The global push towards the use of electronic ID (e-ID) cards and e-passports has provided a welcome boost to the smartcard and biometrics industries. But it has also had an impact on inward investment,with major firms investing in capital infrastructure in strategic locations.
According to research and consulting firm Frost & Sullivan, the e-ID and e-passport market is an important growth area. “In terms of absolute size, it is relatively large.
It is also one of the five fastest growing application areas,” say Yiru Zhong and Jean-Noel Georges, Frost & Sullivan industry analysts.
Figures from one of the industry’s giants back this up. French digital security company Gemalto reports that its government programmes grew by 18% year on year for the full year 2009 and expanded by 32% in the first quarter of 2010.
Frost & Sullivan’s 2009 Quantitative Analysis of World Smart Cards report grouped the e-ID and e-passport market together under the ‘government and ID’ heading. This slice of smartcard applications accounted for 7.7% of all world smartcard shipments in 2008. It was the third largest single application, after SIMs at 63% and financial cards at 13.6%, according to the report.
The government and ID subsector is clearly robust, as the Frost & Sullivan figures reveal. The report says: “Government and ID applications are expected to register the fourth highest seven-year compound annual growth rate [of any sub-sector] of 7% between 2008 and 2015.”
Demand for e-passports and e-ID cards is increasing in a host of countries.Although the UK recently scrapped the former government’s proposed ID scheme, other countries – such as Belgium – remain committed to programmes that provide access to multiple government services, such as ID and social security,on a single card. And in India, where an ambitious ID card project is now under way, the result will be a massive roll-out of e-documents to the country’s population.
Smartcard manufacturers have been interested in the emerging Indian market for some time, thanks to increasing demand for applications including payment cards and mobile phone SIM cards.
In 2006, German security technology company Giesecke & Devrient (G&D) opened a smartcard production centre in the Noida high-tech industrial zone near Delhi, capable of producing more than 40 million chip cards annually. When it opened the site, G&D said that, although a significant amount of output would be SIM cards, the plant would also produce cards for other applications such as IDs and e-payments.
Europe’s local presence
In the EU, some foreign suppliers have opted to establish a local presence to deliver e-IDs and e-passports. “This is not only due to the business need to be close to the customer, but also because the high level of security required for such sensitive documents requires a visible presence for quick responses to risk events,” says the Frost & Sullivan report.
“This new line will enable us to expand this site’s activities to the public sector and meet the increasing regional and global market demand.”
Gemalto is one supplier that has taken the local route for certain markets. The firm’s vice-president for global marketing and communications,Hsin Hau Hanna, says: “We recently increased the manufacturing capacity in our Polish operations in the Pomeranian Special Economic Zone to produce electronic core technology for e-passports.
Gemalto plans to use the new Polish production line to serve the domestic market as well as major customers worldwide, such as national printing houses, and says the new plant is the culmination of investments it has been making in Poland since 1996.