[MSN] RFID tags: driving toward 5 cents

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RFID tags: driving toward 5 cents
RFID-tag prices haven't yet reached the magical 5-cent mark, but aggressive
changes in technology are pushing down their cost and improving performance.
By Charles J Murray, Technical Editor, Design News -- EDN, 6/8/2006

AT A GLANCE 
Adoption of RFID lags behind forecasts, partially because potential users
don't understand the benefits of RFID.
Currently, 5-cent RFID tags lack the capabilities of their more expensive
counterparts.
Process changes take time, especially when they involve retraining people
and reprogramming machines.
Developing the infrastructure for RFID calls for major capital investment.
  
Makers of RFID chips and so-called inlays, which include the chip, antenna,
and substrate, have been trying for years to reduce prices for RFID tags to
5 cents. However, these manufacturers hesitate to do so because those less
expensive tags may lack the capabilities of their more expensive
counterparts. "We've been talking about the mythical 5-cent price point for
years," notes Mike Liard, RFID-practice director for Venture Development
Corp. "Is it possible? Yes. But it may not necessarily be the type of tag
you're looking for." As a result, most manufacturers haven't rushed to put
5-cent tags on the market. Instead, they've been content to cut prices at a
steady rate of about 5 to 10% per year since 2000 while improving the
technology. As a result, users of the tags are employing them in
applications no one dreamed of a decade ago, despite their inability to
reach the elusive nickel price.

At McCarran International Airport in Las Vegas, for example, operators
attach "bag tags" with dual dipole antennas to luggage to ensure that RFID
readers in the handling system can communicate with all bags, no matter
their orientation on conveyor belts (picture). The technology, which Symbol
Technologies developed, integrates two antennas 90° from one another; thus,
the RFID tags can communicate with the airport's RFID readers, no matter how
baggage handlers toss the luggage onto conveyor belts. "If you wanted to
have a lower cost solution in which one antenna would work, the bags would
have to be oriented in a certain way, and they'd have to pass the reader in
a certain way," says Alan McNabb, senior director of product management for
Symbol's RFID tags. "But with our tag, the orientation of the bag doesn't
matter."

Such dual-antenna tags haven't reached rock-bottom prices, but at roughly 20
cents each, they offer capabilities nickel tags can't match. Similarly,
retailers have begun using tags with specialized antennas to enable garments
buried in stacks to successfully "talk" to RFID readers. Again, cheaper tags
are unlikely to achieve such feats.

The bottom line is that while RFID vendors have been lowering their prices
and improving their technology, they've been carving out new niches for
themselves. Increasingly, RFID tags are finding use on pallets (picture),
cartons, garments, luggage, DVD cases, pill bottles, and library books. And
experts foresee their future use in low-cost, everyday items—from lipstick
cases to cereal boxes. Although they won't soon replace bar codes, they
nevertheless offer non-line-of-sight capability, which means that they can
gather information on their whereabouts without the need for individual
handling. As a result, they can deter theft and counterfeiting. 

 
"RFID is not labor-intensive," notes Sanjay Sarma, associate professor of
mechanical engineering at the Massachusetts Institute of Technology and
research director for MIT's Auto-ID Center. "It gives you information you
can't get with a bar code, unless you have an army of people scanning every
product."

Cost still key 
At costs of 10 to 20 cents apiece, however, RFID tags are still far more
expensive than bar codes, which is why the drive to 5-cent tags continues.
"The state of momentum within the industry toward the 5-cent mark is
healthy," Sarma says. "The good news is that it has gone beyond research.
It's moved into development, and a lot of companies are looking to go to 5
cents."

Whether 5 cents is their ultimate goal, makers of chips and inlays alike
have targeted lower cost. Chip designer Impinj Inc, for example, is cutting
costs through a novel semiconductor approach that enables the company to
apply low-cost CMOS techniques to RFID devices. Unlike conventional
RFID-chip makers, which typically use extra photo masks and process steps to
create onboard, nonvolatile EEPROM or flash memory on RFID chips, Impinj
engineers use "self-adaptive silicon." Using the technique, they create
special transistors containing gates that store bits of memory. By
fabricating such transistors, they can make nonvolatile memories without
resorting to the extra photo masks and steps that EEPROMs and flash memory
require. "Self-adaptive silicon enables us to make nonvolatile memory with
the simplest of CMOS processes," says Dimitri Desmons, vice president of
marketing for Impinj. 

Impinj engineers say that self-adaptive technology can potentially cut
pennies from chip costs (picture). Moreover, such technologies even further
reduce costs when manufacturers combine them with high-volume-assembly
methodologies, such as those that Alien Technology developed. Alien, which
employs FSA (fluidic self-assembly), recently cut inlay costs to 12.9 cents
each (picture). A company founder developed the technique, which he thought
of while playing a child's game that required him to maneuver steel balls
into tiny slots. The technique allows the company to package as many as 2
million chips per hour into RFID tags, compared with 10,000 per hour using
conventional methods. The trick, the company says, is to suspend the tiny
semiconductor devices in a liquid and then "flow" them across the holes; the
devices then drop into these holes and self-align. The self-assembly
technology combines with growing production volume to enable Alien to cut
its tag costs by nearly 50%, down from 23 cents each.

Other vendors have attacked the cost issue from a different perspective.
Symbol Technologies, for example, has cut the cost of its tags through
multiple efforts, not the least of which is its move from silver to aluminum
antennas. The company, which makes high-performance RFID systems, moved from
the higher conductivity of silver to the lower conductivity of aluminum by
developing an on-chip "charge pump" that helps boost the continuity and
strength of RF signals coming to the antenna.

An Internet of things 
Such technologies are making inroads for RFID. Symbol, for example, has
placed similar technologies on pill bottles for the counterfeit-wary
pharmaceutical industry. "The pharmaceutical industry has a huge issue with
counterfeit products coming through the market," says Dirk Morgenroth,
marketing manager for RFID at Philips Semiconductors. "They've been very
vocal about using RFID."

Manufacturers, including Philips, Texas Instruments, Impinj, and Alien, have
also placed their RFID products on shirts, pants, and sweaters in the
fashion industry, as well as in library books and on DVD and CD cases. The
industry's biggest score to date, however, could be in the works in Europe,
where rumor has it that the European Central Bank is working with vendors on
weaving RFID into the fabric of its bank notes. The technology, most
probably for incorporation into larger bills, would enable money to carry
its own history. Hence, it would become more difficult for kidnapers to ask
for unmarked bills. It would also enable law-enforcement agencies to "follow
the money" in illegal transactions.

The project, which Wired and EE Times originally reported, was supposed to
take effect in Europe's 2005 currency. Hitachi Ltd, which announced in
February that it has developed the world's smallest RFID chip (picture),
measuring just 0.4×0.4 mm×7.5 microns, has frequent links with the European
reports. Hitachi, however, denies it has worked on such a project. A
European Central Bank spokesman says, "We cannot say anything about this,
and we've requested that our providers sign a mutual agreement not to talk
about it."

Even if such projects never reach fruition, however, experts are confident
that RFID will eventually be the backbone of a plan that researchers call an
Internet of things. In this scenario, almost everything, large and small,
connects through the Web. The plan, which hardware and software protocols
describe, calls for all information on a product to be written in a code
based on XML (Extensible Markup Language). The code, which forms a Web page
for each item, would connect through RFID tags to Internet servers. Thus,
anyone in any location could instantly identify all products. A broad
coalition of corporate giants, including Coca-Cola, International Paper,
Johnson & Johnson, Kimberly-Clark, Pepsi, Procter & Gamble, and others, have
supported such efforts through MIT's Auto-ID Center.

Low cost is key to such plans, but researchers have worked that out, too.
Ultimately, they say, everyday items will incorporate RFID, not on sticky
tags, but through integration into the corrugate of cardboard boxes. Ongoing
effort in this area will be one of the keys to lowering RFID cost,
researchers say, because the technology eliminates the need for certain
parts of the tag. Manufacturers would integrate such technologies during the
cardboard-manufacturing process, thus enabling cost reduction.

"These RFID technologies will coexist with the bar code for a long time into
the future," says Sarma of MIT. "But they will provide information that a
bar code can't: 'Did the item go to the sales floor? Did the meat sit in the
fridge long enough?' You can't know that with a bar code." Sarma says such
technologies will become widespread when production volume reaches a tipping
point. When that scenario happens, it will drive costs down to a level low
enough to motivate use of RFID on everyday items. And with
retailers—particularly Wal-Mart—pushing for RFID, the concept is realistic,
experts say. "The question now is the tipping point," Sarma says. "When do
you get to the percentage that causes you to say, 'I'm going to put the tag
inside the corrugate?' In the next year, we could see it happen."

Design News is a sister publication of EDN. This article originally appeared
in Design News' April 24, 2006, issue.

http://www.edn.com/