"Usage of RFID in retail is still not economically viable"

by Sharon Lobo    Oct 28, 2010

Damien LeconteJust about any electronic device you see around you is surely to have semiconductor at the heart of it. From cell phones to computers to televisions semiconductors are omnipresent. In the field of security too, semiconductors are very prevalent or else devices such as smart cards, security token, RFID etc would have been unheard of. In an interview to CXOtoday, Damien Leconte, Marketing Director, Memories & Secure Microcontrollers; Greater China & South Asia Region, STMicroelectronics explains the semiconductor market in India and how his company plans to tap this growing market. Excerpts.

How has your experience been in India and how different is market here as compared to the global one?
I will begin by giving a brief introduction of our company, STMicroelectronics is the 5th largest semiconductor supplier in the world and has a turnover of $8.5 billion. Worldwide we have over 51000 employees and15 production facilities.

Coming to India, we have been present here for quite a number of years. When it comes to semiconductor usage, I find India to be less matured as compared to some other European or Asian markets, however with the advent of DTH and 3G, I see there is a huge potential in the areas of Pay TV and telecom. So nonetheless we plan to target this space, in a big way. Additionally, we see a huge opportunity in the ID, e-Governance and financial segments.

What has been your go to market strategy in India?
Due to our long existence in the Europe, we have managed to have a strong presence in those markets. However, we plan to replicate the same success in the Indian market as well. And we are sure to do so, as we have the right portfolio of products, which are required by the Indian market. Additionally to better understand and increase our presence in the country, we are working alongside with our local partners and channels. In some cases we work directly with our clients, such as telecom operators to whom we provide with SIM cards manufactured by us.

How do you see the adoption of RFID products in the growing Indian retail sector?
We are yet to see the adoption of RFID products in the logistics and retail space on a large scale. The primary reason being, RFID currently competes with the low cost Barcode technology, which can be printed on just anything for ID purpose. However, using RFID involves the cost of the chip, affixing it to the inventory etc. Usage of RFID in retail is still not economically viable as yet, so we at ST are currently only focusing on RFID deployments at projects which already have a validated economic model. Some of these projects include tagging books in a library to maintain the inventory and segregate the books as required.

Are you going to participate in UID project?
In India, we are largely focusing on our secure microcontrollers business. Secure microcontrollers are used in smart cards, embedded devices, etc. We were the first company to come out with the USB smart card technology. Apart from these we have an experience of over 25 years in the secure microcontroller market. All of these gives us the confidence to participate in UID project.

I believe 20 percent of ST’s global R&D happens in India. Is this percentage expected to increase in the near future? Also do you have plans to set up a chip fabrication plant in the country?
We do a number of R&D in India including designing System on chip, software design, technology development etc. Currently we have over 2000 employees in India but do not have any expansion plans as yet, the same goes for the chip fabrication as well. However there is a possibility that in the future India could be manufacturing base for us.