Seattle-based Impinj, which builds chips that help track merchandise, is expected to announce a Wal-Mart-sized round of venture capital today.

The company said it has secured $26.5 million in funding, Washington's third-largest deal this year. So far, Impinj has raised $75 million since it was founded in 2000.

Impinj started out building a chip with analog and digital components that were nonvolatile — meaning the chip could store small amounts of information without a power source.

Three years ago, it decided to apply that technology to the business of RFID, or radio frequency identification. Instead of manually scanning barcodes, as retailers do today, the technology allows a pallet of boxes bearing RFID chips to pass through a warehouse reader to instantly reveal content information.

The bet is paying off.

Impinj's major wins include a recently announced partnership with Texas Instruments. Through the deal, Impinj will supply technology for Texas Instruments' initial production of RFID products.

Impinj has already shipped 50 million chips in the fourth quarter and expects to ship "hundreds of millions" next year, said Chief Executive Bill Colleran.

RFID is expected to be used in warehouses, manufacturing plants and even at retail checkout. Some consumers have already started to use RFID tags to purchase food at Qwest Field by quickly passing a card over a reader.

It's those opportunities that have analysts predicting big growth. Gartner, the market research company, estimates that worldwide spending on RFID will be $504 million this year but could jump to more than $3 billion by 2010.

After years of not knowing how RFID would turn out, Colleran said: "It is meeting expectations. Many people think a billion chips will be sold next year."

Impinj, which has 105 employees, said it will use the money to expand chip testing and increase product development and marketing. About five employees will be hired both in Seattle, where a majority of employees are, and in a Newport Beach, Calif., office.

New investors include GF Private Equity Group, which led the round, and VentureTech Alliance. Existing investors that also participated include: ARCH Venture Partners, Madrona Venture Group, Mobius Venture Capital, Polaris Venture Partners, Unilever Technology Ventures, UPS Strategic Enterprise Fund and the Viterbi Group.

Tricia Duryee: 206-464-3283 or tduryee@seattletimes.com