the smart card integrated circuit ecosystem in the americas – ready for a turnaround?

The Smart Card Integrated Circuit Ecosystem in the Americas – Ready for a Turnaround?

Peter Finalle, Research Analyst

Smart Cards

June 24, 2009

2

Agenda

Smart Card Market Overview (as it applies to integrated circuits)

-Current State of the integrated circuit market

-Smart Card/Integrated Circuit Comparison

-Integrated Circuit Features in Demand

-Ecosystem

-Life Cycle Overview

Integrated Circuit Market Overview

-Market Participants

-Drivers and Restraints

-Microcontroller/Memory chip

-Chip and Rom size

-Types of memory overview

-Types of memory details

-Crypto processors

Conclusion

3

Economic Effects on the Smart Card Integrated Circuit Market

•Limited IT budgets will hinder current and near-term future smart card deployments

•New projects in any market will be limited

•Many card roll-outs will be delayed or canceled

•New or high-end technology will be the least sold (low-cost will be the focus)

•Lower cost technologies are highly entrenched in the NA and LA regions

•Ubiquity of magnetic strips and readers

•Smart card adoption in the United States has been slow

•U.S. has not experienced fraud levels of that in other regions

•Smart cards will need to make a clear and obvious case for their added value

4

Smart Card Trends as they relate to Integrated Circuits

Low Cost as a Driver

Demand for a Higher Level of Security

More Advanced Applications

Smaller Power Draw

Contactless Technology Demand

Large Markets (Government & SIM)

Overall Smart Card Growth

Competing Technologies

Public Distrust

Low cost Integrated Circuits

Advanced Chips have Advanced Security

Increased Memory Size

Smaller Physical Size

Contactless Circuits

Large Integrated Circuit Roll-Outs

Growing Demand for Integrated Circuits

Lower Integrated Circuit Costs

Distrust for Integrated circuits

Smart Cards Integrated Circuits

5

North and Latin American Emphasis on Features

Power Consumption Low Cost Contactless Support Security Capabilities

6

Smart Card Integrated Circuit Ecosystem Demand

<<< Features >>>

<<

<S

ecurity

>>

>

Vendors

Regional Standards

Consumer Demand

Competition / Technology

7

Average Smart Card System Lifecycle

14

Short Life Cycle Average Life Cycle Long Life Cycle

Government

Corporate

Payment

Transit

Retail

12

10

08

06

04

02

00

Average Lifecycle for the Entire Smart Card System based on application

Nu

mb

er o

f Ye

ars

for th

e T

ota

l Syste

m L

ife-c

ycle

8

The Integrated Circuit Market

9

Competitive Landscape

10

Drivers and Restraints for the NA and LA Regions

Low Cost Solutions

<<< Severity >>>

Financial Projects

Government Projects

Broadband Penetration

GSM Dominance

Liability Shift

Multi Function Support

High Costs

No Local Manufacturing

Payphone Decline

Frost & Sullivan. 2009 Smart Cards Integrated Chipsets (North and Latin America)

Drivers and Restraints Chart

Re

stra

ints

Driv

ers

11

Shift from Memory to Microcontroller Integrated Circuits

Microcontroller Integrated

Circuits

Memory Integrated Circuits

Current Year

Market Shift

Frost & Sullivan. 2009 Smart Cards Integrated Chipsets (North & Latin America)

Dynamic Shift from Memory Integrated Circuits to Microcontroller Integrated Circuits

12

Average Chip Size and EEPROM size

250nm

32kb-64kb

EEPROM

250nm +

8kb-16kb

EEPROM

250nm

128kb

EEPROM

130nm

256kb

EEPROM

130nm

512kb

EEPROM

90nm

128kb

EEPROM

90nm

256kb

EEPROM

64nm

512kb

EEPROM

<<<Legacy Technology Advanced

Technology>>>

40%

35%

30%

25%

20%

15%

10%

05%

00%

Chip Size

EEPROM

Chip size correlation with EEPROM size, by technology level -2008 (Including SIM)

Pe

rcen

tage

of c

ard

s

13

Limitations with Current Smart Card Memory: the Eventual Replacement of EEPROM as the Standard

<<

<M

atu

rity In

Sm

art C

ard

Ap

plic

atio

ns

>>

>

MRAM

EEPROM

Flash

FRAM

<<< Practical Transaction Speed >>>

14

Memory Standards: Breakdown

EEPROM

Flash RAM

Ferroelectric RAM

Magnetoresistive RAM

• Hardware limitations• Slow performance

• Shorter lifecycle• Few smart card deployments with this technology

• Costly technology• Could have security vulnerabilities

• Costly technology• Significant lack of technology maturity

• The current standard• In wide use• Easy to program for

• Significantly faster than EEPROM• In wide use for other applications• Used in some smart card applications

• Over 20% faster than Flash RAM

• Faster than the other three memory technologies

Strengths Weaknesses

15

Crypto-Processor Popularity

NorthAmerica

90%

80%

70%

60%

50%

40%

30%

20%

10%

00%

LatinAmerica

EMEA APAC

Approximate percentage of cards equipped with Crypto-Processors by

region

Pe

rcen

tage

of c

ard

s

16

Conclusions

Smart Card integrated circuits are in a state of growth in the North and Latin

American regions

Microprocessor integrated circuits are on the rise

New memory technology is beginning to show up in smart card projects

Crypto-processors are not in high demand in the United States

Low cost is the current driver in all North and Latin American countries

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For Additional Information

Jake Wengroff

Corporate Communications(210) 247-3806jake.wengroff@frost.com

Craig Hays

Sales ManagerInformation & Communication Technologies

(210) 348-6420chays@frost.com

Shyam Krishnan

Research Manager

Smart Cards

(210) 348-1018

shyam.krishnan@frost.com