Samsung, NXP to Launch NFC Chips in Japan, While FeliCa Networks Seeks to Go Global
BARCELONA – Two more chip makers, Samsung Electronics and NXP Semiconductors, are planning to introduce NFC chips that support Japan’s large infrastructure of contactless readers based on FeliCa technology.
They follow Japanese chip suppliers, such as Renesas Electronics, in developing chips targeted for hybrid NFC-FeliCa mobile phones that Japanese operators plan to introduce as part of their transition to standard NFC technology.
The chip makers are working with FeliCa Networks, the joint venture of Japan-based Sony Corp. and mobile operator NTT DoCoMo, which controls the technology behind Japan's massive contactless infrastructure of terminals and wallet phones. The two companies, along with large commuter rail operator East Japan Railway, which owns a small share of FeliCa Networks, had been resisting the move to standard NFC in Japan.
But FeliCa Networks now apparently sees a business opportunity in jumping on the NFC bandwagon and will be exhibiting for the first time at this week's Mobile World Congress in Barcelona. Besides chip licensing, FeliCa Networks is expanding its trusted service management service offer to standard NFC applications and also seeks to sell other contactless-mobile “solutions” to mobile operators and service providers outside of Japan, according to a release Friday.
FeliCa Networks now controls all chips, phone middleware and TSM services for Japan's contactless wallet phones. While use of the phones by consumers has been generally disappointing compared with original expectations, the Japanese rollout remains by far the largest deployment of contactless-mobile services worldwide.
The hybrid phones and other portable devices planned for Japan would work with the country's infrastructure of hundreds of thousands of contactless point-of-sale, transit and other terminals that accept cards and applications on contactless wallet phones supporting FeliCa technology from Sony.
The hybrid phones would also enable Japanese phone users to tap on standard contactless and NFC terminals and tags overseas and to use such applications as MasterCard PayPass and Visa payWave in Japan, once credit card companies roll these applications out.
DoCoMo, Japan's dominant mobile operator and the driving force behind the rollout of Japan's contactless wallet phones, saw the expensive move to standard NFC as inevitable and last year decided to support it. While the NFC technical standard already supports FeliCa, NFC phones are not interoperable with Japanese FeliCa terminals because of Sony’s proprietary protocol.
DoCoMo plans to move to NFC with the hybrid phones in late 2012. Competing telcos KDDI and probably Softbank Mobile plan to move even earlier.
The three telcos together have distributed about 70 million FeliCa-enabled phones since DoCoMo launched its first Osaifu-Keitai, or wallet phones, in mid-2004. The telcos in December announced they had formed the Japan NFC Consortium to help them set standards for making the move to NFC from proprietary FeliCa.
It’s not clear which hybrid NFC-FeliCa chips will be used in the first phones supporting the transition to NFC this year. Both Samsung and NXP in their announcements Friday said their hybrid NFC-FeliCa chips won’t be ready for commercial production until next year.
But according to FeliCa Networks, it is working with other chip makers, including Renesas Electronics, and also Sony and Japan-based Toshiba Corp. Some of these chips will be available this year. And there probably are other chip makers working on hybrid chips targeting the large Japanese wallet-phone market.
The Samsung NFC-FeliCa chip also will come with an “NFC-SAM IC,” an embedded chip supporting NFC and FeliCa applications. NXP mentioned that its NFC-FeliCa chip will be able to support Mifare transit ticketing applications. It's not clear whether the NFC-FeliCa radio chips from Netherlands-based NXP will come with embedded chips from the vendor, as well. The Japanese operators eventually want to put their NFC and FeliCa applications onto SIM cards, and perhaps the NXP chip will support SIM-based secure elements.
With the move to NFC in Japan, more foreign phone makers could enter the market with contactless wallet phones and tablets. As in other developed countries, smartphones are increasingly popular in Japan. About 10 million of the FeliCa wallet phones are smartphones, but that represents only about 15% of the total wallet phones sold to date. The market for wallet phones is now dominated by Japanese phone makers.
In addition, moving to NFC would allow service providers in Japan to offer more services, including standard bank payment and government applications, which also use the international contactless standard ISO/IEC 14443.
And Japanese subscribers could use their NFC-FeliCa phones for payment, ticketing and other NFC applications overseas, while they are roaming, according to plans by the Japanese operators. The Japanese operators already have NFC roaming agreements in place with their South Korean counterparts.
The transition to NFC in Japan will also cut costs for terminals for Japanese credit card companies, merchants and other service providers, since FeliCa-based terminals are much more expensive than terminals supporting the ISO 14443 standard.
An announcement by Japan’s No. 2 operator, KDDI, last month that it is was putting an NFC-enabled Samsung Galaxy S II smartphone on sale for NFC services does not involve a hybrid chip, since the popular smartphone does not support FeliCa technology.