A new European project has been set up to develop low-cost polymer electronic circuits.

Several electronics manufacturers - including Sweden's Acreo, Germany's Infineon and Siemens, French-Italian company STMicroelectronics, and Philips in the Netherlands - together with research institutes across Europe will make up the EU-funded PolyApply organisation, charged with developing plastic chips for RPID applications, among other things.

As part of its Technological Development and Demonstration Framework Programme, the EC is providing €12 million (£8m) to kick off the development project that will run to the end of 2007.

The group has coined the term "ambient intelligence" to define the general focus of its work. The goal is to integrate a variety of electronic functions, such as sensing, computing and information storage, into a wide range of materials, including consumer packaging, and to enable all these to communicate via low-cost radio frequency technology.

Polymer-based electronic systems will play a key role. In developing these new technologies, researchers and engineers will aim to apply existing system and circuit-design expertise gained from their work on advanced silicon systems to new materials and devices that can be manufactured at substantially lower cost.

Although silicon technology has underpinned most advances in electronic devices and applications for many decades and will continue to play a key role over the next 10 years, many new applications can only be achieved with new technologies such as polymer electronics, which are inherently much less expensive than silicon, Gianguido Rizzotto, general manager of STMicroelectronics' soft-computing, silicon optics and post-silicon technologies group, said.

One these applications could be the ability to print RFID chips on consumer packaging. Numerous retailers around the world are eager to see the development of low-cost RFID chips that they can use to replace bar codes.

Germany's Metro, the fifth largest retailer in the world, is currently conducting one of the sector's largest pilot tests of RFID technology. For the retail giant to deploy RFID chips economically, the price will have to come down to around €0.02 euros from current prices ranging between €0.30 and €0.60 (20p to 40p), said Gerd Wolfram, project manager of Metro's Future Store Initiative.