MOUNTAIN VIEW, Calif. - Last year 14.4 million smart cards were shipped in the United States, 93% of which were for the pay TV market, according to Frost & Sullivan, a research and consulting firm here.
In 2006, 114.7 million cards are expected to be shipped, nearly half of them for network security, according to research by Frost & Sullivan. The government's use of chip technology is expected to grow significantly as well.
The greatest challenge facing the smart card industry in this country is the cost of upgrading the infrastructure to accept chips, an expense estimated at more than $12 billion by Frost & Sullivan. "U.S. banks haven't been able to nail down return-on-investment with smart cards," said Alyxia T. Do, an analyst at Frost & Sullivan.
Banks must recognize that new competitors - telecom operators, insurance companies, and transit authorities - "are changing the face of the financial competitive environment," she said.
"Smart cards can be the banks' response to increased competition," Ms. Do said.
Smart card proponents in the United States also face the problem of fragmentation in the application market, Ms. Do said. The United States has nearly 50 wireless service providers, but countries where chip cards have already taken off, such as France and Germany, have one to three telecom operators.
The company expects the U.S. market to grow and become one of the leading and most innovative smart card arenas. "Smart cards in the U.S. will grow with everything Internet-related," Ms. Do said.