23B NFC chips will ship worldwide in 2020, report says

Manufacturing near field communication (NFC) chips is a good business to be in right now, as contactless mobile payments and the Internet of Things become major themes in technology during the next few years.

A new study out Monday from Semico Research said 23 billion NFC chips will ship worldwide in 2020.

NFC chips generate a short-range radio signal for the secure transmission of sensitive financial and authentication data.

NFC is known mainly for its use in contactless payments. Semico said smart cards (credit cards with chips baked in) make up more than 90 percent of the NFC market, at almost 12 billion units in 2015.

The technology is increasingly used in phones for mobile payments. It’s also being used for authentication, as when the user is passing a public transportation scanner or unlocking a door to a secure facility in an enterprise. Semico said that smartphones will be using nine percent of the chips by 2020.

“The smartphone market for NFC got a huge boost in 2014 with the introduction of the iPhone 6/6 Plus and Apple Pay,” said Adrienne Downey, Semico’s director of technology research in a statement.

“Between that and the adoption of EMV payment standards, we should finally see adoption of NFC take off in the United States as it has already in the rest of the world,” Downey said. EMV, which stands for “Europay, MasterCard, and Visa,” is a protocol used by chip cards and NFC devices to exchange financial transaction data with point-of-sale terminals.

Apple uses NXP NFC chips in the iPhone 6 and Apple Watch for mobile payments transactions.

Semico said smartwatches and other wearable devices will be the fastest-growing host devices for NFC chips by 2020.

NFC chips might also be widely used in the Internet of Things. Qualcomm recently announced that it will include NXP’s NFC solution in the Snapdragon processor platform that powers mobile devices, wearables, and automobiles.