The Universe of RFIDs: Stars Microelectronic Thailand

Tiny RFID

The universe of RFIDs is an important component of the debate on security versus privacy. RFID or radio frequency identification tagging is an automatic ID system using small radio frequency identification devices to identify and track people, pets and commercial products. The technology is gaining traction in the USA, Europe and Asia, with the retail, distribution, transportation, military, and healthcare industries the major demand for the technology. Globally the RFID market was worth US$7.67 billion in 2012, an increase of 18% from 2011. In fact, over the past five years the RFID market has increased by a CAGR of 14%. In total, 4 billion RFID tags were sold in 2012 compared with 2.95 billion in 2011. The major drivers of growth in the RFID market are:

·         Growth of passive UHF systems for tagging apparel – this alone makes up demand for 1 billion RFID labels, with this set to grow to 1.4 billion tags in 2013;

Ethical Dilemma - Tracking Humans

·         Growth of RFID for tickets used in transportation – this accounts for 500 million tags demand in 2012;

·         Governments increasingly promulgating legal requirements to fit RFID into pets and farm animals, such as in New Zealand and Europe;

·         Governments utilizing RFID in non-stop road tolling, library books tagging, national ID cards and passports, and military applications;

·         Emerging market adoption of RFID technology.

Nowhere is private in the universe

One company seeking to take advantage of the eagerness of emerging markets to adopt RFID technology is Thailand’s Stars Microelectronic Thailand (SMT), which is listed on Bangkok’s SET stock exchange. They currently trade at THB6.90 per share, within a 52 week range of THB6.30-12.80 and with a market capitalization of THB2.9 billion. SMT provides microelectronic modules assembly (MMA) and integrated circuits, with MMA revenue contributing 60% of total revenue in 2012. MMA is used to put together hard disk drives, computer notebooks, touch pads, clear pad assemblies for touch screens for smart phones and mp4 players, and liquid crystal display (LCD) modules for office and mobile phones. Currently SMT also trade in the USA and boast major clients in North America, Japan, Europe, and Asia. They are Thailand’s only full-service manufacturer providing both MMA and integrated circuits packaging together, a quality highly sought after by the world’s leading computer and electronic equipment manufacturers. Furthermore, SMT is the only company listed on the SET currently to enjoy a corporate income tax exemption for eight years (with no cap) from the Board of Investment of Thailand, which will inevitably save the company millions of dollars over the remaining five years.

Whilst SMT is currently expanding its MMA production capacity to 100 million units per year and its integrated circuit packaging production to 1,200 million units per year, they are making a concerted push into the RFID market. They plan to move swiftly into the market by tapping into advanced technology from a Japanese partner, Sinfonia Technology. They have a JV called SS RFID, which is 75:25 between SMT and Sinfonia, and expected to list itself on Bangkok’s SET exchange within three years. The advanced technology from Sinfonia is expected to halve operating costs and enhance SMT’s global competitive advantage. SMT aim to increase its RFID manufacturing capacity to 500 million pieces per year by 2018, from 100 million currently, which would propel them into one of the largest global RFID manufacturers. They are on track to realise revenues of THB100 million this year from RFID manufacturing alone, a 30% increase from 2012.