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HolidayBuyer's Guide
Tech Industry

Smart money on cards

Benefiting from rising interest in smart cards, chip card maker Gemplus Group says sales jumped to $440 million in 1996, up from $302 million in 1995.

Benefiting from rising interest in smart cards, chip card maker Gemplus Group reported today that sales jumped to $440 million in 1996, up from $302 million in 1995. Operating income rose 34 percent to $32 million.

Smart card-related sales increased 44 percent, with the biggest growth (396 percent) in contactless cards, the newest technology used for public transit and toll roads. Sales of smart cards with microprocessors climbed 76 percent, while memory cards were up 20 percent.

"Smart cards are coming into play, particularly for Internet-based applications such as payments, security, and downloading cash," said Karen Epper, analyst with Forrester Research. "For a long time, [U.S.] consumers didn't use smart cards and merchants didn't want to take them. Now we have players from outside the smart card manufacturers themselves getting into the game."

She cited Motorola's March 20 announcement that it's forming a smart card division and moves by Netscape, Hewlett Packard, and Microsoft to incorporate smart cards into their security initiatives. Last week, backers of network computers proposed specifications for smart cards that would work with NCs.

Market researcher Dataquest predicts the market for smart cards, also known as chip cards, will grow from 544 million units in 1995 to 3.4 billion units by 2001.

Gemplus, which produces both plastic cards with magnetic strips and smart cards, is poised for that growth; new plants opening in China and Mexico plus added capacity at existing sites will boost production capacity from 750 million to 900 million cards this year.

The French company, which is privately held but reports revenues publicly, said 87 percent of its sales were outside France, compared to 81 percent in 1995.

Gemplus's chief competitor is another French firm, Schlumberger, but Gemplus has been more visible lately in the United States because of its ties to Mondex International.

Late last year, Mastercard bought a controlling interest in Mondex, giving its technology a boost in the race toward de facto standards for the industry. AT&T Universal Card recently backed Mondex for electronic cash.