Inpinj, which until recently has had 100% market share when it comes to those Gen 2 chips that power RFID tags, is now facing competition as the market catches up.

Customers have ordered a billion chips so far from Impinj.

Now, however, Texas Instruments has a Gen 2 chip as does STMicroelectronics. Philips is expected to follow.

A report in Ecommerce Times quotes Drew Nathanson, who directs RFID market research at Venture Development:

"With its new chips, Impinj made a bet on ultra high frequency (UHF), which can be read from greater distances. But the pharmaceutical industry seems to be leaning toward high frequency (HF) chips, said Nathanson.

So far, when it comes to reading data on individual items, UHF hasn't matched the speed and accuracy of HF, he said.

Price has long been a factor limiting more widespread adoption of RFID. Early RFID technology watchers once talked about prices coming down to 5 US cents per tag. While an Israeli company has managed to do that for large volume orders, tag prices are averaging 25 cents each this year, said Nathanson.

He predicts by 2010 the price will be half of that, as users push RFID makers to reduce cost. The chip contributes about half the cost of the tag, which also includes an antenna."

Competition may not be good for Impinj, but it is good for RFID buyers. This is positive news for the market.