China has traditionally been a fairly closed loop market with only local vendors chosen to participate in the deployment of government issued credentials to its citizens. However, China's desire to adopt higher-level microprocessor contactless technology has allowed the likes of Infineon and NXP to win new contracts ahead of the domestic competition.
China continues to be an integral part o...
China has traditionally been a fairly closed loop market with only local vendors chosen to participate in the deployment of government issued credentials to its citizens. However, China's desire to adopt higher-level microprocessor contactless technology has allowed the likes of Infineon and NXP to win new contracts ahead of the domestic competition.
China continues to be an integral part of the market, accounting for approximately 13% of all worldwide smart government ID shipments in 2011. It currently has the largest single national ID project with an installed base of over 900 million. It is also migrating to e-passports and introducing new social security/payment cards, up to 800 million of which will be deployed by 2015.
Both Infineon and NXP have demonstrated that accessing the Chinese market is possible. As the Chinese government looks to make use of high-end technology, expanding the supplier base has become a necessity to fill the need for security and memory capacity.
Research analyst Phil Sealy comments, “In the short to mid-term, NXP and Infineon will have success in the Chinese region with the deployment of e-passport ICs. They are both strong contenders to become suppliers for China's new dual interface social security card with payment functionality. Gemalto and G&D are also operational with the deployment of PBOC 2.0 payment cards, showing that China is certainly softening its approach towards international vendors. It is important for companies looking at China to act now before local vendors develop a comparable solution.”
Security & ID practice director John Devlin adds: “The primary driver for bringing in international vendors is the desire to adopt the highest level technology; the leading IC suppliers believe China is 3–4 years away from developing a comparable solution. It will be interesting to see if China's adoption of cutting-edge technology outweighs recent policy favoring local vendors, such as Eastcompeace, Tongfang Microelectronics, and CEC Huada.”
ABI Research's report, “China Presents New Opportunities for International Smart Card and IC Vendors with Migration to High End Technology” provides a focused analysis of the Chinese Government, Healthcare, and Citizen ID market. The report also discusses what barriers and potential opportunities the market can offer foreign investors.