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Powered Smart Card Markets– 2012 Preview

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This report quantifies the markets for powered smart cards and their major components. Specifically, the objective of this report is to quantify the markets for powered smart cards by application and …

This report quantifies the markets for powered smart cards and their major components. Specifically, the objective of this report is to quantify the markets for powered smart cards by application and by region, and to quantity the market for two key components of powered smart cards—batteries and displays—over the next eight years, in both volume/quantity and revenue terms.
We examine the latest component technologies, strategies, and technical developments of the industry. NanoMarkets has provided coverage of powered smart cards now for several years as part of its analysis of the markets for low-cost displays and printed batteries, and in this report we share the insights that we have garnered into the market opportunities that will emerge and grow in the powered smart card market.
The powered smart card end-use markets covered by this report include: one-time password (OTP) cards, gift and customer loyalty cards, and identification (ID) or medical information cards. We also assess the differences in the potentials for powered smart cards in these applications by region, namely in Europe, Asia-Pacific, and the Americas.
Batteries for powered smart cards are broken out into two general categories: printed batteries, which dominate the market for onboard power today, and thin-film batteries, which have the potential to be adopted more widely in the coming years. Display technologies used in powered smart card applications include liquid crystal displays (LCDs), light-emitting diode (LED) displays, electrophoretic displays (EPDs), and electrochromic displays.

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  • 1. NanoMarkets Report Powered Smart Card Markets– 2012 Nano-585Published Oct. 2012
  • 2. Entire contents copyright NanoMarkets, LC. The information contained in this report is based onthe best information available to us, but accuracy and completeness cannot be guaranteed.NanoMarkets, LC and its author(s) shall not stand liable for possible errors of fact or judgment.The information in this report is for the exclusive use of representative purchasing companies andmay be used only by personnel at the purchasing site per sales agreement terms. Reproductionin whole or in any part is prohibited, except with the express written permission of NanoMarkets,LC.
  • 3. Table of ContentsChapter One: Background and Objectives of this Report...............................................1 Page | i 1.1 Background to this Report ..................................................................................1 1.2 Objectives and Scope of this Report....................................................................1Chapter Two: Powered Smart Card Technologies and Products ....................................2 2.1 Powered Smart Cards: Competitive Advantages and Disadvantages Compared to Other Smart Cards ...................................................................................................2 2.1.1 Comparison with Conventional Smart Cards ................................................................................. 2 2.1.2 Advantages of Powered Smart Cards ............................................................................................ 2 2.2 Enhanced Functionality—Which Smart Card Applications Need Power? ..............4 2.2.1 One-Time Password Cards for Enhanced Security ......................................................................... 4 2.2.2 Customer Loyalty and Gift Cards ................................................................................................... 4 2.2.3 Secure ID, Medical Information, and Biometric Cards .................................................................. 5 2.3 An Overview of Some Current Powered Smart Card Products .............................6 2.3.1 E-Bay/PayPal Security Key ............................................................................................................. 6 2.3.2 MasterCard and Visa OTP Cards—Losing Ground to Mobile Solutions? ....................................... 6 2.3.3 Powered Smart Card Manufacturers ............................................................................................. 7 2.4 Components and Technologies for Powered Smart Cards ....................................8 2.4.1 Thin-Film and Printed Batteries for Powered Smart Cards—Important Factors ........................... 9 2.4.2 Suppliers of Batteries for Powered Smart Cards ......................................................................... 10 2.4.3 Display Types Used in Powered Smart Cards .............................................................................. 11 2.4.4 Other Components: Solar Power, Biometric Sensors, Keypads, Etc. ........................................... 13 2.5 Key Points from this Chapter ............................................................................ 14Chapter Three: Powered Smart Card Markets and Forecasts ...................................... 16 3.1 Forecasting Methodology ................................................................................. 16 3.1.1 General Methodology .................................................................................................................. 16 3.1.2 Data Sources ................................................................................................................................ 16 3.1.3 Scope of the Forecast .................................................................................................................. 17 3.1.4 Assumptions ................................................................................................................................ 18 3.1.5 Alternative Scenarios ................................................................................................................... 19 3.2 Eight-Year Forecast of Powered Smart Cards..................................................... 20
  • 4. 3.2.1 Powered Smart Card Shipment Forecast ..................................................................................... 20 3.2.2 Powered Smart Card Shipment Revenue Forecast by Application .............................................. 23 3.2.3 Powered Smart Card Shipment and Revenue Forecast by Region of Use .................................. 26 3.2.4 Forecast of Batteries for Powered Smart Cards .......................................................................... 28 3.2.5 Forecast of Displays for Powered Smart Cards ............................................................................ 38 Page | iiAcronyms and Abbreviations ..................................................................................... 54 About the Author ................................................................................................... 54 List of ExhibitsExhibit 2-1: Advantages and Disadvantages of Powered Smart Cards ......................................... 3Exhibit 2-2: Overview of Selected Powered Smart Card Providers ............................................... 7Exhibit 3-1: Analysis of Smart Card Market 2012-2019 ............................................................ 22Exhibit 3-2: Powered Smart Cards by Application 2012-2019 ................................................... 24Exhibit 3-3: Powered Smart Cards by Region 2012-2019 ......................................................... 27Exhibit 3-4: Printed Batteries in Powered Smart Cards 2012-2019 ............................................ 29Exhibit 3-5: Thin-Film Batteries in Powered Smart Cards 2012-2019 ......................................... 32Exhibit 3-6: Summary of Volume of Batteries in Powered Smart Cards 2012-2019 (Millions) ...... 34Exhibit 3-7: Summary of Market Value of Batteries in Powered Smart Cards 2012-2019 ($ Millions) .................................................................................................................................... 36Exhibit 3-8: Analysis of Addressable Market for Displays in Powered Smart Cards 2012-2019 ..... 39Exhibit 3-9: Electrophoretic and Related Displays in Powered Smart Cards 2012-2019 ............... 40Exhibit 3-10: Electrochromic Displays in Powered Smart Cards 2012-2019 ................................ 43Exhibit 3-11: Liquid Crystal Displays in Powered Smart Cards 2012-2019 .................................. 46Exhibit 3-12: Light-Emitting Diode Displays in Powered Smart Cards 2012-2019 ....................... 49Exhibit 3-13: Summary of Quantity of Displays in Powered Smart Cards 2012-2019 (Millions) .... 52Exhibit 3-14: Summary of Market Value of Displays in Powered Smart Cards 2012-2019 ($ Millions) ....................................................................................................................... 53
  • 5. Chapter One: Background and Objectives of this Report1.1 Background to this ReportThere is nothing new about smart cards; they have been used by the billions since the 1980s,although they have proved much more popular in geographies other than the U.S. However, they Page | 1are in the process of taking a great leap forward. A new breed of powered smart cards, withonboard power, are emerging and have the potential to bring considerably more applications tothe humble credit and gift card, as well as more security.A smart card is a pocket-sized card with an embedded chip that can receive, transmit, andprocess information. The power for the chip may come from an external reader, throughinduction—or most recently—from an onboard thin-film or printable battery. The potential volumesfor these smart cards are quite large; today, there are about 7 billion smart cards producedannually worldwide. And one credit card company can produce 300 million cards a year.The addition of battery power to smart cards adds greater functionality to the card and, in someways, makes the card easier to design. Most notably, addition of onboard power enables thecards to come with an integrated information display, which could, for example, be used forsecurity or marketing purposes.1.2 Objectives and Scope of this ReportWith this potential in mind, NanoMarkets has published this report, which quantifies the marketsfor powered smart cards and their major components. Specifically, the objective of this report is toquantify the markets for powered smart cards by application and by region, and to quantity themarket for two key components of powered smart cards—batteries and displays—over the nexteight years, in both volume/quantity and revenue terms.We examine the latest component technologies, strategies, and technical developments of theindustry. NanoMarkets has provided coverage of powered smart cards now for several years aspart of its analysis of the markets for low-cost displays and printed batteries, and in this report weshare the insights that we have garnered into the market opportunities that will emerge and growin the powered smart card market.The powered smart card end-use markets covered by this report include: one-time password(OTP) cards, gift and customer loyalty cards, and identification (ID) or medical information cards.We also assess the differences in the potentials for powered smart cards in these applications byregion, namely in Europe, Asia-Pacific, and the Americas.Batteries for powered smart cards are broken out into two general categories: printed batteries,which dominate the market for onboard power today, and thin-film batteries, which have thepotential to be adopted more widely in the coming years. Display technologies used in poweredsmart card applications include liquid crystal displays (LCDs), light-emitting diode (LED) displays,electrophoretic displays (EPDs), and electrochromic displays.
  • 6. Chapter Two: Powered Smart Card Technologies andProducts2.1 Powered Smart Cards: Competitive Advantages and Disadvantages Compared Page | 2 to Other Smart CardsPotentially, powered smart cards can be used for enhanced security of ATM/debit/credit cards,portable healthcare files, airline tickets or boarding passes, and frequent flier cards. They can alsobe used to authorize stock trades, open doors to the office, check out books at the library, storedigital cash to pay for subway rides, parking meters and candy at vending machines, and even ascar and hotel key devices.But it is important to recognize that most of these functions can be carried out using currentlyavailable, conventional, non-powered smart cards. Thus, in any discussion of the market forpowered smart cards, we must first distinguish their potential niches within the larger smart cardmarket. 2.1.1 Comparison with Conventional Smart CardsConventional smart cards contain embedded circuitry and either or both a memory andmicroprocessor chip. These cards can receive input, process the information, and deliver output,and they come in both contact and contactless formats:  Contact-style smart cards have a contact area of approximately 1 square cm comprising several gold-plated contact pads. These pads provide electrical connectivity when inserted into a reader. The card reader provides connectivity to a host, such as a computer or point-of-sale (POS) terminal, or a mobile phone.  Contactless smart cards, and their readers, have embedded antennae and transmit information using radio frequency (RF) induction technology (at data rates of 106-848 kbps), instead of through physical connection to a pad. These cards require only proximity to communicate. Higher security applications use standardized protocols that limit the read distance; lower security applications may employ RF frequencies that can be read over larger distances.Importantly, in both cases, the card reader supplies all of the necessary power. In the case ofcontact cards, the readers power source is harnessed through direct contact. In contactless smartcards, an inductor captures some of the incident RF interrogation signal, rectifies it, and uses it topower the cards electronics. 2.1.2 Advantages of Powered Smart CardsSometimes, smart cards are loaded with enough additional features that powering them with anexternal power source becomes difficult or even impossible.For example, contactless, RF-powered smart cards are constrained in their operation by theirpower consumption. Contactless smart card application designers must pay attention to powerconsumption peaks, high average power consumption, and supply voltage drops. If these hazardsare not handled properly, the smart cards operational stability is compromised.
  • 7. In non-powered smart cards, these hazards are addressed by using special designs. Forexample, a novel multi-core smart card design, which improves the operational stability of somesmart cards in use today, has been designed at the Graz University of Technology in Austria.The researchers there say that their tests show that harmful power variations can be reduced byup to 75 percent and predefined supply voltage levels are maintained properly. Page | 3However, the addition of onboard power in the form of a battery enables smart cards to include alot more functionality, and would simplify design issues for contactless smart cards.The power-draining features that the industry would like to add to smart cards are, in some cases,not yet well defined, but the product designs that are currently being considered include addingsimple displays, sensors, and sound. Several companies—most notably Bank of America,PayPal/e-Bay, and some Visa issuers in Europe—already have powered smart cards incirculation, primarily for enhanced payment security through one-time password (OTP)generation.The advantages/disadvantages that powered cards present over conventional cards are shown inExhibit 2-1. In all cases, the technical advantages of adding functionality are at least partiallyovershadowed by the fact that adding these features greatly increases the cost of the card. Thus,benefits of the added functionality must be carefully weighed against the added cost in eachapplication considered for a powered smart card.Exhibit 2-1: Advantages and Disadvantages of Powered Smart CardsFeature of Powered Advantages DisadvantagesSmart CardOnboard power Increases functionality, simplifies circuit Adds cost designIntegrated display Enables one-time password (OTP) Adds cost and complexity to generation fabrication Adds marketing capability Adds thickness to cardIntegrated sound Adds marketing capability Adds cost and complexity to Enables acoustic OTP generation (for use fabrication with phones, for example)Biometric sensor Enhances security Adds cost; adds thickness to card© NanoMarkets 2012Onboard power to reduce overall costs—eventually: The addition of power to smart cardssimplifies things for the circuit designer and may ultimately lead to a reduced cost for the card.However, in the near term, the cost of the added battery is simply too high, and the cost ofmigrating standards and read/write protocols to adapt to a new, powered smart card is significant.Nevertheless, we believe that, in the long run, the ability of smart cards to contain inexpensive,easily integratable onboard power sources may eventually lead to reduced overall costs for smartcards.
  • 8. 2.2 Enhanced Functionality—Which Smart Card Applications Need Power?Even if powered smart cards are not going to penetrate the smart card market very quickly, theydo remain a long-term opportunity, especially for the three, key applications identified in thissection: one-time password (OTP) cards, enhanced gift and customer loyalty cards, andenhanced ID cards. Page | 4 2.2.1 One-Time Password Cards for Enhanced SecurityOTP cards are the single most important application for powered smart cards, for severalreasons:  The ability of financial institutions to irrefutably authenticate a user through OTP, which complies with two-factor (and sometimes three-factor) authentication protocols, could potentially save financial institutions billions of dollars per year through reducing credit card fraud and hacking/identity theft. Given the money lost every year from credit card fraud, as well as the damage done by the growth of hacking incidents, there is an implicit funding mechanism supporting the development and marketing of such cards by banks, credit card companies, and other institutions.  Furthermore, enhanced security through OTP cards could give consumers additional confidence in electronic commerce applications (phone banking, online shopping etc.), further enabling widespread adoption.  Finally, OTP security protocols are also important in corporate information security. Powered smart cards could represent a cheaper, easier-to-implement, two-factor ID authentication method for corporate user login protocols that are designed to limit access to proprietary software or hardware.An OTP is a password that is valid for only one login session or transaction. They avoid a numberof shortcomings that are associated with conventional—that is, permanent—passwords.The most important shortcoming that is addressed by OTPs is that, in contrast to conventionalpassword systems, they are not vulnerable to so-called replay attacks, precisely because thepasswords are used only once. With an OTP card, the cardholder presses a button on the card todisplay the one-time password, which is generated by an algorithm programmed into the card.OTPs can be implemented in ways other than embedded in the cards. In the Europay-MasterCard-Visa (EMV) "Chip Authentication Program," for example, a reader is used. In thecontext of smart cards, though, OTPs must be displayed. This additional display functionalitydrives the need for onboard power with an integrated battery, as well as, of course, the requiredcircuitry for computing the algorithm. The consensus is that a conventional reader-powered smartcard cannot accomplish these tasks. 2.2.2 Customer Loyalty and Gift CardsSimilarly, powered smart cards may find a home in the retail sector. In this case, the valueproposition involves increasing the marketability of customer loyalty and/or gift cards byenhancing the features of these cards. Certainly, in some cases the use of technology similar to
  • 9. OTP generation may be part of the picture, such as to increase the security of gift cards.However, the application goes well beyond security:  The display could be used to provide a remaining balance notification at the touch of a button; security could be enhanced by adding a simple keypad for PIN entry prior to displaying the balance. Page | 5  The display could be used to deliver marketing messages of various kinds, or as a decorative addition to a gift card.  Addition of miniature, integrated speakers could enable the above displays to come with sound, too.  Finally, onboard power in a smart card could be used to enable the fabrication of sophisticated gift/loyalty cards with multiple, interactive features, such as games with a display and sound, etc. 2.2.3 Secure ID, Medical Information, and Biometric CardsOutside of the banking industry, there is also a need for powered smart cards, usually for thepurposes of two-factor (and sometimes three-factor) authentication of a user. These applicationscan be found in healthcare, corporate security, government identification, and in software orhardware access across any number of sectors.The design of such cards is very similar to the design used in the banking industry. In general,the smart card has an added display that generates an OTP, contains retrievable/writableinformation beyond which a conventional (non-powered) smart card can deliver, or contains anadditional biometric or other sophisticated sensor that requires additional power.Smart cards in healthcare: Powered smart cards are also promising for health care applications,such as to contain a patients complete personal healthcare record (PHR) in a mobile format. Inthis case, the cards are designed principally for the storage of large amounts of information andmust be dynamic/rewritable, but they must also sometimes be accompanied with a high level ofsecurity in order to comply with patient confidentiality regulations.These cards can be carried by the patient and can be formatted to contain the patients completepersonal health record and related legal information, like power of attorney or Do Not Resuscitateorders, as well as insurance information.Smart ID and access cards: Both the public and private sectors may use powered smart IDcards to improve identification security. Governments and corporate entities already commonlyembed electronic identification into passports, IDs, and access cards; the security of theseexisting smart ID cards could be increased by upgrading to a powered smart ID card format thatcould include greater verification capability and/or the ability to contain even larger quantities ofdata.Biometric cards: OTP is not the only security-related application for battery-powered smartcards. Biometric smart cards include embedded sensors, usually fingerprint sensors that canpositively identify the holder of the card. Only after this process takes place will the card generatea password, or otherwise permit access to a secure site.
  • 10. For the biometric cards, the driver is obviously todays heightened sense of the need for security;but this type of card is expensive today, and is not likely to generate the volumes associated witha relatively simple OTP credit card in the near- and mid-term. One firm that is developingbiometrically-activated cards with onboard power is Danish firm CardLab.Note that a three-factor authentication protocol, which is something like the ultimate in powered Page | 6smart card technology, would include both an OTP generator and a biometric sensor.2.3 An Overview of Some Current Powered Smart Card Products 2.3.1 E-Bay/PayPal Security KeyOne of the most prominent proponents of OTP technology is PayPal, which is now owned byeBay. Both PayPal and eBay were early innovators in the implementation of secure methods forconsumers to submit payment information for online purchases, where concerns over fraud,identify theft, and data phishing are high.Thus, it is not surprising that PayPal was one of the earliest firms to offer OTP technology tocustomers in the U.S., Canada, Australia, and several European countries (the U.K., Germany,and Austria). It established a security card (and an alternative security token/fob) OTP option in2006.However, today, PayPal customers that want to take advantage of OTP technology have twooptions; as of August 2012, they may sign up for a free service that sends OTPs to their mobilephone via text-messaging, or they may continue to use the smart OTP card, for which they mustpay a one-time fee ($29.95 in the U.S.).In other words, PayPal customers now have a totally free option that allows access to the samebasic function as the fee-based OTP card that has been around since 2006. Given the ubiquity ofmobile phones and text messaging in general, we expect that the free, mobile option will quicklytake over, leading to obsolescence of smart OTP cards within PayPal. 2.3.2 MasterCard and Visa OTP Cards—Losing Ground to Mobile Solutions?A similar story has unfolded in parts of the banking industry, where several prominent banks areoffering OTP Visa and/or MasterCard smart cards to customers, but as part of a larger morebroad effort to improve payment and identification security. In these cases, mobile OTP optionsare part of the story as well, and, sometimes, mobile OTP generation is the only option:  Bank of America has been offering OTP cards to customers for online payments since 2007 under the trade name SafePass. Use of this optional service is free as long as it is delivered to a mobile phone by text messaging, but costs the consumer $19.99 in the form of an OTP smart card.  Visa Europe partnered several years ago with Australian firm EMUE to offer OTP cards to its partner banks in order to enable two-factor authentication, particularly for improved online security. However, to the best of our knowledge, only a few banks have opted to widely offer the physical OTP card option.
  • 11.  Similarly, Citibank offers OTP service in some countries, but only via text messaging. To the best of our knowledge, no OTP card option is available, although Citibank did release a smart card in 2011 that allows customers to push a button on the card to toggle between payment methods (credit or rewards points).  In general, both Visa and Mastercard offer OTP services globally, through their Verified Page | 7 by Visa and SecureCode systems, respectively. Card-issuers can choose to participate— and most prominent banks have chosen to participate—by offering these services to their customers, but they need not be accompanied by issuing a physical OTP-generating card.The lack of widespread adoption of OTP smart cards thus far is a result of two factors. First, thespread of smartphones has in some cases rendered these cards obsolete, especially for moresophisticated consumers.Secondly, the fact that issuers continue to charge customers for the added OTP service has alsolimited adoption. Going forward, as powered smart card costs come down, issuers may be betterable to absorb the added cost without passing along the cost directly to the consumer. When thathappens, the technology may have a better chance of penetrating the larger smart card marketmore deeply. 2.3.3 Powered Smart Card ManufacturersExhibit 2-2 contains an overview of several key smart card makers, with highlights of these firmscurrent product portfolios and outlook.Exhibit 2-2: Overview of Selected Powered Smart Card ProvidersCompany Product(s) HighlightsActivIDentity OTP tokens and cards, as well as a Focus is on ID authentication for all sectors –(U.S.) wide variety of ID authentication government, corporate, banking productsAniCa (Taiwan) Stored value and OTP cards that are Active in the Asia-Pacific region; Using ISO and/or EMV-compliant; electronic paper displays Also has powered card product specifically designed for use with Apple iPhone for contactless payment capabilitydz card Full range of smart card products, Early pioneer of the OTP card business, now(Thailand) including powered versions (for OTP, offering powered smart cards to banking, ID, etc.) and government sectors; has employed Aveso Also offers chips, software, and electrochromic displays in its products subcomponents directly to other card manufacturersEMUE Offers OTP cards, but also offers Partnered with Visa to offer card to issuing(Australia) mobile token products partner banks, especially in EuropeGemalto (The Mid-sized firm with a broad portfolio Acquired Aveso (maker of electrochromicNetherlands) of security products, including OTP displays) in late 2011/early 2012. cards and smart ID cards (and tokens, fobs, etc.)
  • 12. Exhibit 2-2: Overview of Selected Powered Smart Card ProvidersIdentita Powered smart cards – OTP via Firm is focused on powered smart(Canada/Barbados) audio and display cards only, unlike most that offer Offers three-factor authentication powered smart cards as part of a with added biometric capability larger conventional smart card Plans to introduce GPS-enabled business. Page | 8 cards Firm also has unique, proprietary acoustic OTP generation technology.InCard (Italy, subsidiary OTP cards for banking, customer Recently, focus has shifted somewhatof STMicroelectronics) loyalty, and security toward mobile payment technologies (card-free)Inteligensa (Venezuela) Firm offers full range of EMV- Active mostly in Latin America, butand Intelicard (Italy) compliant powered and non- recently acquired Italian firm powered smart cards targeting Intelicard, which will expand its reach banking, healthcare, and security into Europe and the rest of the world. industries.Nagra ID (Switzerland) OTP cards and a full range of non- Works with Master Card and a group powered smart cards of EMV-certified partner companies working in the banking, healthcare, and ID sectors. Firm has had several early design wins in the powered smart card industry.SmartDisplayer (Taiwan) Powered smart cards with integrated Offers cards with either LCDs or displays for OTP and other electrophoretic displays; key partner applications (dynamic CVV, for electrophoretic displays is E Ink balance/value check, etc.) (U.S.); certified by VisaSecure Metric OTP cards plus a full range of Particularly active in the bankingTechnology (Malaysia) advanced security products, industry in Southeast Asia including tokens & fobs, and software© NanoMarkets 20122.4 Components and Technologies for Powered Smart CardsThinness, durability, and flexibility in this sector are critical to success, because poweredsmartcards (and smartcards in general) must slip inside a wallet. These requirements create aneed for somewhat specialized components.Specifically, as these cards and similar ones spread, they will also create derived demand fornovel components including (1) new displays, like electrophoretic displays and electrochromicdisplays, because LCDs have drawbacks; and (2) low-cost printed or thin-film batteries, becausebutton cell batteries are too thick.All of the applications discussed in this report are a natural fit for powered smart cards, and weexpect to see them increasingly moving toward powered smart card technologies. Althoughmarket penetration of powered smart cards today remains quite small, principally because of theirhigh cost compared to conventional/non-powered cards, in the long run, the value proposition forsuch smart cards will get easier and easier to make.
  • 13. Economies of scale will slowly but surely be realized, and component prices will come down. Inaddition, more and more components will move toward printed and/or solution-processedtechnologies that are inherently compatible with card manufacturing. The "ultimate" poweredsmart card will be one that has a printed battery, but also a printed display (probably based on e-paper), as well as, potentially, printed low-cost logic and even memory components. Page | 9 2.4.1 Thin-Film and Printed Batteries for Powered Smart Cards—Important FactorsThe obvious choice for replacement of too-thick button cell batteries in smart cards would be touse one of the new breed of thin-film and/or printed batteries that are currently being developedby a small group of companies. Among the firms in this group that are specifically targeting thesmart card sector are Infinite Power Solutions (U.S.), Blue Spark (U.S.), Rocket Electric (Korea),and Solicore (U.S.). Solicore is the most important of these firms in terms of actually gaining somemarketplace traction.In the face of competition from conventional smart cards and from mobile (card-free) OTPsolutions, smart cards are not growing as an opportunity for printed and thin-film battery firms atthe rate that was once hoped. Nevertheless, powered smart cards remain an important short-termopportunity for these types of batteries, because they offer a unique combination ofcharacteristics—thinness, flexibility, and (potentially) low cost and compatibility with credit-cardmanufacturing processes. In contrast, conventional battery technologies, with their thick formfactors and liquid electrolytes, are simply not ideal for integration into plastic cards.Thinness and flexibility of printed and thin-film batteries: Thinness and flexibility in the smartcard sector is obviously critical, because these cards must be thin enough to slip easily into awallet. For example, we note that printed battery manufacturer Blue Sparks UT Series is beingpitched toward the smart card market on the grounds that it is the industrys thinnest battery—500microns (0.020 inches).Market impact of smart card lamination requirements: Smart cards are generallymanufactured using a hot lamination process, which can last as long as 12 minutes.Conventional batteries, such as coin or button cells—even assuming that they were thin enoughto be used—contain liquid electrolytes that would not survive such high temperatures, especiallyin a charged state. Furthermore, there are additional safety concerns related to usingconventional batteries because of potential gas or liquid release.However, we note that hot lamination is also a problem for the current generation of printedbatteries from Blue Spark and others, which often use liquid electrolytes and are thus relegated touse only in cold lamination processes.Thus, an immediate opportunity for printed battery suppliers is to develop and market versionswith solid-state electrolytes that can be deposited during manufacturing as a paste and then dried.This approach has been adopted by Solicore, which, as we noted previously, is the dominantsupplier of batteries to the powered smart card business.Thin-film versus printed batteries in smart cards: The most obvious contenders for poweredsmart card applications are printed batteries, since smart cards represent a highly price-sensitiveapplication. Lost cost, primary cell, printed batteries are a particularly good fit for a mass-marketcredit card that is produced in high volumes and has a low power requirement.

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