Researchers in Germany have come one step closer to the dream of a super-cheap chip to be used to trace billions of products.

PolyIC, a joint venture between Siemens and Kurz, claims to have created the world's fastest plastic chip to date, running at 600KHz, and pioneered a technique to print circuits directly onto foil.

"We're still at the beginning of using polymer, an organic material, to mass-produce inexpensive chips that could be used, for instance, as RFID [radio frequency identification] tags, but we're moving steadily ahead," said Wolfgang Mildner, managing director of PolyIC.

Using its technology, PolyIC plans next year to begin production of a plastic 4-bit chip, which could be used for applications such as forgery-proof labeling, according to Mildner. The next step will be a 32-bit chip aimed at applications in the logistics sector.

By 2008, PolyIC hopes to have a chip with a storage capacity of 128 bits and a processing speed of 13.56MHz to comply with RFID standards, according to Mildner. Today's bar code labels, which many companies hope to replace with RFID tags, have a typical storage capacity of 44 bits.

The prototype plastic chips of PolyIC contain at least four layers placed on a foil substrate made of a special type of polyester. The electrodes are conductive polymers. Above them is a semi-conductive layer made from poly-3 alkylthiophene, followed by an insulating polymer layer and a counter-electrode. Mildner referred to the process as "a chip evolving on foil and becoming one".

The plastic chips are only a few square centimeters in area and have a thickness of one micrometre, while the electrodes and the semiconductor layer account only for a few hundred nanometres of the total.

In the lab printing process, researchers use stamps to print the conductors. Then they coat the foil with the semi-conductor and insulator using a type of squeegee technology that is common in the textile-printing industry.

The goal of PolyIC is to produce RFID chips with a price point of one cent (euro) compared to the price of silicon-based RFID chips that range between 30 and 50 cents, said Norbert Aschenbrenner, a spokesman in Siemens research and development division.

PolyIC was launched after Siemens decided to spin off its plastic chip research activities into the new joint venture with Kurz, which specialises in production of stamping foils, according to Aschenbrenner.

Albrecht von Truchsess, a spokesman for Metro, which is at the forefront of deploying RFID technology in the European retail sector, called the PolyIC development "super". Metro expects to have the retail group's entire operations equipped with RFID technology within the next 15 years.