SIM manufacturers shipped 30 million NFC SIM cards in 2012, 70% of them to mobile operators in South Korea and Japan, with Europe beginning to ramp up, the SIMalliance trade association said today in announcing its global SIM shipment figures for the year.
The 30 million NFC SIMs were a small but high-end part of the total 5.1 billion SIMs that all vendors shipped in 2012, up by about 9% from 2011. SIMalliance members accounted for 90% of the total global SIM shipments, at 4.6 billion, up 6%.
It’s the first major release of NFC SIM shipment figures by the vendor group, which noted that NFC SIM shipments were up by 87% from 2011, a year in which few telcos were rolling out NFC SIMs. Nearly all of the NFC SIM shipments in 2011 went to such operators as KT and SK Telecom in South Korea, with some quantities sent to elsewhere in Asia and Europe.
The vendor group said a large number of trials are still going on worldwide, but NFC is “finally moving beyond trials and pilots,” with “mass-scale deployments” by the first set of mobile operators moving forward.
The lion’s share of the early NFC SIM market has been in Asia, noted SIMalliance chairman Frédéric Vasnier in a Webinar the group held today. Asia took delivery of 23 million NFC SIMs in 2012, 21 million of them shipped to South Korea and Japan. Those SIMs accounted for fewer than 1% of the total of just under 2.5 billion SIMs shipped to the region. All three major South Korean telcos, SK Telecom, KT and LG U+, are rolling out NFC. Such Japanese telcos as NTT DoCoMo and KDDI have been ordering standard NFC SIMs for their hybrid NFC devices that support both NFC and domestic FeliCa technology.
Europe ranked second in regional NFC SIM deliveries with 6.5 million, and 6 million of those went to Western European countries. The NFC shipments accounted for about 1.4% of Europe’s total 450 million SIMs.
Africa and the Middle East received 250,000 NFC SIMs, out of 806 million total SIMs shipped to the region. Meanwhile, SIMalliance members delivered just 100,000 or fewer NFC SIMs to North America, out of 216 million total North American SIM shipments.
Vasnier described NFC SIMs as a high-value market for the organization’s members, especially since they serve as secure elements for mobile payment applications.
“Those products will be based on banking-grade certified chips...on top of which we will add banking grade certified applications,” he said during the presentation. “That means not only more complex products, more high-end products, but also certainly products with a lot more memory and a lot more processing power.”
This increase in SIM memory and processing power could be needed, Vasnier suggested, with consumers showing a tendency to store multiple debit or credit cards in their mobile wallets–based on observations of recent trials and pilots. He didn’t mention the particular pilots he was referring to.
“We see SIM cards, which are going beyond 1 megabyte of memory now,” Vasnier said.
He characterized market penetration of NFC-capable handsets as a “problem of the past,” noting that just about all major handset makers are shipping NFC handsets. The notable exception is Apple.
Embedded Chips More Numerous
The SIMalliance didn’t talk about other types of secure elements in NFC phones, but roughly two-thirds of the 150 million NFC phones shipped in 2012 carried an embedded secure chip, led by Samsung Electronics’ adoption of the technology for the Galaxy S III and other devices.
It means embedded chip shipments reached about 100 million units in 2012, more than three times that of NFC SIMs. But except for the Google Wallet in the U.S., few of the embedded chips were used. That is expected to change this year with Samsung’s partnership with Visa and other payment schemes. The device maker’s Galaxy S 4 will come preloaded with a Visa payWave application and, later, possibly other payment applications.
Many of the same phones that pack embedded chips also have a single-wire protocol connection to the SIM slot, which would enable the phones to support NFC SIM cards as secure elements.
The NFC ecosystem is still working out business models and agreements for NFC services, especially payment and other applications using the secure elements in the phones.
But the SIMalliance contends that the infrastructure for a payment ecosystem is falling into place.
“What we see now is beyond technical,” Vasnier said. “The first commercial launches will combine payment and couponing. Demand for NFC payments and couponing will continue to drive the market, particularly in developed regions.”
The group did not offer projections for NFC SIM shipments for 2013, but appeared to agree that, among other markets, there are commercial rollouts expected later this year in Australia, Brazil, China, Germany, Italy, Russia, and Spain, along with expansions in Canada, France, Poland, the U.S., and the UK.
“We believe the 2013 outlook is going to be a bit more of the same,” Vasnier predicted, speaking of the SIM market in general, with “developed regions continuing to launch LTE (4G) and NFC.”
First Significant Volumes of Nano-SIMs
The NFC SIMs are a bright spot for SIM vendors, which in 2012 had to deal with slow economic growth or stagnation in many markets, mature SIM markets in developed countries and increased regulation of basic SIMs and operators in some countries of South America and Asia, including India. Shipments actually fell in China, which the group blamed on “inventory problems.”
NFC SIM prices are believed to run about two to four times that of conventional SIMs, NFC Times has learned. Vendors say they are charging high prices for the higher security and memory the cards offer and for what they insist are significant R&D expenses that went into the cards.
Vendors also reported shipping significant volumes of LTE SIMs for 4G networks in Japan and South Korea, as well as North America and some European countries in 2012, though the group didn’t release a breakdown for this. Often LTE and NFC are combined on the same SIM.
About 70% of SIM shipments to Japan and South Korea were miniature SIM cards, either the third form factor, known as micro-SIM; or the fourth form factor, the so-called “nano-SIM.”
Globally, nano-SIMs accounted for 2% of total SIM shipments in 2012, according to the SIMalliance, which would mean vendors shipped about 1 million nano-SIMs during the year. Besides Japan and South Korea, the nano-SIM shipments went to countries in North America and Europe.
About 8% of SIMs shipped in 2012 were micro-SIMs, up from 4% in 2011.
Vendors said they are also counting on increased tablet sales and machine-to-machine communications, along with continued growth in developing countries, to continue to bulk up SIM shipment volumes.
Dan Balaban contributed to this report.