Escalating smart card applications are giving a boost to Asian smart card vendors. Security-related smart card applications coupled with the low labor and materials cost in Asia, drive local smart card and silicon vendors to deliver cost-effective, high-end products and value added services.

"The Asian smart card market is witnessing an increase in the number of regional participants in various segments of the value chain, from manufacturers to system integrators. These local vendors have an advantage particularly in large-scale government projects," says Frost and Sullivan Industry Analyst, Michelle Foong. She adds, "Apart from understanding the economic policies and other rules and regulations of the regional market, the local companies also share close business ties with the governments of their region, which further strengthens their position."

In addition, the increasing use of smart cards in government projects drives market growth, enabling smart card vendors in Asia to notch up higher profits. Manufacturers in Asia are fairly protected by the local economic policies that allow them to operate and profit in a relatively sheltered environment. As a result, smart card vendors in Asia are less motivated to invest in R&D and innovative high-end products as compared with their European competitors.

However, since Asian companies in Asia lack brand recognition globally, the competition from international vendors is proving to be a credible threat, forcing them to invest more in upgrading their R&D facilities and delivering higher end products.

"With growing opportunities in various applications such as enterprise security, transportation and banking, companies in Asia are likely to exploit their ties with international partners to penetrate overseas markets," notes Foong.

Further, expansions in mobile communications, contactless payments as well as the mass deployment of Europay, MasterCard, Visa (EMV) in the Chinese and other Asian markets are likely to help Asian smart card manufacturers and integrators garner significant revenues.