When foreign tourists in Shenzhen's streets can easily make payments with the "touchable, visible and scannable" digital RMB hard wallet, when the super SIM card can still complete transactions in the absence of power and network, and when biometric technology and smart card chips are deeply integrated to form a new security paradigm of "fingerprint on the card" - the seemingly traditional smart card industry is undergoing a profound transformation from a "physical payment tool" to a "digital identity hub".
I. Review of the "14th Five-Year Plan" Industries: From Scale Expansion to Value Reconstruction
1.1 Leapfrog Growth in Market Size
During the "14th Five-Year Plan" period, China's smart card industry has shown a development trend of "steady progress and structural optimization". According to the "China Smart Card Market in-depth Investigation and Research Report 2025-2030" released by the China Research and Analysis Institute, the total output value of China's smart card industry reached nearly 70 billion yuan in 2024. Among them, financial IC cards dominated, while the sub-sectors such as IoT cards and government cards also achieved steady growth.
More significantly, the global market continues to expand. The global smart card market size is expected to exceed 20 billion US dollars in 2025 and approach 30 billion US dollars by 2034, with a compound annual growth rate of around 6%. The Asia-Pacific region leads with a market share of over 40%, and China, as the world's largest producer and consumer of smart cards, has a complete industrial chain and manufacturing capabilities that are globally competitive.
From the perspective of industry research reports, the application boundaries of smart cards are rapidly reconfiguring. The traditional fields of financial payment and identity authentication continue to release stable demands, while emerging scenarios such as digital RMB hard wallets, V2X communication in the Internet of Vehicles, and medical Internet of Things are forming new growth poles. Shenzhen's first-ever "tap, view, and scan" digital RMB hard wallet in the country makes payments more convenient for groups such as the elderly, students, and foreign visitors to China. The SIM card hard wallet jointly launched by China Mobile and Industrial and Commercial Bank of China has the most prominent feature of contactless payment without electricity or network. The mobile phone can be used in situations such as no network, screen on, screen off, and power-off.
1.2 Historic Breakthrough in Domestic Substitution
During the "14th Five-Year Plan" period, domestic smart card chips have achieved a crucial leap from "catching up" to "keeping pace".
In the field of security chips, listed companies have formed a clear "first echelon" pattern. Unisplendour Microelectronics leads the industry with a full-scenario layout, with a domestic market share of over 40% in financial IC card chips and serving as a core supplier for several major state-owned banks; Fudan Microelectronics has deeply cultivated niche markets, with a domestic market share of over 60% in contactless logic encryption chips and providing services to the campus card systems of more than 200 universities across the country; Chengtian Weiyee focuses on high-end scenarios such as digital RMB, with a market share of 12% in hard wallet chips.
In terms of technological processes, domestic listed companies have broken through the 32-nanometer process and are advancing the research and development of high-end chips with a process of less than 22 nanometers. The goal is to achieve that advanced process products account for more than 50% by 2030. In the field of security technology, enterprises are accelerating the commercialization of post-quantum encryption technology. Relevant products have been certified by the central bank, and it is planned to complete the replacement of quantum-resistant chips in key areas such as finance and government affairs by 2027.
In terms of architectural innovation: Enterprises are actively laying out the RISC-V architecture, promoting the construction of an independent ecosystem. It is expected that by 2028, the penetration rate of RISC-V architecture smart card chips will reach 30%.
1.3 Three Major Trends of Technology Convergence
During the "14th Five-Year Plan" period, the evolution of smart card technology will exhibit three major characteristics: "security upgrade, communication integration, and intelligent integration".
The comprehensive popularization of national cryptographic algorithms: The adoption rate of national cryptographic algorithms SM2/SM4 has risen to 75%, and chips supporting SM9 identity-based cryptography have achieved mass production, providing a solid foundation for financial-grade security applications.
Innovative integration of communication protocols: The power consumption of the NFC + UWB integrated communication module has been reduced by 40%, and the communication distance has been extended to 50 meters, providing technical support for scenarios such as the Internet of Vehicles and smart homes.
Biometric deep integration: The combination of smart cards and biometric technology to enhance the level of security protection has become a new trend. Some manufacturers have embedded biometric features such as fingerprints, palm shapes, and irises, which are unique to individuals, into the chips of smart cards through high-tech means such as computers, optics, biosensors, and biostatistics. This has significantly improved the convenience, reliability, and security of systems in high-security requirement fields.
II. Investment Trends in the "15th Five-Year Plan" Period: Driven by Technology, Scenarios, and Globalization
2.1 Technological Breakthrough Direction: From "Single Function" to "Multi-mode Integration"
The report points out that during the "15th Five-Year Plan" period, the technological evolution of the smart card industry will present the following characteristics:
Commercialization of quantum encryption technology: It is expected that financial-grade security chips will be mass-produced in 2026, and post-quantum cryptography (PQC) technology will be deployed on a large scale in key fields such as finance and government affairs, providing forward-looking solutions to counter the threat of quantum computing.
The popularity of programmable chips: The penetration rate of smart cards that support OTA (Over-The-Air) upgrades will exceed 25%. The functions of the cards can be remotely and dynamically updated, extending the product life cycle and reducing the cost of card replacement.
Energy technology innovation: The self-powered card body technology has entered the testing stage. By using energy harvesting technology, the card can be self-powered, and its service life is extended to fifteen years, providing a new solution for the passive scenarios of the Internet of Things.
Biometric card matching: Biometric FIDO2 card authentication technology will be first implemented in markets such as Europe, Northern Europe, Japan, and South Korea. By embedding fingerprint sensors, it enables secure on-card matching verification, addressing the growing demands for authentication and regulation.
2.2 Deepening Application Scenarios: From "Payment Tool" to "Digital Identity"
During the "15th Five-Year Plan" period, the application scenarios of smart cards will present a pattern of "vertical deepening" and "horizontal expansion" proceeding in parallel.
Digital RMB Hardware Wallet: As the number of pilot cities expands, super SIM cards that support dual offline payments will become mainstream. The issuance volume is expected to exceed 200 million by 2025. Investment can focus on chip design enterprises that cooperate with the Digital Currency Research Institute of the People's Bank of China. Cities like Shenzhen, Suzhou, and Shanghai are accelerating the construction of the application ecosystem for digital RMB hardware wallets. The first "touchable, visible, and scannable" hardware wallet in the country makes payments more convenient.
The market size of smart cards supporting C-V2X in the Internet of Vehicles (IoV) V2X communication is expected to reach 15 billion yuan. Unigroup Tsinghua Microelectronics' automotive-grade MCU chips have been adopted by leading car manufacturers, with annual shipments exceeding several million units; the second-generation automotive domain control chips have been introduced to multiple Tier 1 suppliers, providing a secure communication foundation for intelligent connected vehicles.
The integration of the Internet of Medical Things: The fusion solution of electronic health cards and wearable devices has been implemented in over ten provinces and cities. The market for smart card readers in healthcare is expected to reach hundreds of millions of dollars by 2035, with a compound annual growth rate of approximately 15%. The advancement of biometric technology and the demand for telemedicine are the main driving forces.
Smart city interconnection and interoperability: After years of development and extensive application, the "multi-purpose card" for smart cities has become a requirement of the times. The popularization of cloud technology provides strong support for data intercommunication. The correct realization of data intercommunication through "one card for all" will become an important development direction for a considerable period of time in the future.
2.3 Sustainable Transformation: From "PVC Cards" to "Green Carriers"
During the "15th Five-Year Plan" period, the green transformation of the smart card industry will shift from passive compliance to active value creation.
Mastercard has announced that it will phase out the use of PVC plastic in all payment cards by 2028, switching to eco-friendly materials such as recycled PVC (rPVC) and polylactic acid (PLA). Airtel Payments Bank has launched India's first eco-friendly debit card made of r-PVC, which offers enhanced durability and tamper resistance.
Biobased Materials Innovation: HID Unveils Seos Bamboo Access Control Security Card, Made from Sustainable Bamboo Sources and Certified by the Forest Stewardship Council (FSC), Supporting Green Building Certifications Such as LEED and BREEAM. The Application of Graphene-based Conductive Ink Reduces the Card Thickness to 0.58 Millimeters and Ensures Over 500,000 Bending Durability.
Full life cycle management: Establish a complete green industrial chain from card production to recycling and processing. Through ecological design, make products easier to disassemble and recycle materials, and build a full-chain low-carbon ecosystem from production to operation.
III. Value Reconstruction of the Industrial Chain: From "Hardware Sales" to "Ecosystem Operation"
3.1 Upstream: Autonomous Breakthrough in Chip Design
The upstream of the smart card industry chain is centered on chip design, wafer manufacturing, and packaging and testing. A complete industrial chain has been formed in China, ranging from chip design (Unisplendour Microelectronics, Datang Telecom) to wafer manufacturing (SMIC) and then to packaging and testing (JCET).
During the "14th Five-Year Plan" period, domestic chips have made breakthrough progress: the penetration rate of national cryptographic algorithms SM2/SM4 has increased to 75%; the power consumption of NFC+UWB integrated communication modules has been reduced by 40%; the application of new materials such as graphene-based conductive ink has significantly improved the performance of card bodies. However, there is still a gap in advanced manufacturing processes and core technologies. Currently, domestic products mainly use mature manufacturing processes ranging from 40 to 90 nanometers, with advanced processes of 28 nanometers and below accounting for less than 30%, while international giants have achieved large-scale application of 16-nanometer manufacturing processes.
3.2 Midstream: From Card Manufacturing to System Integration
Traditionally, the core competitiveness of smart card manufacturers lies in their packaging technology and large-scale production capacity. However, during the "15th Five-Year Plan" period, this logic is being completely rewritten. Midstream enterprises are evolving from mere card suppliers to full-stack solution providers offering "chips + modules + systems".
At present, leading enterprises have established a full-chain capability covering "R&D - testing - certification - service": Chutianlong's revenue from embedded security products exceeded 3 billion yuan in 2024, with R&D investment accounting for more than 12%; Aerospace Information has been deeply involved in the government and financial sectors in the field of system integration; Dongxin Heping has a leading advantage in the module packaging process.
3.3 Downstream: From "One-time Card Issuance" to "Full Lifecycle Service"
The purchasing logic of downstream customers is undergoing a fundamental transformation. They are shifting their focus from the initial cost of the card to the total cost of ownership (TCO) and the full life cycle value. New products such as digital RMB hard wallets and super SIM cards are driving customers to transition from "one-time card issuance" to "continuous operation services".
The "Card as a Service" (CaaS) model is beginning to take root: instead of merely purchasing cards, customers now buy a full-service package that includes card issuance, management, updates, and recycling. Card manufacturers, through remote management platforms, can monitor card status in real time and make dynamic updates, transforming infrequent one-time purchases into frequent service revenues.
IV. Evolutionary Roadmap for the Next Three Years (2026 - 2028)
2026: Breakthrough of the Critical Point for Technology Commercialization
As the first year of the "15th Five-Year Plan", quantum encryption technology will achieve mass production in the field of financial-grade security chips, and post-quantum encryption chips will start to be piloted in key areas. The penetration rate of RISC-V architecture smart card chips will exceed 20%, and the construction of an independent ecosystem will enter an accelerated period.
The issuance volume of physical digital RMB wallets has exceeded 200 million, and the super SIM card has become the mainstream solution for payment without electricity or network. The V2X communication smart card for the Internet of Vehicles has been mass-produced and pre-installed in leading automakers, providing a secure communication foundation for intelligent connected vehicles.
2027: Deep Integration of Biometric Technology and Business Model Reconstruction
Biometric card matching technology has been widely applied on a large scale in high-end financial and government affairs fields. The integration solution of fingerprint recognition, facial recognition and smart card chips not only ensures security but also enhances user experience, making it a standard configuration in high-security scenarios.
The "card-as-a-service" model has made breakthrough progress in the high-end market. Leading enterprises have begun to explore new business models such as charging by service volume and paying by security level, transforming one-time card sales revenue into continuous service income. OTA upgrade functions have become standard features for mid-to-high-end cards, and card life cycle management has entered a stage of refined operation.
2028: Global Layout and Standard Export
Chinese smart card enterprises, relying on technological breakthroughs and cost advantages, have begun to challenge the leadership of traditional giants in the global market. Emerging markets such as Southeast Asia and Africa have become the main drivers of export growth; the proportion of exports to countries along the "Belt and Road" has continued to rise, and the share of overseas markets has increased from less than 10% currently to 25%.
The number of international and industry standards for smart cards led or participated in by China has significantly increased, marking a shift from "standard follower" to "standard setter". Technologies such as national encryption algorithms, quantum encryption, and biometric fusion have become core labels of China's solutions, playing a more important role in global digital identity governance.
V. Conclusion: Seeking Structural Opportunities in Certainty
Looking back from the historical juncture of 2025, China's smart card industry has traversed the arduous period of "from nothing to something" and is now making a crucial leap towards "from something to excellence". The policy dividends of the "15th Five-Year Plan", the in-depth advancement of the digital economy, and the vast and complete domestic manufacturing system collectively form the solid foundation for the industry's development.
The article comes from ChinaIRN com