Smart Card Technology Market - Global Industry Analysis, Market Size, Share, Growth, Trends, And Forecast, 2012 - 2018

Smart cards market can be classified based on the basis of the interface into contact smart cards, contactless smart cards, and hybrid smart cards. Based on its components, there are two types - memory smart cards and microprocessors. Smart cards have a wide area of application such as in transportation, telecommunication, for making government IDs, in the financial sector and in paid TV services. In addition to these, geographically the market is divided into North America, EMEA, Asia-Pacific, and Rest of the world.

The global smart card market was valued at USD 4.5 billion in 2011 and is expected to grow at a CAGR of 7.7%. The market is expected to reach USD 7.9 billion by 2018. The telecommunication sector is the largest revenue generator for the smart card market, contributing about 50% of the revenue. Geographically, EMEA is the largest revenue generator for the smart cards market on account of technology competence and demand for secured transactions.

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The major driver for the smart card market is its application in the financial sector with the increased global demand for credit cards. Also, rising cases of fraudulent transactions have reduced the use of the magnetic strip for encoding data. The explosive growth in the cell phone market, especially in India and China, has resulted in tremendous growth in the smart card market. The widened 3G penetration has also enhanced the demand for these cards.

smartcards--small plastic cards with silicon chips implanted in them--are hard to miss. They are used for making calls on a pay phone or boarding a subway. One smartcard can do the work of several magnetic-stripe conventional cards.

In the mid-1990s, many analysts predicted that Americans would also be using smartcards by now, but the U.S. rollout has been slower than expected. One notable exception is American Express Blue card. In the U.S., smartcards have made their biggest penetration, so far, inside wireless phones, TV set-top boxes and security access cards. 

Worldwide microprocessor card shipments grew by 45%, to 628 million units, while memory card shipments reached 1.1 billion, according to market research firm Gartner Dataquest. The global market is expected to get a huge boost, as China--where smartcards are already commonly used for public telephones--wants to issue 1.26 billion smart identification cards to every one of its citizens over the next five years. 

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The two biggest card suppliers are Gemplus a French-owned company based in Luxembourg, and Schlumberger who together control two-thirds of the market. Last month, Gemplus blamed the slowdown in mobile phone shipments for a $6.5 million loss during its first fiscal quarter ended March 31. On June 6, it warned that it expects a second-quarter operating loss of 10 million to 15 million euros ($8.5 million to $12.8 million).

Earnings are now more correlated to worldwide handset sales than management may have expected, notes a recent report by David Readerman, analyst with Thomas Weisel Partners in San Francisco. Shares of Gemplus are off more than 60% from their 52-week high. On the bright side, Gemplus has recently landed contracts to sell smartcards to Fleet Credit Card Services, First USA and Visa.

Semiconductor manufacturers also have a stake in smartcards. For example, German chipmaker Infineon the former semiconductors unit of Siemens, reported $418 million in sales of smartcard-related chips, according to a market study published by Gartner Dataquest. This study also pegged smartcard-related revenue for Europe's STMicroelectronics at $365 million.

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