Scott McGregor of Philips Semiconductor, the leader in radio frequency ID chips, says they'll change the world -- and not threaten privacy

The decision by Wal-Mart (WMT ) and other retailers to require that their largest suppliers attach inventory-tracking RFID (radio frequency identification) chips to their products is creating a brand-new chip market -- one with a bright future. RFID chips, whose data can be grabbed by electronic readers, could one day hold all of an individual's personal information. In theory, that means they could displace credit cards, medical-insurance cards -- perhaps even wallets, predicts Scott McGregor, CEO of Philips Semiconductors, a division of Koninklijke Philips Electronics (PHG ) and the world's No. 1 maker of RFID chips, which are also known as "tags." If that comes to pass, RFID could also be an engine of growth for Philips, which now gets 5% of its $4.9 billion in annual revenue from sales of such chips.