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PI market cap: $4.8B
Impinj manufactures UHF (RAIN) RFID tag integrated circuits (ICs). They sell more than about 15 billion per year. Impinj might sell a tag IC for $0.005-$0.02. Impinj sells the tag ICs to inlay manufacturers like Avery Denison and others. Inlay manufacturers sell inlays (tag IC + antenna + substrate) to end customers to attach to their products. Tags can be little stickers, adhered to paper clothing tags, sewed nearly invisibly into clothing, hidden inside anything non-metallic or non-liquid, etc. Impinj also manufactures expensive stand-alone RFID readers, but also sells the reader IC used by several other companies who then sell their cheaper readers to end customers. I don't have much to say about their readers.
Impinj competes with NXP in tag ICs/chips. Impinj won lawsuit against NXP in 2024 and receives license fee yearly. Part of settlement beyond the yearly cash is a 10-year agreement to not sue over patents, which is a huge relief for Impinj through 2034. David defeated Goliath once and Impinj has 8 more years before any possible rematches. For the next 8 years, Impinj has freedom to grow aggressively without fear of immediate retaliatory litigation from NXP.
RAIN RFID is currently used in places like: Walmart, Inditex (clothing), UPS (package tracking, package-on-right-truck verification), Delta and United (baggage tracking), medicine tracking, car tires and other parts, etc. Supply chains and clothing, primarily.
Recent investor calls show they're starting to push food with Kroger. Food opportunity for Impinj and tagging is obviously very large compared to their current markets, which may explain their current valuation, which is arguably high. They're starting in the bakery sections now.
Engineering deets you can skip if you're not technical: Tag ICs have been improving in performance, usually about 1-2dB (RF link budget spec for tag sensitivity) per generation / node shrink. This has been essential to the technology's capability and expanded usage. I asked Gemini about next node and it's guessing 20-something nm will be the final node and its reasons are sound, which means tag chip analog performance improvement is nearing its end and the analog circuitry will not get smaller. Impinj knows this. Digital performance/capability/featureset may yet still improve with even smaller nodes. Impinj has been focusing on broadening featureset like cryptography and gen2x and is clearly leading and driving its technology. Also, smaller node = more tag ICs per wafer = cheaper tag ICs, so Impinj still certainly has one more significant margin increase ahead. 20-something nm nodes are well matured at this point and should not have a premium. Impinj requires cheap wafers.
Impinj likes to talk about the European DPP initiative in their investor calls (do your own reading on this). I know Trump is fucking over US-EU relations and is causing EU re-evaluation of large initiatives and regulations, so I have my doubts about DPP ever using RAIN RFID at all, even as a option/backup. HOWEVER, Impinj clearly sees it as a backdoor into the real endgame: retail consumers. Right now, RAIN RFID tags are always killed at checkout. The EU DPP would expand RAIN RFID adoption obviously, but more importantly would necessarily keep tags alive after item purchase. Consumer use is the reason for Impinj's new "Protected Mode". Tags with Protected mode look dead and only wake up if given the right PIN. Retailer controls PIN and can transfer PIN to consumer via smartphone, or Kroger could set PIN(s) for all its products and allow consumers to query their groceries' tags at home for pantry inventory, etc. You get the idea.
There's also insights into Impinj's thoughts from press releases on Gen2x, which extends the protocol the tag ICs use:
"It \[Gen2x\] addresses consumer privacy at point-of-sale.. \[...\] We are today focused on enterprise use cases, but tomorrow’s emphasis will be on consumer use cases, including consumer safety and item sustainability."
"Inhibits tag and item counterfeiting, fraudulent returns, or both."
"Impinj Protected Mode tag data protection Makes a RAIN tag invisible to RAIN readers. When necessary, the tag can be returned to normal operation using a secure PIN."
"Impinj Authenticity cryptographic authentication Verifies a product’s authenticity using a challenge-response protocol, preventing counterfeits and securing the supply chain."
I suspect that authentication requires a centralized database to verify that the tag chip itself is authentic. Impinj must control that. I doubt that Impinj will control the item info itself ('this is a Nike Air shoe, number 123456' for example) but will control authentication and will certainly charge a fee per scan for authentication ('Impinj indeed made this tag IC, it matches code xyzpdq in our authentication database'). So Impinj won't know what the product is (only the brands will, like Walmart or Nike), but Impinj uniquely will be involved in \*every tag scan for authentication\*. Impinj will not make ad revenue on item data itself - only end-users like Nike or Kroger would. However, Impinj will certainly charge for authentication events like store purchases/returns. Imagine getting an additional few cents return per tag IC via the authentication service.
Impinj is clearly trying to get into consumer phones. Qualcomm Q-6690 - UHF (RAIN) RFID integrated into mobile processor for the first time. Commercial/industrial device focus only. It's a relatively easy jump to consumer smartphones from here now that a UHF/RAIN RFID radio has been integrated into an IC. That will unlock tons more potential. Smartphone manufactueres may be excited about finally introducing a significant new feature. I see this playing out like so:
1. Consumer enables RFID reading on their household grocery items via Kroger (or their clothing items via Kohls or whoever)
2. For the first time, companies get information on where items go once they leave the stores and how long they stay there.
3. Companies know what food is in someone's house and how long it's been there.
4. Companies know what clothing is in someone's house and how long it's been there.
5. Fundamentally, Companies know identifying information of any UHF (RAIN) RFID tagged item in anyone's house (if the tag IC is alive and enabled), as long as consumers have a phone that can read them AND as long as consumers allow the tags to be read again with the PIN from the store they bought their stuff from.
6. Advertiser potential galore for whoever has this information. Impinj won't make money off this directly, but this'll push more tags to be in more things.
7. Companies will want to tag fucking everything, so Impinj sells 100s of billions of tags per year instead of 15 billion. I'd say >20x growth potential, reasonably, not including the value of authentication services which is fuzzy to me.
Wiliot has been brought up as an existential threat to RAIN RFID because it uses Bluetooth (which everyone already has) but I don't see it. Inlays are 2-5x as expensive, read rate is 100x to >1000x slower, tag beacons its info out randomly instead of upon query by a reader/interrogator, tag beaconing interval depends on ambient energy levels which vary everywhere. I'd forget about it.
I think Impinj needs to hit +20% yearly growth by gaining enterprise customers to meet investor expectations and today's valuation. Hitting those high targets will reward Impinj with consistent $200+/share. Consumer market is the moonshot / gamble for long term holders. Authentication, to me, is a positive thing of unknown magnitude/effect, though it'd definitely improve margins.
Risks:
\-Trump's continued antagonizing of Europe (and the world) may harm/kill RAIN RFID consumer adoption via DPP as EU countries reprioritize and/or may create preference for NXP within the EU. Reducing global cooperation is bad for global standards for RAIN RFID.
\-Stock is unusually volatile despite being recently added to S&P smallcap 600. Seems to have a strong yearly cycle based on retail/holiday cycle. Many sudden ups/downs based on enterprise performance and news and whether investors believe in the company's growth as a result. Be patient and only buy in low if you buy in.
\-The timeline to break into the consumer space, if it ever does, may still be long.
Obstacles:
\-Tagging metal surfaces (like canned goods or foil-lined bags) can be done and the physics has been solved, but crucially it remains expensive at >$0.60 per tag. A normal RAIN RFID tag (tag IC + inlay) might be $0.035-$0.05. A cost breakthrough for metal surfaces would be big news. Until then, this fundamentally limits RAIN RFID in grocery and remains a barrier for the technology.
\-Breaking into consumer (normal person) smartphones for the high growth trajectory. Impinj is making all the right moves so far, but it's a barrier that hasn't been broken yet.
Bulls:
\-If you hear about major new enterprise customers, that's bullish. Imipnj can dream about getting Amazon.
\-If you hear about the launch of an Impinj authentication service, that's bullish.
\-If you hear that RAIN RFID tags for metal surfaces have a cost breakthrough, that's very bullish.
\-If the EU \*mandates\* RAIN RFID for DPP, that's very bullish (whereas if RAIN RFID is just an option, that's somewhat bullish).
\-If any major smartphone manufacturer announces UHF (RAIN) RFID capability built into consumer phones, that's extremely bullish.
Bears:
\-If Impinj fails to secure new large enterprise accounts, that's bearish.
\-If Impinj's only growth over the next two years is through increasing its market share (like vs NXP) rather than new market growth, that's very bearish.
Recommendation: Diversify your portfolio with Impinj if it dips below \~$110. Buy a large amount if it ever dips below $70 (like last April) because I'd peg Impinj at roughly $50-$60 without its growth premium at all. Sit on it for 3 years and then re-evaluate.