Nickel tag will cost 16 cents

ARC Advisory Group says in a study that by 2008, it estimates the average price of a passive UHF radio frequency identification (RFID) tag will drop to 16¢, instead of the “nickel tag” predicted by some.

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Published in RFID Journal, the ARC study, “RFID Systems in the Manufacturing Supply Chain,” reports that in 2003, the average price of a tag was 91¢ for a passive HF tag and 57¢ for a passive UHF tag. The passive HF tag is predicted to be nearly 30¢ by 2008, but the report goes on to say that “some tag manufacturers with high-volume contracts may be able to offer passive UHF tags for as low as 5¢ each.”

The author of the study, Chantal Polsonetti, vice president of manufacturing advisory services at ARC, says the tag manufacturing process will have a major effect on costs. “Antenna attachment or tag assembly, not intergrated circuit production, will be a primary supply-side inhibitor to increased volumes and in turn lower-cost tags.” The report is based on a survey of virtually “all suppliers of passive and semi-passive HF and UHF tags.”

Adoption of RFID tagging by retailers will be dependent on tag prices. “This is evident in Wal-Mart’s contention that the next tier of applications—tagging higher-end items—are contingent on tag prices of 25¢ or less, and expanded item-level tagging on tag prices of 5¢ or less,” Polsonetti says.

Along with the cost of tags, another obstacle to widespread RFID implementation by manufacturers is the lack of a perceived business case.

On the other hand, the report predicts that the pharmaceutical market won’t be as sensitive to tag prices in the face of the Food & Drug Administration’s recommendation to use RFID technology to create a package “pedigree.” The potential for this market is 12 billion units, and pharmaceutical drugs have higher retail prices and higher margins.

More details about the ARC report are available at

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