With the end of 2014 fast approaching, I wanted to provide some of ABI Research’s top level findings and success stories within the three primary smart card market verticals, whilst presenting a preview into our market expectations and makeup for 2015.
Firstly, I think it’s important to note that the SIM card and government ID market will bounce back in 2014, both expected to post shipment growth. In 2013, the government ID market retracted slightly, due to large scale deliveries the year previous into Indonesia’s pure contactless national ID card project paired with Germany’s near completion of its healthcare card issuance. These two projects pushed shipment numbers above the market norm, which presented an overinflated view of the market.
2014 YoY government ID shipment growth, although forecast to be flattish at 3.4%, is a step in the right direction. The market does need to be approached with an air of caution, as the persistent issues around project delays continues, a scenario which ABI Research foresees as an ongoing market bone of contention for the foreseeable future. Having said this, the future business pipeline looks healthy, not just driven by delayed project start dates moving into the future, but additional new projects specifically within the deployment of eID cards and smart driver licenses.
The SIM card market experienced a significant shipment decline in 2013, down approximately 200 million units. Large markets such as India, which implemented registration regulations, have now stablished and those teething problems which resulted in long lead times between registration and SIM deployment which effective overall shipment levels last year have been worked through.
Although growing, driven by factors such as the deployment of higher end features such as SWP and increased coverage within the M2M market, long gone are the days of double digit YoY growth. The mature and over penetrated nature of the market has not gone unnoticed by those active vendors. It was already noted in 2013 that a number of the large SIM IC vendors shifted strategy, moving away from the commoditised low cost SIM market, moving toward a business model to support a lower volume, but higher value market in an effort to differentiate and move toward a higher value proposition which supports greater revenue generation per SIM. Moving into 2015 this will likely remain a key strategy, with the low cost volume side of the market continuing its migration to China.
And finally the payment cards market is once again proving to be another highlight of the year. China continues its migration to its PBOC standard, and is expected to ship volumes in excess of 600 million units by year end 2014 The U.S. is beginning to show some extremely positive steps towards its EMV migration, likely to exceed initial expectations with shipments totalling 180 million forecast by year’s end.
The payments market, from a vendor perspective, is fast becoming a U.S. v.s. China scenario. Next year’s market shares will be won and/or lost based on the continual success of migration in these two countries.
Initial reports suggest that the Chinese market is beginning to slow and flat growth would not be entirely unexpected, in large part due to oversupply and a high level of inventory currently in the hands of the Chinese issuers. Time will tell, but given the current expectations, it is largely expected that those vendors with increased activity in the U.S. may close the market share gap in 2015 on its competitors with majority share in China.
