[Dave Birch] The chap who runs Philips Semiconductors, Frans van Houten, recently said that half of all new mobile handsets will come with NFC by 2010. Good news for Philips, who make the NFC chips. Then he sold just over 80% of the company to a consortium led by U.S.-based Kohlberg Kravis Roberts & Company who, if I remember correctly (and a quick google reveals that I did), were the eponymous “Barbarians at the Gate”. So how are contactless and NFC looking?

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Overall chip sales are down, but contactless is looking good. Philips Semiconductors shipped 142 million contactless chips last year, up nearly 49% from 2004, according to our friend at Frost & Sullivan, Anoop Ubhey. The majority were MiFare smart memory chips (used by transit operators) but about 13% were contactless microprocessor used for electronic passports, government ID cards and contactless credit or debit cards. But what about our digital money favourite next big thing, NFC?

Well, things look good for NFC, even if it may mean fewer chip sales for KKR (*). Pilots and trials are continuing as far afield as China, where testaments abound. Mr. Xu, a “volunteer consumer” in the China Mobile NFC pilot in Xiamen said: “With the integration of E-Tong Card to my mobile phone, I feel so convenient to make payment. It is cool! I hope it will be put into commercial use soon.”

Mr. Xu need not worry: since we are told that the purchase by the KKR consortium will not affect the Philips Semiconductors’ strategy or products, including the chips for contactless cards and NFC phones. NFC will, indeed, be put into commercial use soon.

(*) The spread of NFC means less overall chip sales because you will use your phone as your contactless debit card, contactless transit card, contactless mobile pre-paid card and so on. Therefore, the phone’s NFC chipset may well replace a number of other chips.

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