's 'Connected Consumers' — enabling them better access to information, entertainment and services. To this end, the RFID system in East Asia being built by IBM is a good illustration of Philips adopting the very technology it is driving into the marketplace."