The increase showed chips sales rising—based on a RAIN Alliance survey—outpacing expectations set by earlier research.
Mar 18, 2024RFID industry group RAIN Alliance has found a 32 percent increase in UHF RAIN RFID tag chip shipments in the past year, with a total of 44.8 billion chips shipped around the globe, produced by the four top suppliers of RAIN RFID semiconductors and tags.
That number is more than six billion tag chips higher than forecast for the year, based on a 2022 VDC Research market research report in November 2022. That earlier report, commissioned by the RAIN Alliance, predicted 38 billion shipments in 2023. The same prediction report anticipated shipments rising to 88.5 billion by 2026.
The VDC’s next forecast report will be released in May of this year and may update the expectations for tag chip volumes in coming years, said Aileen Ryan, RAIN Alliance president and CEO.
Four Chip Manufacturers Weigh In
While tag chip sales have been tracking at approximately 20 percent increase each year since 2020, last year’s growth showed a significant uptick based on several factors: increased demand for RFID across multiple sectors (especially in retail), and a backlog of chip orders created by pandemic-era supply chain issues that is now being addressed.
For about four years, the RAIN Alliance has annually measured tag chip volumes on reported shipments from RFID chip manufacturers; Impinj, EM microelectronic, NXP Semiconductors and Quanray Electronics. All four companies are members of the RAIN Alliance. The relative number of UHF RFID tag chips provided by companies beyond the four manufacturers is likely to be small, Ryan added.
The data was collected based on a single question: “How many EPC Class 1, Gen 2, ISO 18000-63, RAIN specification compliant chips did you ship in 2023,” Ryan said. The numbers they provided represented all shipments without categorization according to geographic areas or specific industries.
Chip Supply Chain Recovery
The reasons for the growth are open to discussion but are likely to result from several economic and industry-wide trends.
In 2021 and 2022, there was a significant backlog of semiconductors for most industries and RFID was no exception. Demand exceeded supply and led to delays in order fulfillment.
By 2023, manufacturers began to see the wafer and chip shortages recovering. For that reason, the high numbers may reflect the fact that the supply chain delays may be resolving.
The RAIN Alliance did not ask the four companies participating in the report whether shipments were based on any backlogged orders. Despite that, Ryan says, “the feedback that I've been hearing anecdotally is that things are back on track.”
Growth in RFID Demand in Retail and Beyond
In the meantime, the retail sector’s demand for RFID technology has been growing exponentially, following the mandates or recommendations from large retailers including Walmart. Additionally, RFID tag costs are down, making them affordable to some companies tracking products at the item level.
While apparel and footwear have been the significant drivers initially, other products are also being tagged with RFID labels for inventory visibility.
Other growth areas for RFID include the air travel sector to track baggage, the automotive industry for managing vehicle components and tires, and logistics for optimizing warehouse operations.
Surprise in 2023 Growth
The 2022 VDC report projected compound annual growth of 29 per annum. But based on the results related to 2023 shipments, that growth rate may be adjusted up with the next VDC report.
Ryan says she was surprised by the numbers reported for last year, “I wasn't expecting a 32 percent increase, I was surprised and really pleased. While we talk a lot about the proliferation of use cases and the fact that RAIN RFID is popping up in in all different industry sectors … it's gratifying to see that the numbers actually reflect what our gut feeling has been.”
Looking forward there may be other accelerators to the industry such as the issuance of the European Union's (EU) Digital Product Passport (DPP) requirement along with similar legislation in other parts of the world. DPP will require that specific products carry a digital identity to be tracked from point of manufacture to disposal or recycling.
Expansion in EU
The RAIN Alliance recently achieved a win in the European regulatory sector. Short range device organizations have been lobbying EU standards organization ETSI in an effort to access spectrum ranges that are close to that of European UHF RAIN RFID technology (865 to 868 MHz). Approval of that expansion would have negatively impacted the RFID industry, but the request has been declined by the ETSI governing body.
“This was a very significant result for our industry,” Ryan said.
In an effort to continue RAIN RFID technology growth, RAIN Alliance collaborates with other organizations including GS1, AIM, Michigan State University’s Axia Labs, and RFID Labs at Auburn University. The groups meet quarterly. The next meeting will take place at RFID Journal LIVE! April 9 to 11, in Las Vegas.
“The goal of the RAIN Alliance is to promote the adoption of RAIN RFID globally,” Ryan said, and that mission remains, as the industry grows. “There's nothing in these numbers that changes our direction. But it does reinforce that we need to be on the ball and make sure that there are no impediments to the scaling that we're seeing now.”
Key Takeaways:
- RAIN RFID tag chip shipping numbers are up 32 percent last year, following a multi-year trajectory closer to 20 percent.
- The rise in shipments—at 48 billion in 2023—indicates that the supply chain challenges for RFID tag chips are easing, while orders continue to increase based on RFID technology’s growth.
