The 1 cent RFID tag getting close to reality

Radio Frequency ID tags aren't on every product on store shelves yet in part because of the cost. An entire tag--which includes a semiconductor, an antenna, and package--now runs about 5 cents.

"That's still too expensive to put on a cereal box," said Rafi Nave, vice president and CTO of Tower Semiconductor, an Israeli chip foundry that specializes in making radio chips and imaging chips.

RFID specialist Alien Technology, which works with Tower, is closing in on the goal. "We should get there within the next year or two," he said.

The chips themselves are already somewhat cheap. A chip in a 5 cent tag probably runs close to 2 cents and dropping. Chips will get below 1 cent, he stated. Alien has also come up with novel packaging techniques to drop the production costs. The big variable is the price of the antenna.

Here's another way to look at some of the dimensions of the problem. A wafer costs about $1,000. Thus, to make 1 cent chips, you need to be able to pull 100,000 chips out of a wafer with a 200 millimeter diameter.