China IC Card/Smart Card Industry Report, 2007-2008

The report analyzes and forecasts the situation and development of China’s IC card market, and researches six key IC card chip suppliers in the world, as well as nearly 50 IC card chip, COS, card packaging manufacturers and IC card relevant equipment manufacturers in China.

According to the forecast of Eurosmart in Nov, 2007, the SIM card shipment would reach 3.04 billion pieces in the world in 2007, up 20% compared to the same period of 2006. This figure was beyond estimation made early this year, because the demand from mobile operators in the developing countries exceeded expectation. The orders held by the global largest network operator, China Mobile, added to more than 280 million pieces in the first three quarters in 2007, rising 60% year-on-year.

From the above chart, along with the growth of total shipment of IC card in the world, the proportion of CPU card also increases; while the shipment of memory card slips gradually. Shipment of memory card increased from 2006 to 2007, mainly because statistics and forecast from Eurosmart include the 2nd ID card and oyster card project.

According to Smart Cards Special Committee of China Information Industry Chamber of Commerce, the shipment of China's IC card market was about 1.08 billion pieces in 2005, up 91.8% year-on-year; while the shipment revenue increased 11.1% only to RMB 5.607 billion. In 2006, the shipment was about 1.676 billion pieces, rising 55.2% year-on-year; the shipment revenue ascended 32.4% only to RMB 7.426 billion. This was caused by increasingly intensive competition in China IC market and the dropping prices of SIM card particularly.

With the historic statistics from Committee of Smart Cards of China Information Industry Chamber of Commerce, ResearchInChina evaluates and forecasts the IC card shipment and shipment value from 2007 to 2008 by using time series method. During this course the following factors are considered: Gold Card Project of Ministry of Information Industry, issuance of the 2nd generation of ID card, plan of bank card EMV transference, and 2008 Olympic Games. In 2006, IC card shipment volume and value reached 1.676 billion pieces and RMB 7.426 billion. While in 2008, the volume will increase to 4.183 billion pieces, 1.5 times more than 2006; and the value will hit RMB 14.656 billion, almost doubled that in 2006.

The important IC card market has been dominated by the six international semiconductor giants, like Infineon. Frost & Sullivan’s investigation shows that, in 2006, Infineon took up 29.1% market share in global IC chip market valued with USD 1.9 billion, leaving its competitors far behind. Then Samsung, NXP, Atmel, Renesas and STMicroelectronics ranked the next. The six accounted for 91.3% in total. Currently, most of chip markets in China rely much on the international market, so does IC card market, and the market share of domestic IC design companies is not high as well.

The years of 2006 and 2007 witnessed the active period of reform in China IC card industry. Through reorganization, merger and acquisition, new companies established. The increasingly strong companies via the 2nd generation ID card and telecommunication market accelerated to expand the other markets. Meanwhile, entering the international market has become the key work for these companies as well. However, the product similarity still existed, which led to continuous low price. However such situation can not be improved fundamentally. Therefore, the competition in the future will focus on low costs.

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