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HP Israel has won a Finance Ministry tender to issue smart identity cards.

The company, an arm of Hewlett Packard (NYSE: HPQ), beat four other contenders to the contract, valued at around NIS 40 million. HP's offer prices each smart ID card at NIS 40.

By law, all Israelis must carry their identity cards, or driving licenses with pictures.

The tender states that all citizens must replace their ID cards with smart cards by 2006.

The smart card tender is one of the most prestigious the state has issued in the last couple of years.

Previously, HP won the deal supplying state employees with smart ID cards. Gripers claim the company slashed its price on that deal in order to show off its capacities to state officials

ahead of this new tender to equip all citizens with smart cards.

The smart ID cards may also contain "electronic wallet" information, and other identifying data, such as medical details.