Impinj Acquires Intel RFID

Every trade event or conference of any significance always produces at least one important industry announcement. At RFID World 2007, that significant announcement came from chipmaker Intel Corp. It was then that the company introduced the Intel R1000 — a UHF RFID reader chip that integrated up to 90% of typical reader radio components onto a single chip. The R1000 was small (8 mm x 8 mm), inexpensive ($40 retail price tag), and consumed little power. Reader and module manufactures lined up to integrate the R1000 into current and future product portfolios.

Sixteen months later (July 10, 2008), RFID solutions provider Impinj, Inc. announced that it acquired Intel's RFID operation and, in the process, the R1000 reader chip. Intel's R1000 brought much-needed credibility to the RFID space and helped jumpstart the growth in the industry that continues today. For Intel's part, the investment in the R1000 (it was a business created by Intel's New Business Initiatives incubator) should pay off in the form of increased processor sales to an expanding RFID market. As part of the equity deal, the company will also maintain an observer seat on Impinj's Board of Directors.

For Impinj, however, the acquisition has much more significant ramifications. The R1000 (now branded Indy R1000 to align with the racing theme of Impinj's product line) immediately fills a hole in the company's portfolio. "Our Speedway reader technology represents a small part of the overall reader market. This acquisition really expands our OEM partner relationships and increases our penetration in critical RFID markets," states Evan Fein, vice president of finance and administration at Impinj. "It would have been a significant investment in time and resources for Impinj to develop a competitive product [to Intel's R1000]. We investigated that option, but the dynamics changed as we began discussions with Intel."

With the acquisition, Impinj took possession of all the assets of Intel's RFID operation. In addition to the R1000, which has been available since last year and shipping in reader models and modules, Impinj also acquired RFID products that were in development at Intel, related intellectual property, and some physical assets. The acquisition also included the sales and marketing teams, which will now function under the Impinj banner.

OEMs Make For Strange Bedfellows
One of the most interesting aspects of the acquisition is that taking ownership of the R1000 means that Impinj now owns the OEM relationships that once belonged to Intel. It will largely be through leveraging and expanding these relationships that Impinj will drive demand and volume for the Indy R1000. In some cases, Impinj already has friendly relationships with these technology vendors. In other cases, however, Impinj may have been viewed as a competitor that's now a critical component supplier. "We've had conversations with many of these technology manufacturers. Most of them have been real positive, but there are a few with a hint of trepidation," adds Fein. "We've been clear with each partner that there will be no interruption in supply. And, they will benefit from the development resources Impinj will dedicate to the product."

Without question, the relationship dynamics between Impinj and Alien Technology will certainly be worth watching. The two companies are among the most prominent players in RFID and also happen to be each other's top competitor. When Intel announced the R1000 in March 2007, an Alien exec stated, "The Intel R1000 will enable the proliferation of RFID readers in a variety of form factors addressing a broad spectrum of new application segments. Alien plans to utilize this new highly integrated offering to accelerate the development of reader products for new segments." At this point, Alien doesn't offer any products that incorporate the R1000. But, it's tough to say if the R1000 was part of future product offerings in its portfolio. Fein didn't speak to any communications that may or may not have happened between the two companies, but it would seem that conversations are certainly forthcoming.

In recent discussions with Impinj and Alien, both have reported bullish revenue numbers. And, both are optimistic about short-term and long-term prospects. The RFID market continues to grow and this acquisition by Impinj opens new growth opportunities that weren't previously available to the company.