Shenyang Piotec Technology Co.,LTD.
Shenyang Piotec Technology Co.,LTD.

Analysis of the Competition Pattern and Development Space of the Smart Card Industry in 2020

Smart card is a general term for a card that is embedded in an integrated circuit chip and contains a microprocessor, storage unit, and chip operating system, also known as a CPU card. It has good functions such as data storage, command processing, and data security protection, among which the main types of smart cards include telecommunications cards, financial IC cards, ID cards, etc. The card base materials currently used in smart card production mainly include ABS, PVC, PET, PETG, etc. Customers' selection of card body materials mainly considers factors such as market environmental requirements, printing effects, smart card functions, and application fields.

Since the emergence of the smart card industry in the 1980s with the development of the communication industry, after more than 30 years of vigorous development, the industry has become more mature. From an institutional perspective, industry regulatory agencies and self-discipline organizations are operating maturely, and relevant systems and standards are gradually established and improving; From a market perspective, the competition in the industry is fierce, with high levels of product standardization, complete structure, low price, and excellent quality, resulting in the replacement of old and new products; From the perspective of enterprises, the number of enterprises in the industry is stabilizing, product profit margins are constantly shrinking, core technology and research and development capabilities are becoming increasingly important, and enterprises are facing important challenges of transformation and upgrading. The smart card industry can be divided into upstream chip and module industries, as well as downstream card reading equipment manufacturing and various application industries based on the position of the product in the industry chain. 

According to the "2020 2026 China Smart Card Industry Market Analysis and Investment Prospects Research Forecast Report" released by CICC Enterprise Trust International Consulting, global smart card shipments increased by 13.11% in 2015. Benefiting from the global LTE network migration and the development of communication technology, smart cards in the communication field, as traditional smart card products, account for the largest proportion of shipments. Affected by the global EMV migration, the growth momentum of financial payment smart card shipments is strong, and the global market share of smart card applications in the financial field is about 31%. The smart card industry in China is developing rapidly, and the driving force of communication smart cards and financial IC cards has become the main factor for the growth of the domestic market. From the perspective of the competition pattern in the Chinese smart card market, except for foreign-funded enterprises such as Jinyatuo, Jinbonda, and Jiede, all of the top ten in the current market are local manufacturers. Among them, companies such as Dongxin Heping, Woqi Data, and Datang Microelectronics also have certain competitive strength in the international market. From the perspective of the competitive landscape in the smart card chip market, with the rapid growth of domestic integrated circuit design enterprises in China, the smart card chip market has broken away from the heavy reliance on foreign semiconductor manufacturers. Some domestic manufacturers can already design and produce smart card chips with the same functions as foreign products, while some foreign chip companies have also abandoned the development of smart card chips in some fields due to cost and profit factors. Nowadays, Chinese smart card chip manufacturers have formed two types of competition patterns between China and foreign countries, with foreign companies represented by Samsung, Italy France, Infineon, NXP, Reza, and others, while domestic companies represented by Datang Microelectronics, Huahong Design, Fudan Microelectronics, China Electronics Huada, and Tongfang Microelectronics. In the packaging process of smart card modules, there are well-known enterprises such as China National Electric Corporation, Shanghai Innor, Shandong Shanaluminum, and Shanghai Changfeng. Nowadays, the Chinese smart card industry has formed a complete industrial chain of chip design, chip manufacturing, module packaging, and smart card production and development. 

According to the statistics of the IC Card Application Group of the National Gold Card Office and the Smart Card Special Committee of the China Information Industry Chamber of Commerce on member units above designated size, in 2014, China Telecom issued an additional 300 million cards, an increase of 33%, while the issuance of financial IC cards increased by 260 million, an increase of 76%. In 2010, the emerging application fields of smart cards in China, represented by urban all-in-one cards, social security cards, and bank IC cards, showed strong development momentum, with sales growth rates of 14.2%, 19.3%, and 32.9%, respectively. The urban one card system is currently widely used in urban public transportation, automatic toll collection on highways, intelligent buildings, various public toll collection, intelligent community property management, attendance and access control management, and campus and factory one card systems. Among these applications, the one card system for access control has seen rapid growth in recent years. Taking campus applications as an example, the one card construction in only 1792 universities in China has a market potential of nearly 6 billion yuan.

In addition, various links in the industry chain of the access control card system, such as radio frequency cards, reading and writing equipment, electric locks, software, and system integration, have also achieved rapid development. Under the recent implementation of the residence permit system by the country, the social security card market has rapidly developed from scratch and from small to large. For bank IC cards, on March 15, 2011, the People's Bank of China issued the "Opinions on Promoting the Application of Financial IC Cards" (referred to as the "Opinions"), deciding to officially launch the migration of bank card chips nationwide. This indicates that 2011 will be the first year of bank IC cards, and the domestic bank IC card market will inevitably enter a rapid growth channel. According to the "Economic Operation of the Communication Industry in November 2016" released by the Ministry of Industry and Information Technology, as of November 2016, the number of mobile phone users in China was 1.32 billion, and the proportion of 4G users reached 55.7%. 2G and 3G users were steadily transitioning to 4G users, and 4G users continued to grow explosively. With the upgrading of communication networks and the continuous growth of mobile phone users, the communication smart card market has growth potential. 

Due to its advantages such as scalability, convenience, and security, the demand potential for smart card market is enormous, and the downstream application space is vast. In 2018, the global shipment volume of smart cards reached 36.8 billion, an increase of 2% compared to 2017. It is expected that the global shipment volume of smart cards will reach 38.4 billion by 2022. 5G technology has a significant improvement compared to 4G technology, which is an inevitable development direction for the future market and will bring new growth opportunities for communication smart cards. It is predicted that 5G will be connected to new terminal devices, and Asia Pacific will become the second fastest growing region for 5G users after North America. By 2025, the number of 5G mobile users will reach 550 million. The growth of mobile phone users and network migration will drive the growth of communication smart card sales.

In the future development of the Internet of Things, there will be a huge demand for smart cards, and it will also promote the further development of smart card technology. The important application fields of the Internet of Things, such as intelligent transportation, intelligent healthcare, finance and service industries, cannot be separated from the application of smart cards. In the field of intelligent transportation, non-contact smart cards such as urban all-in-one cards and highway express cards make transportation convenient and efficient possible; In the field of intelligent healthcare, the application of social security cards and medical cards makes it no longer cumbersome for people to seek medical treatment; In the field of finance and services, the issuance of bank IC cards greatly improves the security of personal accounts. At present, bank IC cards, social security cards, city all-in-one cards, and residence permits have become hot areas in the smart card market.