MUMBAI
APRIL 18, 2007

Escalating smart card applications were giving a boost to Asian smart card vendors, a news analysis by a consulting firm recently said.

Security-related smart card applications coupled with the low labor and materials cost in Asia, drove local smart card and silicon vendors to deliver cost-effective, high-end products and value added services.

The new analysis from Frost & Sullivan (F&S) - Profiles of Local Companies in the Smart Card Value Chain in Selected Asian Countries - revealed that the explosive growth of the smart card market in Asia Pacific had resulted in an emerging pool of local vendors. These included silicon vendors, smart card and reader manufacturers and system integrators. A large proportion of these vendors were serving the regional market effectively, and further driving the growth in the region, F&S said in a statement.

'The Asian smart card market is witnessing an increase in the number of regional participants in various segments of the value chain, from manufacturers to system integrators. These local vendors have an advantage, particularly in large-scale government projects," said F&S Industry Analyst, Michelle Foong.

"Apart from understanding the economic policies and other rules and regulations of the regional market, the local companies also share close business ties with the governments of their region, which further strengthens their position," she added.

In addition, the increasing use of smart cards in government projects was driving market growth, enabling smart card vendors in Asia to notch up higher profits. Manufacturers in Asia were fairly protected by the local economic policies that allowed them to operate and profit in a relatively sheltered environment.

Subsequently, F&S said, smart card vendors in Asia are less motivated to invest in R&D and innovative high-end products as compared with their European competitors.

However, since Asian companies in that continent lacked brand recognition globally, the competition from international vendors was proving to be a credible threat, forcing them to invest more in upgrading their R&D facilities and delivering higher end products.

"With growing opportunities in various applications such as enterprise security, transportation and banking, companies in Asia are likely to exploit their ties with international partners to penetrate overseas markets," noted Foong.

Further, expansions in mobile communications, contactless payments as well as the mass deployment of Europay, MasterCard, Visa in the Chinese and other Asian markets were likely to help Asian smart card manufacturers and integrators garner significant revenues.

Profiles of Local Companies in the Smart Card Value Chain in Selected Asian Countries was part of the Smart Card Growth Partnership Service, which also includes research in the world smart card market, world smart card IC market and world contactless smart card market.

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