Current events give new meaning to “when the chips are down.” The global upheavals caused by the pandemic followed by a chip shortage means the numbers for the smart Government ID credentials market that grew slightly in 2021 will not increase in 2022. But that doesn’t mean that all bets are off. Increasing interest in developing a universally accepted smart vaccine passport may give rise to a new form of Government ID.
The global upheavals caused by the pandemic followed by a chip shortage means there was only modest growth for the smart Government ID credentials market last year and none expected for next year. According to ABI Research’s forecast, the worldwide shipments of smart Government ID credentials rose from 500.1 million in 2020 to 554 million in 2021 but will not rise in 2022 due to the chipset shortage. The demand for smart passports is not expected to return to what it was pre-COVID until 2024.
Due to a confluence of events, including the pandemic, a fire at a chip plant in Japan, arctic temperatures at chip plants in Texas, and bottlenecks for cargo ships carrying them, the demand for chips far outstripped supply in 2021. As production capacity will not be able to expand enough to meet the current need, the shortage will persist into 2022.
Less travel meant less demand for passports
The demand for passports has been lower than usual over the past couple of years because international travel was off the table for most people. Restrictions on entry to or return from foreign countries during the pandemic made crossing borders impossible in some cases and extremely complicated in others. Travel dropped significantly in 2019-2020 but started to resume in 2021, and that had a significant impact on the passport markets.
“The National ID and Passport markets will see small increases from the shortfall seen in 2020,” said Sam Gazeley, Digital Security Analyst at ABI Research. “Projects that have been postponed from last year or seen issuance levels vastly reduced have begun to spin-up, contributing to the year-on-year growth forecast to take place in 2021.”
Specifically, e-passport shipments for 2021 are estimated at 105.4 million units, which represents an increase YoY of 7.5% from 2020 to 2021. Even though many people have sought to renew their passports, issuance levels are not anticipated to return to what they had been pre-COVID --over 167 million units -- until 2024.
One of the biggest differentiators between 2020 and 2021 is the emergence of the COVID vaccine. Being able to ascertain vaccination status gives nations the confidence to allow visitors in again. Gazeley remarked: “While many countries are still in various states of travel restrictions, rising vaccination rates are tentatively opening borders, and this has injected some impetus back into the Government ID market.”
The rise of the vaccine passport
As Gazeley pointed out, vaccinations are the keys that unlock international travel. Consequently, there is new interest in chip-enabled IDs that can serve as vaccine passports. A smart version could be linked with a government-issued mobile identity. There are already several mobile identity projects underway in various countries, including the Philippines, Germany, China, and Argentina, where they are typically linked to a national ID and driver’s license.
At present, there is no standardized version that is universally accepted or officially endorsed by the International Civil Aviation Organization (ICAO). However, with some international cooperation, it may be possible to devise a universal mobile identity that will expedite international travel. Gazeley explained that it would offer the dual benefit of enabling a contactless experience for the boarding process and verified proof of vaccination status required for travel.
“It is worth noting that with the current interest in COVID-19 vaccine passports, the speed of border openings to international travel will depend, in some instances, on travelers having a vaccine passport. Such a digital credential would be the first instance of a mobile or digital identity playing a role in the realm of international travel and will serve as an aggregator toward mobile passports, especially with developments in standardization from governing bodies, such as the ICAO,” he concluded.
These findings are from ABI Research’s Government and Healthcare ID Cards.