The bar-code industry may finally have met its enemy, and it is ... plastic.

Despite the growing threat from smarter, more capable RFID tags, the bar code has held its own in the auto ID market largely because of its enormous cost advantage. But that could change soon. At least two companies say they have developed 13.56 MHz RFID tags based entirely on plastic electronics, instead of the silicon chips used in conventional RFID tags. The tags may still be a few years away from market, but the introduction of a tag with RFID capabilities at a bar-code price could turn the market upside down.

The latest announcement comes from Philips Research. In February, researchers there reported that they had developed a 13.56 MHz RFID tag based entirely on plastic electronics. Late last year, PolyIC GmbH & Co. KG also reported that it had produced a plastic electronics-based RFID tag capable of transmitting multi-bit digital identification codes at 13.56 MHz.

Right now, researchers working with the plastic tags, which are roughly the size of a postage stamp, still have to work out the problems of printing and mass production. But if they succeed, the breakthrough would have important supply chain implications. For example, manufacturers that once reserved RFID tags for use on cartons, pallets or extremely high-value items would suddenly have an affordable way to tag even the most inexpensive items: packages of toilet paper, gallon jugs of spring water or packs of gum.

Researchers believe the development could someday transform the packaging industry. Unlike a conventional RFID tag, a plastic electronics RFID tag can be printed directly onto a plastic substrate along with an antenna, without involving complex assembly steps. "The realization of plastic RFID tags that operate at 13.56 MHz is a precursor for wide-scale market acceptance in the coming years," says Dr. Leo Warmerdam, senior director at Philips Research. "To speed up commercialization of our technology, we will explore co-development options with third parties."

That's not to say that Philips will abandon silicon tags anytime soon. The company says it remains committed to producing silicon RFID tags and is currently ramping up production for Gen 2 tags.

Despite the allure of plastic RFID tags, some observers remain skeptical of the technology's viability. "We've looked into [plastic electronics] ... and concluded that it has no mainstream applicability," says Rob Glidden, senior director of engineering at Impinj Inc., which produces silicon-based RFID tags. "While the premise is technologically fascinating, our customers need ... Gen 2 tags in volume, now."

Of course, applications for plastic RFID tags would not be limited to the supply chain market. Right now, both Philips and PolyIC are working with the German Federal Ministry of Education and Research's Prisma project for printed smart labels, whose participants are also looking into applications like aviation ticketing and security.