New research shows that the market for smart cards used in the Government & Health sector has shown strong growth over the last few years, growing from under 200 million units shipped in 2005 to over 400 million this year. However, this sector is set for a bit of a rollercoaster ride; 2009 will see the market peak and then fall into decline – at least temporarily…

The Chinese Citizen ID scheme has been largely responsible for the success of this sector in the last two or three years, but by the end of next year most relevant recipients will have received their cards. The market will then move to one dominated by replacements, and with an estimated replacement rate of 10 years, this will result in the market tailing off.

However, market research company IMS Research believes that in the medium term, the future for this application is in fact very bright. A plethora of government schemes are underway or at least in the pipeline; and more are projected to be announced. Compared to the Chinese scheme, these may well prove more lucrative for the more established smart card and smart card IC suppliers who were, in general, locked out of the Chinese market by a preference for domestic suppliers.

The economic downturn may even provide an upside for this industry as some governments push forward on major infrastructure projects in order to stimulate economies. The Government & Health application area is projected to bounce back and surpass 2009 unit shipment levels in 2012. In terms of revenue the bounce back is forecast to come a year earlier, primarily owing to the fact that the market will move from a lower cost memory driven market to one dominated by the higher value microcontroller cards.

IMS Research’s prediction are to be found in a recently published report “The Worldwide Market for Smart Cards & Semiconductors in Smart Cards”.

Source Security Document World