2025 Was a Difficult Year for UHF RFID Chip and Inlay Suppliers; What’s Next?

In March, the RAIN Alliance published its annual figure for Ultra-High Frequency (UHF) Radio Frequency Identification (RFID) endpoint Integrated Circuits (ICs) shipped in 2025. This figure, 42.7 billion, was 19.1% lower than 2024’s 52.8 billion endpoint IC shipments, and was the first major decrease in UHF RFID shipments. The weakness in 2025 was due to two main factors:

• “Retail weakness” is one of the most frequently cited factors, driven by difficult macroeconomic conditions. This impacted both the apparel sector, with few new major deployments going ahead in 2025, and the general merchandise market, with a slight slowing in deployment across Walmart’s categories, partly related to tariff implications for Chinese suppliers shipping to the United States.
• Significant overstocking of endpoint ICs in 2024, in anticipation of high growth for 2025. The anticipation was undermined by difficult macroeconomic conditions, resulting in an excess of IC inventories held by inlay vendors and slower re-ordering.

These weaknesses were apparent across the UHF RFID market, but the collapse in endpoint IC shipment numbers was not evenly spread. ABI Research estimates that NXP Semiconductors saw shipments drop from 25.1 billion units in 2024 to around 12.5 billion units in 2025. In addition to the macroeconomic conditions cited above, this drop appears to reflect the outcome of NXP’s Intellectual Property (IP) dispute with Impinj, which resulted in NXP ordered to pay licensing fees for some Impinj IP, and delaying the launch of UCODE X because of the need to redesign the chip to avoid future IP infringement.

Impinj, by contrast, reported a 9% increase in endpoint IC sales, with volumes reaching around 29.2 billion units in 2025. This increase appears to have been driven, to a small extent, by some NXP UCODE 9 designs switching to Impinj’s M800 while awaiting the launch of UCODE X. But to a greater degree, this appears to reflect significant over-ordering of endpoint ICs by Impinj’s inlay customers in anticipation of a high allocation for 2026 in UPS’ 5+ billion RFID label project. Several inlay vendors missed out on the hoped-for allocation in this project, so the result will likely be that they will have excess M800 stock to work through in the early months of 2026. A final factor could be NXP’s focus on producing higher capacity ICs because of the demand for Artificial Intelligence (AI), which would reduce capacity available to lower-cost markets such as UHF RFID.

Outside of the top-two endpoint IC vendors, smaller endpoint IC suppliers’ (EM Microelectronics, Quanray, Fudan) shipment volumes decreased, but in a more limited way in line with the slowdown in projects. One company that suffered more than others was Shanghai Fudan. Its inclusion on the United States’ Bureau of Industry and Security (BIS) Entity List impacted its sales, and will likely require it to refocus its international expansion plans away from the North American market.

In addition to difficult economic conditions, inlay suppliers also had to deal with a number of other impacts. These include:

• Several key vendors lost their ARC certification, including Beontag, BoingTech, and SML. This significantly impacts these vendors’ ability to compete for large tenders, with volume and share going to competitors that have retained theirs—Avery Dennison, Arizon, Tageos, Checkpoint, Hana RFID, and Paragon ID.
• With limited “new growth” opportunity in 2025, inlay suppliers competed, to a great degree, over market share, resulting in some fierce price competition. Arizon and Tageos’ full year 2025 revenue was down, despite flat to low growth in volumes. Avery Dennison saw mid-single-digit revenue growth, and an estimated low-double-digit growth in label volumes, driven almost entirely by a greater allocation from the UPS logistics project. Checkpoint saw a small revenue increase, which appears to derive primarily from share of projects from vendors losing ARC certification, as well as the ramp-up of a couple of mid-size projects. Price competition is likely to stabilize, and prices may even increase over 2026, as vendors look to return to more normal margins. This trend has already been seen in adjacent low-cost IC markets.
• Tariffs impacted some vendors, such as Arizon, which saw its gross margin decrease from 32.2% in 2024 to 22.3% in 2025, stating that tariffs “caused nearly half of our profit last year to be contributed to the U.S. government as tariff revenue.”

Overall, inlay shipments in 2025 were slightly lower compared to the previous year, and slightly higher than total endpoint IC shipments in 2025, highlighting the IC overstocking in 2024 going into 2025.

While it is clear that there was a perfect storm of adverse circumstances buffeting the UHF RFID market in 2025, the mid- to long-term impact is less significant. The ecosystem will likely return to growth in 2026 (barring more macroeconomic challenges), with projects scaling across a wide variety of end markets, including:

• Grocery is the market most suppliers are excited for, with projects of high-single-digit/low-double-digit billions in the United States with Kroger and Walmart expected to start scaling at the end of 2026, focused on bakery and deli; and some projects beginning to yield fruits in Europe, focused on both perishables’ shelf life and loss prevention.
• Pharmaceutical projects are expected to start ramping up either in 2026 or in 2027, with major companies like Pfizer stating clear intentions to start tagging certain products at the source for its hospital customers initially.
• Logistics has been dominated by UPS, but growth will come from a number of directions, including the expansion of UPS’ program into Europe; FedEx’s preparations to expand its use of RFID; and a number of Chinese logistics providers growing their use of RFID.
• Apparel, the traditional market, will also see some new growth as new Requests for Proposal (RFPs) for high-volume projects are released, such as from Primark, and paused projects come back into play.

It is worth noting that while the impact on the endpoint IC and label industry was significant in 2025, there were more positive noises from the reader ecosystem. Walmart’s mandate for RFID across categories is starting to have an impact on mid- to small-size retailers, which appear to have reached, or be reaching, a critical mass of pre-tagged items appearing in their stores, justifying their investment in printers to tag the remaining items arriving untagged, and in readers to start using tagged items for inventory and analytics purposes. The diversification of vertical markets and company sizes using RFID is a clear sign of its long-term impact.