Alien Lands in North Dakota with $50 Million RFID Tag Manufacturing Plant

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Alien Technology Corporation (Morgan Hill, California) is planning to construct a $50 million manufacturing plant and research center in Fargo, North Dakota. Once the plant is completed, it will have the world's highest production capacity of Radio Frequency Identification (RFID) tags.

A RFID tag is an integrated circuit (a small silicon chip), attached to a small flexible antenna. The integrated circuit provides data storage to record and store information. Each RFID tag is given a unique code known as an Electronic Product Code (EPC). The tag embedded with the EPC is a high tech replacement of the standard bar code. The tag used with a tag reader is able to provide the same product information as a barcode, but without the need for a line of sight. A standard bar code identifies only the products and its manufacturer, but an RFID tag can provide that and much more information, such as where a product has traveled from and where it's going. Also it provides the ability for each individual item to be uniquely identified and multiple items can be identified at once.

The existing plant in Fargo is able to complete only one of the three phases necessary to produce RFID tags. The Morgan Hill, California plant furnishes the semiconductor and packaging functions, and the tags are then shipped to the existing facility in Fargo where they are assembled and tested. The new plant in Fargo will have the ability to perform all three functions at one location.

Alien Technology currently employs 200 people among its three facilities in Morgan Hill, California (HQ and manufacturing), Fargo, North Dakota (manufacturing), and Dayton, Ohio (customer service). Twenty-five of the workers are located in Fargo. Alien Technology anticipates that it will employ approximately 300 people in the new plant by 2007.

R L Engebretson Company (Fargo, North Dakota) provided the project's architectural and engineering services and will also serve as construction manager. Construction is slated to begin in the spring of 2005. Industrialinfo.com has been tracking plans for the new plant since April of 2003. The plant is expected to begin operations in March 2006. The company will relocate existing operations from the 10,000 square foot facility that Alien Technology is currently leasing in Fargo, which operates 24 hours a day, five days a week. The new 47,000 square foot plant will contain two production lines capable of producing 600 tags per second.

Alien Technology produces a type of tag known as EPC Class 1 UHF RFID tags using its Patented Fluid Self Assembly (FSA) operation. The FSA process makes it possible for Alien Technology to package micron-sized integrated circuits in EPC tags at over 2,000,000 units per hour, versus the 10,000 units per hour using traditional methods. As a result, Alien is able to reduce costs of individual tags and provide an economical method to produce large quantities of RFID tags in the billions or trillions. Alien Technology anticipates that it will increase production to as much as ten times the annual capacity of its Morgan Hill plant, bringing Alien's overall capacity to approximately 20 billion tags per year.

Alien Technology Corporation is a privately held company that initially began as Beckmen Display, which focused on producing large glass panel displays using the FSA technology. In 1999 the company decided to focus on RFID, and the name was changed to Alien Technology Corporation to reflect the unique manufacturing process and the new technology behind RFID. Alien's primary focuses are the supply chain, logistics, and brand authentication markets. Currently, Alien has the largest market share of UHF tags and readers. Upon completion of the plant it hopes to increase that lead.

The market for RFID tags is forecasted to increase dramatically over the next few years, as companies such as Alien overcome technological problems. RFID tags have been receiving more attention since 2003, when the world's largest and most influential retailer Wal-Mart (NYSE:WMT ) (Bentonville, Arkansas) and the United States Department of Defense (DOD) announced that their many suppliers must use the technology by 2005. The belief is that the implementation of the technology will decrease operational costs, improve logistics and supply chain efficiencies, and improve inventory management.

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