The latest report from industry analyst firm Transforma Insights presents its annual snapshot of the status of the IoT market worldwide.

Transforma Insights has today published its report ‘Global IoT Forecast Report, 2023-2033’ which provides the industry benchmark of the status of the global Internet of Things market.

The key highlights are:

• At the end of 2023 there were 16.1 billion active IoT devices, a figure which will grow to 39.9 billion in 2033, a compound annual growth rate (CAGR) of 10%. Annual device sales will grow from 4.1 billion in 2023 to 8.7 billion (a CAGR of 8%).

• Short range technologies will dominate connections, accounting for 73% in 2033, a slight reduction compared to the 79% they account for today.

• Cellular connections will grow from 1.9 billion at end 2023 to 7.5 billion at end 2033. By 2033 total ‘5G’ including mMTC will be 5.5 billion, but just 1.1 billion will be ‘full’ 5G New Radio (NR). The remainder will be mMTC technologies such as NB-IoT and LTE-M. Substantially the biggest 5G non-mMTC use case is vehicle head units, accounting for 41% of connected in 2033.

• Other Low Power Wide Area technologies such as LoRaWAN will collectively grow from 360 million in 2023 to just over 2 billion in 2033.

• In revenue terms, the total IoT market (defined as including connectivity modules, value added connectivity, and core associated applications) in 2023 was worth USD335 billion, a figure which will rise to USD934 billion in 2033. Value Added Connectivity will account for 10% of spend in 2033, with the connectivity modules accounting for a further 4%.

• In 2033 the consumer sector will account for 61% of all connections. Of the enterprise segment in 2033, 35% of devices will be accounted for by ‘cross-vertical’ use cases such as generic track-and-trace, office equipment and fleet vehicles, 24% by utilities, most prominently smart meters, 22% by retail/wholesale (predominantly payment processing devices and electronic shelf labels), 7% by government, 4% by transport and logistics, and 3% for agriculture.

• Geographically, China, North America, and Europe dominate, accounting for 32%, 21% and 19% respectively of the total value of the IoT market in 2033.

Commenting on the findings, Principal Analyst Matt Arnott said: “The growth in adoption IoT continues at a steady pace, reflecting the diversity of use cases encapsulated within the concept. It’s not a hockey stick and never has been, but a series of micro-markets that each have their own dynamics, with some growing faster and others slower. There are micro-level factors that can massively accelerate growth such as the requirement in Spain to adopt breakdown beacons, and there are notable macro-level trends which will also have knock on effects on growth, such as populations aging even faster than expected. To forecast the IoT market you need to understand both, and much more besides.”

The report provides a summary of the data within Transforma Insights’ ultra-granular IoT Forecast Database and associated Forecast Insight reports, which together provide application-by-application analysis of the market.

Matt Hatton, Founding Partner at Transforma Insights noted: “Transforma Insights analysts have been forecasting the Internet of Things market opportunity for over a decade. Back in 2011 our analysts’ expectation of 12 billion IoT devices by 2020 was close to the bottom of the league table of predictions but proved to be easily the most accurate. Today as Transforma Insights our team continues to provide the most extensive and deeply researched forecasts of the IoT, making ours the benchmark against which all predictions of IoT market growth should be compared.”

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According to a new research report from the analyst firm Berg Insight, the number of waste collection points fitted with smart waste sensor technology reached 1.25 million worldwide in 2023 (excluding China).

Growing at a compound annual growth rate (CAGR) of 22.8 percent, the number will increase to 3.50 million by 2028. These wirelessly connected fill-level sensors can be either pre-integrated into waste bins and containers, for example as a smart bin offering, or retrofitted on existing collection points. Europe accounts for around 45 percent of the installed base with markets such as the Benelux, France, the UK, Spain and the Nordics in the lead. The installed base in the North American market meanwhile reached 470,000 units in 2023. The Rest of World market excluding China will at the same time have the highest growth rate of 26.8 percent and surpass 700,000 installed sensors in 2028.

After acquiring Compology in late 2022, the US-based provider of managed waste and recycling services RoadRunner now holds the world’s largest installed base smart waste sensors and a market share of 16 percent of the total installed base (excluding China). Waste Harmonics (Keter) ranked second and is one example of that waste brokers and managed service providers in North America to a growing extent utilise proprietary smart waste sensors as part of their offerings. The US-based smart bin provider Bigbelly ranked as the third largest player. Meanwhile, the Norwegian smart waste sensor and software specialist REEN was the leading vendor in Europe and the world’s fourth largest in terms of installed base. The top 10 smart waste sensor technology vendors also included Sensoneo from Slovakia; SmartEnds from Belgium; Waste Vision from the Netherlands; BH Technologies from France; Enevo from the US; and Nordsense from Denmark. Together, the top ten vendors accounted for more than 53 percent of the global installed base of waste collection points featuring smart waste sensor technology. The companies in the market oftentimes focus on specific customer segments and geographies, and therefore face varying degrees of competition from each other.

While municipal smart waste management have been growing robustly in the last few years, private companies are also becoming an increasingly important customer segment for vendors offering smart waste management solutions and the segment is poised for significant growth. “We are still in the early stages of waste generators increasing their focus on sustainability and going forward it will be instrumental for organisations to measure, manage and track generated waste and emissions”, said William Ankreus, IoT Analyst at Berg Insight. Cellular communications remain the most popular connectivity technology choice, accounting for over 80 percent of the connected waste collection points in 2023.

Mr. Ankreus concluded:

“Cellular LPWA technologies (NB-IoT and LTE-M) have improved the overall business case for smart waste sensors and represented a large share of shipments in the last couple of years.”

Due to the sunsetting of 2G and 3G networks in several regions, replacements of existing sensors are also expected to affect the shipment volumes to an increasing extent in the coming years.

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• The global cellular IoT module market’s shipments declined 2% in 2023 as compared to 2022.
• Despite a decline in shipments, Quectel continued to lead, followed by Fibocom and China Mobile.
• NB-IoT and 4G Cat 1 shipments declined in its top market, China, where 4G Cat 1 bis gained at 4G Cat 1 and NB-IoT’s expense.

Global cellular IoT module shipments saw their first-ever annual decline in 2023, falling 2% YoY, according to Counterpoint’s latest Global Cellular IoT Module and Chipset Tracker by Application report.

Inventory adjustments following supply chain disruption and reduced demand in some key market verticals like industrial and enterprise were some of the key factors driving this decline.

4G Cat 1 bis grew the fastest in 2023, capturing over 22% of the shipments. In China, 4G Cat 1 bis has now become the primary cellular standard for POS, smart meter, telematics and asset tracking markets, owing to its affordability and energy efficiency. The market is slowly transitioning from 4G Cat 1 and NB-IoT to more efficient 4G Cat 1 bis.

Commenting on market dynamics, Associate Director Mohit Agrawal said,

“India and China have shown positive growth due to increasing demand in the smart meter, POS and asset tracking markets. Conversely, the rest of the world witnessed a sharper decline, indicating a lack of expected market momentum.”

Agrawal added, “Around 12% of the modules shipped in 2023 were equipped with AI capabilities at the software or hardware level. These modules are gaining popularity in high-end markets such as automotive, router/CPE and PC, facilitating the management of the escalating data load in these sectors.”

• Quectel, the leading module vendor, experienced a decline in its market share primarily because of weakened demand in markets outside China. The company has partnered with Syrma SGS Technology to manufacture IoT modules in India.
• China Mobile and Fibocom experienced double-digit YoY growth. China Mobile’s growth was driven by smart meters, asset trackers and POS applications, while Fibocom’s growth was driven by POS and telematics applications.
• This year’s merger between Telit and Thales propelled Telit Cinterion into the top five vendors of IoT modules. To further solidify its presence in India, Telit partnered with VVDN for local production.
• Several Chinese brands like Unionman, OpenLuat, Lierda and Neoway have shown significant growth within specialized markets like smart meter, asset tracking and POS.

Commenting on the market outlook, Research Analyst Anish Khajuria said, “In 2024, the IoT module market is expected to return to growth in the second half of the year with normalizing inventory levels and increasing demand in the smart meter, POS and automotive segments. Moreover, substantial growth is forecasted for 2025, coinciding with the widespread adoption of 5G and 5G RedCap technologies in smart meters, routers/CPE, POS systems, automotive solutions, and asset tracking applications.”

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According to a new report from the IoT analyst firm Berg Insight, the installed base of smart gas meters in Europe amounted to 55.9 million in 2023, equivalent to a penetration rate of 45 percent.

The installed base is forecasted to grow at a CAGR of 6.8 percent between 2023 and 2028, reaching 77.6 million units at the end of the period. Annual shipment volumes amounted to 4.8 million units in 2023 and are expected to be around 5.0–5.8 million throughout the forecast period.

The UK, Italy and Belgium were the most active markets, together accounting for 86 percent of all smart gas meter shipments during the year. While the rollouts in Italy, France and the Netherlands are largely completed, the UK market is finally after several delays ramping up yearly installations to reach a peak of 3.2–3.4 million units per year during 2024–2025. Belgium and Ireland are two other markets that are expected to contribute with significant shipment volumes in the coming years. The Spanish market is expected to reach yearly shipment volumes of 1.0 million units by the end of the forecast period.

The smart gas meters deployed in Europe have over the past years not been networked in quite the same way as their counterparts in the electricity sector. A common model, observed in the UK, the Netherlands and Belgium, is to utilize a local wireless or wired interface to transmit gas data via the customer’s smart electricity meter. A mix of 169 MHz RF and 2G/3G cellular communications has meanwhile been the primary model for the largest projects in which smart gas meters have been deployed independently of smart electricity meters, such as in Italy and France. A change of the status quo is likely on the horizon as new types of LPWA technologies have become more readily available in the past couple of years.

Mattias Carlsson, IoT Analyst at Berg Insight, said:
“The Italian gas sector was the first in Europe to initiate large-scale adoption of NB-IoT as a primary smart meter connectivity choice and in 2023 the installed base of gas meters with NB-IoT connectivity in the country reached more than 2.5 million at the end of the year. We anticipate that by the end of the forecast period NB-IoT will become the go-to connectivity option for smart gas meters, not only in Italy but also in several other European markets.”

The composition of communications technologies in the installed base of smart gas meters has already begun to shift in favor of new LPWA technologies. 169 MHz still however remains the most popular communications technology with a market share of around 37 percent at the end of 2023, while Zigbee boasted a market share of 26 percent. By 2026, Zigbee is expected to surpass 169 MHz as the most prevalent connectivity option with an installed base of 23.4 million – a number that is further forecasted to increase to 25.5 million in 2028.

NB-IoT/LTE-M is expected to be the fastest growing connectivity option at a CAGR of 35 percent during 2023–2028 to reach an installed base of around 13.2 million units in 2028 and accounting for as much as 60 percent of yearly shipment volumes at the end of the forecast period.

Another emerging technology trend is the anticipated increase in the use of hydrogen in European gas supply operations.

Mr. Carlsson concluded:

“Projects are currently underway in for example the UK and Italy that pilots metering devices capable of measuring either pure hydrogen or a blend of hydrogen and natural gas. The interest in hydrogen meters is anticipated to increase as the technology matures.”

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2023: First time, massive decrease in cellular module market shipments. Inventory normalization expected in 2nd half 2024.

The cellular non-handset device market is expected to decline significantly by 11.5% YoY in 2023 due to the inventory adjustments after supply chain disruption, inflation and demand decrease in 2022-2023. It is assumed that the impact of inventory adjustments will continue until the first half of 2024.

Industrial cellular module market (excluding automotive telematics) is estimated to decrease by 14.3% for the bigger the inventory in the whole supply chain. This is the first time decrease since 2009, we started to follow cellular module market. Complex supply chain from IC, module, distributor, and device OEM/ODM, makes it difficult to predict the inventory situation. However, suppliers expect that inventory normalize at some point in 2nd half of 2024.

Among non-handset cellular modem applications, only cellular CPE and automotive telematics showed steady growth in 2023. However, for automotive, tier-1 and tier-2 suppliers start to adjust IC chip inventory in late 2023, 2024 module demand is expected to soften.

Cellular Industrial/Automotive Module Market Forecast by Vertical Application

The cellular industrial and automotive module market grew significantly in 2021-2022. Yet, it is estimated to decline significantly by 12% on YoY in 2023. From the second half of 2022 onward, the decline in demand due to the economic downturn and excess inventory in relation to supply chain disruptions had an impact. Inventory adjustments are expected to continue until 1H/2024, and the market growth rate is estimated to be flat to low single-digit growth in 2024. Industry expects the recovery in 2H2024, then back to high single-digit growth after 2025.

The main uses of industrial cellular module are as follows in descending order:
Smart Meter (Electric, Gas, Water Meter): 25% (2023)
Transportation (Before/After-market Telematics, Vehicle Tracking, Train, Marine) : 22% (2023)
GPS Asset/Life Tracking (Logistics, Heavy Machinery, Livestock, Human…) : 15% (2023)
Payment/Retail (Point of Sales (mPOS), QR Code Payment, ATM, Vending Machine…) : 14% (2023)
Security/ Automation (Security Camera, Security Robot, Gate System, Alarm, Sensor) : 8% (2023)
Healthcare (Patient Vital Monitoring, Medical device monitoring, Vaccine management, smart pill box…) : 5% (2023)

Among Cellular industrial IoT applications, smart utility meters (25%), GPS tracking (telematics + transportation + asset tracking) together accounts over 60% market share in shipment volume base.

Other main applications include sharing economy (bike, e-scooter…), industrial computer, PoC (Push Over Cellular) handset, EV charging pile, smartphone charging pile, remote environment monitoring, smart agriculture, and so on.

Cellular M2M Market Forecast by Standard

Many Industrial IoT applications do not require broadband connectivity. On the other hand, wide area coverage and stability in connectivity is important.

Looking at the industrial M2M module market in 2023 by standard,

• Cellular LPWA (LTE Cat.M and NB-IoT) decreased from 33% (2022) to just under 29% (2023).
• LTE Cat.1/Cat.1 bis expands from 35% (2022) to 39%.
• 5G for automotive increased slightly. Market share will increase from 2022: 0.3% to 2023: 0.6%.
• LTE will expand slightly from 21% (2022) to 23% (2023).

Trends after 2023 are as follows:

• 2G/3G to LTE Cat.1 bis migration in Europe and emerging markets
• Decrease of NB-IoT in Chinese market, migration to LTE Cat.1 bis
• Migration from LTE Cat.4/ Cat.1 bis to 5G RedCap in Chinese market
• 5G RedCap to be introduced in developed markets in 2026-2028
• Migration from LTE Cat.M to LTE Cat.1 bis in some applications in Europe, North America, etc.
• Migration from LTE to 5G in the automotive telematics

2G still has a market share of 7.6% in 2023. It is almost disappear in mature market, but still mainstream in South America, Africa, India and other emerging APAC countries. 2G will decrease to only 1% by 2029, migrate to LTE Cat.1 bis and LPWA.

LTE/ LTE-Advanced have a 23% share in 2023. It is widely used in the automotive, payment terminals, camera/video, industrial gateways, high end telematics, and so on. It will migrate to 5G eMBB/RedCap in the long run. The market share will decrease to just under 10% by 2029.

The market share of industrial 5G is only 0.6% in 2023. Private 5G/local 5G have been promoted in China and other developed markets, but they have not yet reached a large volume shipment. Excluding automotive telematics, the volume of 5G module shipments in 2023 is expected to be less than a million units. With the introduction of 5G RedCap, it is anticipated that the migration from LTE to 5G will progress in a wider range of applications. Thanks to the 5G RedCap market expansion, 5G will accounts about 17% of share in 2029.

LTE Cat.1 bis rapidly expanded in the Chinese market since 2021. In 2022-2023, Chinese low-cost LTE Cat.1 bis module has begun to be deployed in Europe, MEA, and APAC. It is expected that LTE Cat.1 bis will be introduced in Japan and USA from 2024. The market share of LTE Cat.1 + Cat.1 bis is estimated to increase to 39.3% in 2023 and exceed 50% in 2028-2029. Compared to LTE Cat.M/NB-IoT, the benefit of LTE Cat.1 bis is that it does not require base station upgrades. In the long term, LTE Cat.1 bis will migrate to 5G RedCap.

LTE Cat.M market is expected to see a decline first time in 2023 due to inventory adjustments. While demand is expected to decline in Europe and other countries, North America and Japan shows steady growth. The LTE Cat.M market share in 2022-2023 is approximately 10%. In 2029, it is estimated to grow to 11.5%. 5G eRedCap with 5MHz bandwidth operation is assumed to replace LTE-M in the long future.

The NB-IoT market turn to decline trend in 2023. In China market, competition between NB-IoT and LTE Cat.1 bis began in smart utility meter (gas, water) market in China. NB-IoT market is also expected to decrease outside China. Even in India, which is expected to become a large market for NB-IoT in the future, there is a possibility that LTE Cat.1 bis will take place of NB-IoT in the future.

Cellular Module & Modem Chip Market Share

In the industrial cellular module market, Quectel has about 39% of market share in 2023 based on shipments and 30% on a revenue basis. Quectel keeps top market share since 2017. Suppliers ranked second and below have a share of less than 10%, which is a big difference from Quectel. After Quectel, Telit-Cinterion, SunSea, Fibocom, ChinaMobile IoT, Neoway, ublox, Sierra Wireless, Rolling Wireless, MeiG accounts major share.

Since China market, which accounts over 50% of global cellular industrial module market, is occupied by local module suppliers, Chinese module suppliers counts about 83% of market share in shipment volume base. Among Chinese module suppliers, Quectel, Sunsea, Fibocom/Rolling Wireless also sells large number of cellular modules to overseas market.

The main module vendors by communication standard are as follows:

• LTE: Quectel, Fibocom, Rolling Wireless, SunSea, MeiG, LG Innotek, Telit-Cinterion, WNC
• 5G: Quectel, MeiG, Fibocom, Sierra Wireless, WNC
• LTE Cat.1 Global: Telit-Cinterion, Quectel, ublox、Sierra Wireless, Abit
• LTE Cat.1 bis China: Quectel, Fibocom, SunSea, Neoway, MeiG, MobileTek, Lierda
• LTE Cat.M: Telit-Cinterion, Quectel, u-blox, Sierra Wireless
• NB-IoT Module: Quectel, ChinaMobile IoT, Lierda, MobileTek, SunSea, Goldcard, Luat

For cellular modem chipset for cellular M2M module, Qualcomm, UNISOC, Eigencomm, and ASR have a large share, followed by Xinyi, MediaTek and Sony Israel. In shipment volume base, Qualcomm is by far the largest (2023: 34%), and the three major Chinese companies each have a market share of 14-15%. Chinese chip suppliers, all together accounts about 55% of share in 2023.

The major chipset suppliers by cellular standard are as follows:

• GSM: MediaTek, UNISOC
• 3G: Qualcomm
• LTE: Qualcomm, Intel, Sanechips, ASR, UNISOC
• 5G eMBB: Qualcomm, UNISOC, HiSilicon
• 5G RedCap: HiSilicon, Qualcomm
• LTE Cat.1 Qualcomm, Intel, Sequans
• LTE Cat.1 bis: ASR, UNISOC, Eigencomm, AICXTek
• LTE Cat.M: Qualcomm, Sony, ublox, Nordic, Sequans
• NB-IoT: Eigencomm, Xinyi, UNISOC, HiSilicon, M-Link

Qualcomm is strong in high end (5G, LTE-Advanced) cellular modem segment. In the LTE market, Qualcomm still has a large market share, but ASR, UNISOC, and Sanechips are growing in low cost segment. The LTE Cat.1 bis and NB-IoT chipset markets, which have expanded in the Chinese market, are dominated by Chinese IC suppliers. There are no Chinese chip suppliers in LTE Cat.M market, which is not used in China. The 5G RedCap chipset, which will be diffuse in the Chinese market first, other than Qualcomm, Chinese IC suppliers such as HiSilicon, UNISOC, ASR, Innobase, Eigencomm, and AICXTek are expected to take major market share in the early stages.

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The cellular IoT ecosystem is poised for significant transformation over the next seven years, driven by the rise of 5G technologies as revealed by new Omdia research.

With a predominant focus on 5G RedCap, 5G Massive IoT, and 4G LTE Cat-1bis modules, the forthcoming shipments are anticipated to culminate in a substantial 5.4 billion cellular IoT connections (installed base) by the year 2030. This paradigm shift underscores the evolving landscape and increasing prominence of advanced cellular connectivity solutions.

The research also found that mass adoption of 5G RedCap is set to commence from 2024 onward with the technology establishing itself as a mid-tier connectivity solution for 5G devices that do not require such high specifications as Ultra-Reliable Low Latency Communications (uRLLC) and Enhanced Mobile Broadband (eMBB). It will also enable futureproofing of devices as the industry anticipates the eventual phase-out of 4G beyond the year 2030.

Alexander Thompson, Senior Analyst for IoT at Omdia commented:

“2024 will be a pivotal year for 5G RedCap growth. This will begin in China, where most volume is expected and in due course subsidies will bring the module Average Selling Price (ASP) down to similar pricing as LTE Cat-1.”

The forecast also finds that over 60% of IoT module shipments will come from the Asian & Oceania region, making up approximately 80% of IoT connections in 2023. Notably, the automotive sector emerges as a key driver, and is set to see the largest number of module shipments due to the growing demand for smart vehicles integrating 5G connectivity.

“Across the IoT value chain, Application Enablement Platforms (AEPs) continues to be the leading revenue generator. There remains a role for industry specific/pure-play AEPs despite the exponential growth of hyperscaler offerings and financial constraints for startups in the current economy,” added Andrew Brown, Practice Lead for Omdia’s IoT group.

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Amid waning demand, cellular IoT module market faces another challenging quarter in Q3 2023, according to Counterpoint Research.

• Despite a decline in shipments, Quectel continued to lead, followed by Fibocom and China Mobile.
• The top five applications – smart meter, automotive, POS, router/CPE and telematics – accounted for over 60% of total cellular IoT module shipments.
• Against the backdrop of muted demand, full-year shipments for 2023 are expected to decline by 5%.

Global cellular IoT module shipments saw a 2% YoY decline in Q3 2023, according to Counterpoint’s latest Global Cellular IoT Module and Chipset Tracker by Application report.

Weaker demand, rising interest rates and cautious spending from enterprise IoT players are some of the important factors for slowdown in this market.

For the first time, the 5G market’s share in the global cellular IoT module market crossed 5%, indicating traction for 5G adoption. However, 5G applications are currently limited due to the lack of killer use cases and higher prices. We are only witnessing early adoption in the router/CPE, PC and automotive markets.

The IoT module market is undergoing a technology transition from 4G Cat 1 and NB-IoT to 4G Cat 1 bis. The low-cost and power-efficient 4G Cat 1 bis is becoming popular for many applications, including POS, smart meter, telematics and asset tracking.

Commenting on the market dynamics, Associate Director Mohit Agrawal said, “The top five applications, encompassing smart meter, automotive, POS, router/CPE and telematics, accounted for over 60% of total cellular IoT module shipments this quarter. Notably, only the smart meter and router/CPE segments observed positive growth in shipments, with other applications experiencing a decline.

India stands out as the only region to register positive growth in the global cellular IoT module market. Conversely, the market outside of China and India saw a steeper decline compared to China. Contrary to industry expectations, the market is not gaining momentum.”

• Quectel, the market leader, and Telit Cinterion, one of the leading international vendors, experienced a decline in shipments. This trend mirrors the prevailing conditions in both the Chinese and global IoT module markets. However, Quectel showed a slight improvement in performance in the global market on a sequential basis.
• In contrast, the other two vendors in the top five – China Mobile and Fibocom – saw positive growth. This growth was driven by smart meter, asset tracker and POS for China Mobile and router/CPE applications for Fibocom. China Mobile recently established a subsidiary, BILIN’ZHILIAN, to accelerate its module business growth.
• Certain Chinese brands such as Unionman, OpenLuat and Lierda exhibited positive performance from a niche perspective. Their growth was fuelled by applications in smart meters, asset tracking and POS.

Commenting on the future outlook, Senior Research Analyst Soumen Mandal said, “Global cellular IoT module shipments are projected to experience a 5% YoY decline in 2023. However, demand revival is expected by the second half of 2024, with substantial growth predicted for 2025, coinciding with the mass adoption of 5G and 5G RedCap.”

“In the long term, the cellular IoT module market holds promise and applications such as smart meter, router/CPE, POS, automotive and asset tracking will be driving most of the growth for this market.”

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Berg Insight presents a unique database covering the 500 largest cellular IoT deployments identified as part of the company’s world-class IoT market research activities since 2004.

The extensive list includes various types of projects and product categories deployed across all types of vertical markets including OEM automotive, aftermarket automotive, transport & logistics, utilities, infrastructure, buildings & security, retail, industrial, consumer electronics, healthcare and other. The database includes project size and geographical distribution by the end of 2022 as well as a 5-year forecast for each individual project.

“The projects included in the top-500 list together account for approximately 548 million active cellular IoT subscriptions”, said Rickard Andersson, Principal Analyst, Berg Insight.

He adds that this corresponds to as much as 20.6 percent of the total number of cellular IoT connections worldwide at the end of 2022. The 500 projects on the list are in the coming years forecasted to grow to 1,024 million units by 2027, corresponding to an overall compound annual growth rate (CAGR) of 13.3 percent.

Mr. Andersson continued:

“More than 100 deployments on the list have reached 1 million subscriptions or more, and the top-10 projects alone account for over 183 million units.”

Transport & logistics is the largest vertical in terms of the number of projects that made the top list, followed by aftermarket automotive, retail, utilities, OEM automotive, buildings & security and healthcare.

“When comparing the number of active subscriptions represented by each vertical for the entries in the top-500 list, OEM automotive is instead the largest vertical, accounting for 191 million units, ahead of utilities at 118 million units and transport & logistics representing 97 million units”, concluded Mr. Andersson.

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Berg Insight estimates that the global installed base of active off-highway vehicle telematics systems reached 7.9 million units in 2022.

This includes connected units deployed on various off-highway vehicles across the construction, mining, agriculture and forestry sectors. The construction sector accounts for the largest share, driven by OEM telematics systems offered by heavy equipment manufacturers. Agriculture and mining moreover each account for a similar number of connected units deployed on machines and vehicles used in agricultural and mining operations respectively. The remainder is represented by the forestry sector including telematics systems fitted to various forestry equipment. Growing at a compound annual growth rate (CAGR) of 13.1 percent, the active installed base of off-highway vehicle telematics systems across all sectors is forecasted to reach 14.6 million units worldwide in 2027.

“The top-10 equipment manufacturers offering telematics together account for around 70 percent of the total number of off-highway vehicle telematics systems in use across the construction, mining, agriculture and forestry sectors globally”, said Rickard Andersson, Principal Analyst, Berg Insight. Berg Insight ranks Caterpillar as the leading off-highway vehicle telematics provider.

“Far from surprising, the leading equipment manufacturer by market share is also by far the top player when it comes to the number of off-highway vehicle telematics subscribers”, said Mr. Andersson.

He adds that this is a natural development in an industry where telematics has increasingly been included as standard with the machine purchase, gradually covering more models and equipment categories.

“Caterpillar was the first to surpass the milestone of 1 million connected assets across all segments and the company now has more than 1.4 million units”, said Mr. Andersson.

The runners-up are SANY and Komatsu. Other major manufacturers with estimated installed bases of more than 100,000 units include Volvo Construction Equipment, Deere & Company, XCMG, Hitachi Construction Machinery, JCB, HD Hyundai and Doosan Bobcat.

“Additional players having estimated installed bases of off-highway vehicle telematics units in the tens of thousands include CNH Industrial, Liebherr, Terex, JLG Industries, AGCO, CLAAS Group and Tadano”, concluded Mr. Andersson.

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With the inflation and slowdown in macro-economic growth, the Bluetooth device market is estimated to decrease by 6.3% on YoY to 8.07 billion units in 2022, as a result of the significant decrease in the market for host devices such as smartphones, PCs, TVs… and the saturation of Bluetooth audio application market.

Despite the weak consumer demand, BLE (Bluetooth Low Energy) market has been growing in 2022 and 2023 thanks to the expansion in industrial automation, home/building/retail automation, healthcare, automotive and so on. Bluetooth has been expanding new application and use cases along with the introduction of new standards and features.

Bluetooth Device Market Forecast by Device Type

The Bluetooth device market is estimated to shrink slightly to 8.01 billion units in 2023 due to weak consumer demand and inventory correction. However, Bluetooth device market is estimated to rebound in 2024 after the inventory digestion, and improved consumer spending. Bluetooth market will grow by mid to low single digit after 2024, will surpass 10 billion units by 2028.

Dividing Bluetooth application into host type devices such as smartphones, PCs, and TVs, and peripheral/accessory type devices, the market for host-type devices has matured and will decline significantly in 2022-2023. The peripheral/accessory type devices market grows in 2023 onwards, driving the growth of the Bluetooth market. Peripherals and accessories are estimated to account for 65% of the total Bluetooth market in 2021, growing to just under 73% in 2028. Bluetooth adoption will expand in various devices such as HID (Human Interface Device), remote controller, proximity tag/ asset tracking, home/building/retail automation, smart lighting, automotive accessory, mobile accessory, healthcare, and so on.

Single Mode Bluetooth Low Energy Device Market Forecast

In 2021, the BLE chip market expanded strongly by 44% YoY to 1.57 billion units. 2021 growth was partly contributed by the inventory buildup in user companies and channel. Strong demand continued by the first half 2022, but the demand decline and inventory adjustment began in the second half of 2022. 2022 market growth is estimated to remain at 9.4% YoY. The consumer, PC and mobile application market remains weak, but industrial and automotive applications will grow. Overall market growth is estimated at 4% in 2023.

After 2024, in addition to the economic recovery and inventory normalization, BLE device market is expected to show strong momentum due to the expansion of new applications such as audio, automotive digital key and TPMS(Tire Pressure Monitoring System), commercial tag, smart lighting, access control (door lock), electric shelf label, smart metering, and EV charging pile. Some of the application market will grow along with the new features such as Periodic Advertisement with Response (for electric shelf label), Channel Sounding (secure access), LE audio/Auracast (for hearing aid and public speaker). Bluetooth adoption in Matter standard also support Bluetooth penetration in smart home market.

Though BLE has been used in broad range of IoT devices, the main volume application of BLE chip are as follows in descending order: 1.remote controller, 2.tag/beacon (proximity, asset tracking), 3.wearable (smart watch/ activity tracker), 4.HID (mouse/keyboard/digital pen), 5.home/building automation (lighting, door lock/access control, remote switch, sensor…), 6.healthcare device.

In 2022-2023, while the volume of BLE shipments for tag/beacon (proximity/tracking), home/building automation, home/building automation, healthcare, and automotive accessories will increase. BLE IC shipment for wearable decreases significantly as BLE has been replaced by Bluetooth Audio SoC, with the emerge of voice enabled smart watch market in India, China and other developing countries. Remote controllers and HIDs market volume remains flat in relation to the sluggish market for PCs, tablets, TVs, and set-top boxes.

Bluetooth Low Energy IC Market Share

There are over 50 BLE IC suppliers and market share is quite fragmented. However, Nordic Semiconductor keeps top spot since 2014. Nordic establishes leading position in BLE IC market by growing developer community with mature SDK, reference design, low power RF design and flexibility in memory.

In 2022, Nordic, Realtek, Telink, Renesas, and PHYPlus are recognized as top 5 supplier in shipment unit, followed by SiLabs (SiliconLabs), NXP, STMicroelectronics, Qorvo, Infineon, and TI (Texas Instruments). Nordic, PHYPlus and NXP gained the market share in 2022, while Telink, Renesas and Realtek dropped in market share.

The main supplier differs by end market and application. The table below shows the main BLE IC suppliers by application.

Major BLE SoC Supplier by Application

Chinese low cost BLE IC suppliers takes major share in activity tracker, remote controller, HID, mobile accessory, and PC accessory. On the other hand, Western IC suppliers are relatively strong in the tag/beacon (industrial/commercial asset tracking), healthcare, and automotive.

Energy Harvesting and Ambient IoT are attracting attention in the fields of tag/beacon, tracking and proximity. Energy Harvesting and ultra low power BLE IC suppliers are Atmosic, InPlay, OnSemi, WilioT, EM Microelectronics, and Renesas.

For automotive, NXP and TI are the popular BLE IC supplier. In addition, major automotive IC suppliers such as Infineon and Renesas aims to enter the automotive BLE IC market. Moreover, there is a demand for domestic Bluetooth IC suppliers in the Chinese market, and Beken, Senasic and others are developing Bluetooth ICs for automotive.

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MCU embedded WiFi is used for a wide range of applications such as home IoT device, home appliance, industrial terminal, consumer IoT device, toy, healthcare, medical device and more. Home appliances, IP cameras, home IoT devices (lighting, smart plug, etc.), and industrial terminals are the main applications with large volume.

MCU WiFi market declined dramatically in 2022 by prolonged impact of COVID-19 in China and emerging countries, inflation, and weak consumer spending. 2023 market growth remains weak for inventory correction in the supply chain. However, fundamental of IoT demand is firm. We estimate the market growth return to normal in 2024 onwards, with 10% of CAGR from 2023 to 2028.

WiFi Standard Evolution

WiFi standard had been evolved to enhance data throughput by WiFi 5. WiFi 6 first set features for low power IoT applications. The new WiFi 7 standard is designed for broadband applications. The highlight of new WiFi 7 standard is Multi-Link Operation (MLO) to enhance the data throughput. WiFi 7 also support Time sensitive Networks (defined in IEEE802.11aa) to improve low latency communication for xR and mission critical applications.

Many of MCU-WiFi applications does not require high data throughput, therefore WiFi 4 with 20MHz bandwidth is the mainstream standard for MCU WiFi applications. On the other hands, low power operation, AI and computing, security, and multi-protocol are growing importance for IoT WiFi devices.

MCU WiFi 6 chipset has been introduced during 2022 and 2023. MCU WiFi 6 typically support TWT (target Wake Time) for low power operation, 20MHz bandwidth and single antenna.

For IoT application, WiFi alliance also standardized sub-GHz WiFi (WiFi HaLow) and started certification program in 4Q2021. WiFi HaLow target LPWA applications like remote monitoring, sensing, IP voice terminal, and low-resolution camera.

WiFi HaLow ecosystem is still immature, with limited number of suppliers and devices appear in the market. Currently, WiFi HaLow is used as a private network and the public sector. If the commercialization of WiFi HaLow proceeds smoothly, the market size is expected to grow to several hundred thousand units in 2024 and to exceed 1 million units in 2025-2026.

MCU WiFi Market Forecast

The MCU embedded WiFi module market grew rapidly to 508 million units in 2020 and 795 million units in 2021. Then it dropped sharply to the 612 million units in 2022, down 23% on YoY. In addition to the strong demand in 2021, the IC supply shortage led the strong the demand for inventory build-up. In 2Q-3Q/2022, however, the demand for home IoT devices, IP cameras or the like dropped sharply, resulting in excess inventory.

The main volume application of MCU WiFi are home appliances, IP cameras, home IoT devices (smart lighting, smart power plug, etc.), and industrial handheld terminals. In 2022, shipment volume of IP camera and home IoT device decreased significantly due to the weak consumer spending, inflation, and COVID-19 related lockdown in China. On the other hands, the demand for home appliances (air conditioners, refrigerators, etc.) is relatively stable, and industrial/commercial segment shows strong demand in 2022.

In 2023, although a recovery trend can be seen in the consumer IoT and home IoT segment, the overall market growth rate is expected to remain at around 1.3% due to the demand weakness in industrial/commercial segment, and continuous inventory adjustments. In 2024-2025, market growth is expected to return normal, double-digit growth in light of inventory normalization and economic recovery. The Matter standard will also support the smart home application market growth.

WiFi + Bluetooth (BLE) combo chip is increasing in the MCU WiFi market. It is estimated that 44% of the total in 2022 and about 60% in 2028 will be WiFi + Bluetooth combo chip. Bluetooth is not always used, but is in demand, especially for provisioning with smartphones.

2.4GHz single band WiFi 4 is the mainstream in current IoT devices. From 2024 to 2026, it is anticipated that the migration to WiFi 6 will proceed based on the design cycle of end devices. WiFi 6 market share is estimated to reach 23% in 2026 and 50% in 2028. The driving force of WiFi 6 in IoT application will be the product migration by IC suppliers, and the benefit of lower power operations.

The demand for 2.4GHz single band WiFi is strong in China and emerging countries where cost is a priority. While demand for 5GHz WiFi is growing in mature market or industrial/commercial applications to avoid interference in 2.4GHz band. The ratio of dual band/tri-band WiFi is anticipated to increase to less than 7% in 2022 to 15% in 2028.

Matter

Matter is the IP based connectivity protocol for smart home applications to make sure the interoperability between different device suppliers, Matter is developed by CSA (Connectivity Standard Alliance, former ZigBee Alliance) and global internet companies like Amazon, Google, Apple, and Comcast. As a connectivity, Matter support Zigbee/Thread, WiFi, and Ethernet, and Bluetooth for provisioning.

Smart Speaker plays a hub/ controller role in Matter based smart home use scenario. Amazon Echo products, Google Nest products, Android OS and Apple iOS 16 already support Matter during 4Q2022 to 1Q2023. At the same time, CSA released matter specification, SDK and certification in 4Q2022. Matter enabled end node is expected to be released in 2023. Followed by the Matter specification release, major MCU WiFi chip suppliers start to support Matter from the beginning of 2023.

Matter application is defined by protocols. Matter profiles that have been standardized to date include lighting, smart speaker, smart lock, sensor, TV remote, smart light, power plug, switch, window cover, sensor and others. New profiles like home IP camera, air conditioner, refrigerator, and robot cleaner are expected to be added in the near future.

Matter is expected to penetrate in the North America market first, then followed by EU and other developed countries, where Amazon/Google/Apple smart speaker is widely penetrated. China’s major smart home players such as Alibaba, Baidu, and Xiaomi does not participate Matter ecosystem, but promote proprietary protocol. Under the situation, China will not be the market for Matter standard.

MCU WiFi Chip Market Share

In IoT WiFi market, cost is often the priority, but the WiFi data throughput is not matter. Major WiFi chip suppliers, Qualcomm, Broadcom, MediaTek, Intel… does not take major share in MCU WiFi market. Asian chip suppliers play as main supplier in the area. The other competitive factor in IoT WiFi is ease-to-use. modular solution, application, SDK and developer support are the key element. Suppliers such as Espressif, NXP, Infineon, Silicon Labs and Texas Instruments take advantage in the software and support part. The major MCU chip suppliers, ST, Renesas, Nordic Semiconductor (acquires many IoT developers through Bluetooth business) also have opportunity to gain the market share in the future.

In 2022, The major vendors in the MCU WiFi market are Espressif, Realtek, Beken, NXP and Infineon in shipments unit base. Espressif maintains top market share since 2016, from the early day of IoT WiFi market. On a revenue basis, Realtek, Espressif, Infineon, and NXP are taking the lead.

Followed by the weak home IoT and IP Camera trend, the main supplier Beken, Espressif, ASR are estimated to lose the share in 2022. On the other hand, the main suppliers to industrial and home appliances, NXP, Infineon, Realtek, Texas Instruments, gained the market share.

For Consumer and Home IoT segment, Chinese chip suppliers and Realtek accounts major share. In the industrial/commercial segment, Western WiFi chip suppliers, NXP, Infineon and Texas Instruments account major share, however, Espressif and Realtek increases presence in industrial/commercial segment.

The other IC suppliers include Bouffalo Labs, HiSilicon, Nordic Semiconductor, Qualcomm, Eswin, AIC Semiconductor, T-Head (Alibaba), WinnerMicro, WuQi, and more.

For WiFi 6, some of major suppliers and new players: Espressif, Beken, AIC Semiconductor, MediaTek, Infineon, NXP, SiliconLabs, Texas Instruments, Eswin, WuQi, iComm, Casemic, and Nordic announced or released WiFi 6 for IoT applications.

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A new report from the IoT market research firm Berg Insight says that global IoT connectivity revenues increased 24 percent to reach € 10.8 billion in 2022 as the decline in the global ARPU decelerated.

The ARPU dropped just 1 percent to € 0.38. On average, IoT connectivity revenues account for about 2 percent of total revenues for the largest mobile operator groups. By 2027, Berg Insight projects that there will be 5.3 billion IoT devices connected to cellular networks worldwide, generating annual connectivity revenues of € 21.4 billion.

The top ten mobile operators reported a combined active base of 2.3 billion cellular IoT connections at the end of 2022, accounting for 87 percent of the total 2.7 billion connections. China Mobile is the world’s largest provider of cellular IoT connectivity services with 1.06 billion cellular IoT connections. China Telecom and China Unicom ranked second and third with 407 million and 390 million connections respectively.

Vodafone ranked first among the Western operators and fourth overall with 160 million connections, followed by AT&T with 107 million in fifth place. Verizon, Deutsche Telekom and Telefónica had in the range of 36–57 million cellular IoT connections. KDDI and Orange were the last players in the top ten with about 30 million each. The year-on-year growth rates for the largest operators were in the span of 1–37 percent.

In Western markets, IoT managed service providers play a key role in the ecosystem. Most players operate as full MVNOs, typically offering IoT connectivity services based on a mix of roaming and local access agreements and sometimes also value-added services targeted at vertical segments. Notable examples include Velos IoT, Aeris, KORE Wireless, 1NCE and Wireless Logic. Altogether, IoT managed service providers had more than 150 million cellular IoT connections under management at the end of 2022 and around € 1.5 billion in annual revenues.

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Worldwide spending on the Internet of Things (IoT) is forecast to be $805.7 billion in 2023, an increase of 10.6% over 2022, according to a new International Data Corporation (IDC) Worldwide Internet of Things Spending Guide.

Investments in the IoT ecosystem are expected to surpass $1 trillion in 2026 with a compound annual growth rate (CAGR) of 10.4% over the 2023-2027 forecast period.

“The last few years have shown that connecting with a digital infrastructure is no longer a luxury, but a necessity,” said Carlos M. González, research manager for the Internet of Things at IDC.

“For organizations to excel in data-driven operations, investing in IoT projects is essential. Connecting devices to data networks to gather insight, expand operations, and increase performance are the hallmarks of executing an IoT ecosystem.”

Discrete and Process Manufacturing are the industries that will see the largest investment in IoT solutions in 2023 and throughout the forecast period, accounting for more than one third of all IoT spending worldwide. Professional Services, Utilities, and Retail are the next largest industries in terms of overall IoT spending with roughly 25% of the worldwide total. State/Local Government and Telecommunications will deliver the fastest spending growth over the five-year forecast with CAGRs of 12.0% and 11.7% respectively.

IoT investment is a key building block to supporting an increasingly digital and distributed organizational footprint. Most of these investments are seeking solutions that can help organizations achieve a specific business goal or customer challenge, such as cost savings or supply chain efficiency. As such, use cases are the focus of most IoT investment plans.

The two IoT use cases that will receive the most investment in 2023 are both closely tied to the manufacturing industries: Manufacturing Operations ($73.0 billion) and Production Asset Management ($68.2 billion). The next largest use cases – Inventory Intelligence ($37.6 billion), Smart Grid (Electricity) ($36.9 billion), and Supply Chain Resilience ($31.6 billion) – will benefit from strong investments from the Retail and Utilities industries. The use cases that will experience the fastest spending growth represent the diverse application of IoT technologies – Electric Vehicle Charging (30.9% CAGR), Next Generation Loss Prevention (14.5% CAGR), Agriculture Field Monitoring (13.9% CAGR), and Connected Vending and Lockers (13.8% CAGR).

“Updates to the IoT use case taxonomy in this release of the IoT Spending Guide reflect the evolving Digital Transformation investment objectives of enterprises. Thematically, greater investment in goods production and supply chains resulting from the COVID-19 pandemic and global reactions that caused massive business and societal disruptions are evident in the new use cases. These production and supply chain related use cases can be seen in the Discrete Manufacturing, Process Manufacturing, Retail, and Transportation industries,” said Marcus Torchia, research vice president with IDC’s Data & Analytics Group. “Meanwhile, digital business investments are ramping up in other industries such as the Resource Industries. For example, IoT is helping to improve upstream supply chain processes in Agriculture, such as growing, harvesting, and delivering higher quality produce to market.”

This release of the IoT Spending Guide also includes a Video Analytics overlay forecast that is intended to provide high-level insight into a broadly adopted use case (i.e., found in most or all enterprise industries). Video analytics refers to the use of artificial intelligence (AI) and other advanced algorithms to recognize, detect and analyze live or stored video feeds in a variety of uses, including business analytics, security surveillance, and other rapidly evolving adaptations of this technology. These uses are found in numerous settings (e.g., business analytics in manufacturing and retail, in government for crowd management and traffic congestion management, and broadly for security surveillance). Video analytics requires IP networked capable cameras to support the advanced software whether embedded in hardware or provided by third party vendors.

IDC expects spending on Video Analytics solutions across all industries to be more than $23.5 billion this year. Future releases of the IoT Spending Guide will include additional broadly adopted use cases, such as smart buildings.

From a technology perspective, IoT services will be the largest area of spending in 2023 and through the end of the forecast, accounting for nearly 40% of all IoT spending worldwide. Hardware spending is the second largest technology category, dominated by module/sensor purchases. Software will be the fastest growing technology category with a five-year CAGR of 11.0% and a focus on application and analytics software purchases.

Western Europe, the United States, and China will account for more than half of all IoT spending throughout the forecast. Although Western Europe and the United States currently have similar levels of spending, Western Europe will expand its lead with an 11.0% CAGR over the 2023-2027 forecast, compared to an 8.0% CAGR for the United States. China’s IoT spending is forecast to surpass the United States by the end of the forecast due to its 13.2% CAGR.

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IoT Analytics published the Q1/2023 update of their “Global Cellular IoT Module and Chipset Market Tracker & Forecast” – an interactive dashboard and structured market tracker that includes quarterly data on worldwide cellular IoT modules and chipsets from 2018 to Q1 2023, and forecast data from Q2 2023 to 2027.

KEY QUOTES:

Satyajit Sinha, Principal Analyst at IoT Analytics, comments:

“The cellular IoT module market experienced a decline in Q1 2023, due to cautious end-user spending, device makers reducing inventory, and the ongoing semiconductor chip shortage. The slow recovery of the Chinese market and global uncertainties have significantly impacted the market. However, this Q1 market weakness is seen as a bump in the road, with more than 6 billion cellular IoT connections expected by 2027, driven by various sectors and the emergence of 5G technologies.”

KEY INSIGHTS:

• In Q1 2023, global cellular IoT module revenue declined 6% YoY; shipments declined 16%.
• The key reasons for the decline are: 1. Cautious end-user spending; 2. Inventory reductions; and 3. Chip supply issues.
• The top five cellular IoT module companies—Quectel, Fibocom, Telit Cinterion, Sierra Wireless, and LG Innotek—currently account for 66% of the global market.
• The Q1 market weakness is seen as a bump in the road, with six billion cellular IoT connections expected by 2027, driven by various sectors and the emergence of 5G technologies.

Global cellular IoT module market declined 6% in Q1 2023 in a weakening demand environment

The Cellular IoT Module Market: Overview

This month, IoT Analytics updated the in-depth Global Cellular IoT Module and Chipset Market Tracker & Forecast, which provides a quarterly look at the revenues and shipments of the companies providing IoT modules and chipsets for cellular IoT deployments.

According to the latest data, the market declined 6% in Q1 2023 on a revenue basis and 16% on a shipment basis (year-on-year). It is important to note that the cellular IoT module market only accounts for roughly 3% of the global IoT enterprise market, so the impact this segment has on the total IoT market is limited. Yet, it is an indication that the general IoT market weakened in Q1 2023. Earlier this year, we forecasted IoT enterprise spending to grow 19% in 2023.

The decline in the cellular IoT module market in Q1 can be attributed to three main factors:

1. There has been cautious end-user spending on the back of economic uncertainties.

Spending for IoT connectivity modules has slowed on the back of budget constraints in a globally uncertain economic environment characterized by high inflation, trade tensions, political instability, and post-pandemic ripple effects in China. Our data show that the retail industry and the Eastern Europe regions are the biggest reasons for the Q1 decline.

“The primary reasons for this decline were the slow recovery of the Chinese market and uncertainties in the global market.” – – Quectel, Q1 2023 financial results

2. Device makers are reducing their inventories.

In response to the economic uncertainties and fluctuating market conditions, device makers that build IoT modules into their products have focused on reducing costs and managing inventory more efficiently. As these companies deploy a lower-inventory strategy to avoid overstocking and minimize costly excess inventory, orders are getting delayed and order quantities get reduced. This has decreased demand for cellular IoT modules.

“Some of our customers pushed out orders to later this year due to their inventory stock levels.” – A cellular IoT module company, Q1 2023

3. A few companies are still facing a shortage of semiconductor chips.

Although lead times for most standard semiconductors have improved steadily since the peak in early 2022, these lead times remain elevated and particularly high for specific chips, particularly in the automotive industry, e.g., vehicle-to-everything (V2X) connectivity modules. LG Innotek, Adient, Cars.com, and Group 1 Automotive are some of the companies that highlighted the chip shortage in their investor reporting in Q1 2023.

“We are experiencing weaker demand and ongoing tightness in the semiconductor chip supply.” – LG Innotek, Q1 2023 financial results

Competitive landscape of the top five cellular IoT module companies

The top five cellular IoT module companies (based on revenue)—Quectel, Fibocom (including Rolling Wireless), Telit Cinterion, Sierra Wireless, and LG Innotek—account for 66% of the global cellular IoT module market in revenue. Recently, #2 Fibocom and #3 Telit Cinterion boosted their positions in the global ranking due to M&A activities in the space.

Here are some of the Q1 highlights from the top 5 vendors:

1. Quectel: As the market leader in shipment and revenue, Quectel experienced an 11% YoY decline in cellular IoT module revenue, a higher YoY decline than in Q4 2022. According to the company, the primary reasons for this decline were the slow recovery of the Chinese market and uncertainties in the global market.

2. Fibocom: Fibocom completed its full acquisition of Rolling Wireless at the beginning of 2023. This acquisition was the key driver for its cellular IoT module revenue growth, which increased by more than 40% YoY in Q1 2023. The acquisition also expanded Fibocom’s portfolio scope in the automotive, FWA, and other mobility industry verticals.

3. Telit Cinterion: Established in early 2023 as a result of the merger between Telit and Thales’s IoT module unit, Telit Cinterion holds third position in cellular IoT module shipment and revenue. Since it is a newly formed entity, there are no benchmarks for comparing its growth or decline.

4. Sierra Wireless: Semtech completed its full acquisition of Sierra Wireless at the beginning of 2023. Sierra Wireless secured fourth position, but its cellular IoT revenue declined by 25% YoY due to lower market demand.

5. LG Innotek: As a pure automotive communication module provider, LG Innotek ranks fifth with a 5% share of global cellular IoT revenue. The company’s cellular IoT module revenue declined by 6% quarter-on-quarter due to weaker demand and ongoing tightness in the semiconductor chip supply.

Outlook for the broader cellular IoT market

According to IoT Analytics’ Global Cellular IoT Connectivity Tracker & Forecast (Q2/2023 Update), the cellular IoT market grew 27% in 2022. The market is expected to continue to grow significantly, reaching more than 6 billion connections by 2027. Various sectors, such as intelligent metering, transport, supply chain management, logistics, and automotive telematics, drive this growth.

Technology innovation also plays a key role for market growth.

The following three key technology trends are visible:

1. 5G coming up : 5G and 5G Recap technologies are expanding their footprint in the market. 5G shipments, for example, are expected to account for 12% of global cellular IoT modules by 2027. Fixed Wireless Access (FWA) and Automotive CV2X are major use cases for 5G technology.

2. New LPWA cellular modules threatening incumbents : New LPWA cellular modules from MCU-based companies such as ST Microelectronics and Renesas compete with traditional cellular module players such as Quectel or Fibocom. MCU players promise better scalability, reduced bill of materials (BoM), and accelerated time-to-market while maintaining full control over the supply chain.

3. The rise of 3GPP-based satellite connectivity : The implementation of 3GPP-based satellite connectivity is becoming increasingly popular, with major chipset manufacturers such as Mediatek, Qualcomm, and Sony Semiconductor showcasing their latest developments in this area. Sony Semiconductor already launched ALT1350, the first cellular IoT LPWA chipset to offer satellite connectivity, which opens up new possibilities for IoT devices to communicate beyond traditional network boundaries. This integration of satellite connectivity into LPWA chipsets is expected to drive further innovation and growth in the IoT market.

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• Global cellular IoT connections grew 29% YoY to reach 2.7 billion in 2022 with 4G continuing to grow its majority share.
• China held more than two-thirds of total cellular IoT connections in 2022, followed by Europe and North America.
• NB-IoT dominates in China, while LTE-M is preferred in Australia, Japan and North America; Europe supports both.
• 4G and NB-IoT are the most preferred technologies for cellular IoT applications.
• 5G is nascent as module prices and breadth of applications reflect early-stage dynamics.
• IoT growth drivers are shifting, with the enterprise and transformation initiatives key in propelling IoT connections forward.

Global cellular IoT connections grew strongly at 29% YoY to reach 2.7 billion in 2022, according to Counterpoint’s latest Global Cellular IoT Connections Tracker report.

They are expected to grow at a CAGR of 10.8% to reach an installed base of over 6 billion by 2030. China held more than two-thirds of total cellular IoT connections in 2022, followed by Europe and North America.

Amid the challenges faced by various industries, such as inflation, macroeconomic headwinds and supply chain constraints, the cellular IoT market has experienced remarkable growth fuelled by the digital transformation initiatives undertaken by various industry applications like smart meters, automobiles and asset tracking in particular. Cellular IoT connectivity has played a significant role in enhancing productivity, streamlining operations, minimizing downtime, automating processes, and generating cost savings for industries.. The COVID-19 outbreak unexpectedly proved beneficial for enterprise IoT players, accelerating their digital transformation efforts.

Commenting on the cellular IoT connectivity technology dynamics, Senior Research Analyst Soumen Mandal said, “At the end of 2022, 4G and NB-IoT together accounted for nearly 90% of the installed base of cellular IoT connections. 4G emerged as the most preferred technology for cellular IoT connections after surpassing 2G and 3G-based IoT connections in 2016. NB-IoT has gained significant popularity in China, while Japan, Australia and North America prefer LTE-M technology for lower-end applications. Europe has adopted a combination of NB-IoT and LTE-M, supported by roaming services offered by most operators.

5G is still nascent but we expect 5G-based applications to pick up as the module ASP (average selling price) drops to sub-$100 and more 5G RedCap-based solutions become available in the market.. The introduction of 5G RedCap and 5G eRedCap will play a crucial role in driving mass adoption of 5G, particularly in developing and underdeveloped countries.”

Commenting on the market outlook, Research Vice President Neil Shah said, “The global cellular IoT connections installed base is expected to surpass 6 billion by 2030 with a CAGR of 10.8%. The growth will be mainly driven by cellular connectivity adoption across various sectors such as utilities, automotive, industrial, retail and healthcare. Unlike the previous decade, where consumer devices like smartphones and PCs played a significant role in driving cellular connections, this decade will see a shift towards cellular connections being propelled by the digital transformation initiatives undertaken by enterprise IoT payers. The widespread adoption of cellular connectivity will also contribute to a further reduction in prices for cellular-connected devices, making them more competitive against alternative non-cellular connectivity technologies like LoRa, Sigfox and Wi-SUN. Over the past year, the cellular IoT industry has witnessed many consolidations, including Telit’s acquisition of Thales’ cellular IoT business, Semtech’s acquisition of Sierra Wireless, and Aeris Communications’ acquisition of Ericsson’s IoT accelerator and connected vehicle cloud business. As the cellular IoT module market continues to mature, we can expect more consolidations aimed at providing improved solutions and maintaining competitiveness against other non-cellular connectivity technologies.”

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IoT Analytics, today published insights on the enterprise IoT market, including a new market evaluation, spending outlook, and a discussion of common IoT vendor strategies.

KEY QUOTES:
Knud Lasse Lueth, CEO at IoT Analytics, comments:

“The IoT is evolving. Software for example is becoming a more important part of the IoT stack, more specifically IoT applications. AI is also starting to play a bigger role. We are observing that IoT vendors deploy 5 distinct strategies for “winning” in this changing IoT market. The partner ecosystem for example is becoming a crucial element in any IoT vendors’ go-to-market and IoT delivery.”

KEY INSIGHTS:

• IoT enterprise spending reached $201 billion in 2022, significantly lower than many had previously predicted.
• IoT adopters will focus on building the IoT software backbone, developing IoT applications, and infusing AI in the coming five years. 47% of IoT applications are expected to have an AI element by 2027.
• Five things vendors focus on as they evolve their IoT strategies: ecosystem, solutions; AI vision; acquisitions; and open standards.

In 2017, BCG published a much-cited and discussed analysis, asking: “Where are the growth opportunities in enterprise IoT?” The authors discussed the growth opportunities along the IoT tech stack from 2015 to 2020. The conclusion: The top layers of the tech stack (services, applications, and analytics) will grow the fastest between 2015 and 2020 and will see the highest spending.

Today, six years later, we wonder: How accurate was the assessment by various industry analysts back then, and what does it take to win in a changing enterprise IoT market between 2023 and 2027?

Evaluating the IoT market vs. past predictions

According to our January 2023 IoT market update, IoT enterprise spending reached $201 billion in 2022, up from below $100 billion in 2018. For comparison, this represents roughly 5% of the global IT market in 2022. While we had to lower the outlook for the forecast period of 2023–2027 in our January 2023 update, the market is still expected to grow by +19% annually and reach $483 billion in spending by 2027.

The IoT market is expected to reach $483 billion by 2027

The number of global active IoT connections grew by 18% in 2022 to 14.4 billion active IoT endpoints. In 2023, IoT Analytics expects the global number of connected IoT devices to grow another 16% to 16.7 billion. While 2023 growth is forecasted to be slightly lower than it was in 2022, IoT device connections are expected to continue to grow for many years to come.

How accurate were industry predictions in 2017?

We compare our market tracker that is based on actual revenues of 170+ companies in the IoT market to industry predictions of several third-party data providers that were cited by BCG in its 2017 article.

Our verdict: Industry predictions were directionally correct but too bullish on the pace of IoT adoption and on how fast different technology categories would shift.

1. Total market size

• Industry prediction for 2020: $250 billion
• IoT Analytics IoT spending tracker: $136.6 billion. According to our estimates, the IoT market came out 45% lower than estimated. The market grew substantially in the 2015-2020 time frame but did not explode as had been projected by many (some segments, such as services, had been forecasted to grow 40%+ every year).

2. Tech stack changes:

• Industry prediction for 2020: Services, applications, data analytics, and software platforms would substantially outgrow other parts of the tech stack.
• IoT Analytics IoT spending tracker: According to our data, this did happen. However, data analytics, applications, and services captured 39% of the market in 2020 and not 60% as forecasted by some data providers.

3. Segment changes:

• Industry prediction for 2020: Discrete manufacturing, utilities, and logistics would make up the largest share of the market.
• IoT Analytics IoT spending tracker: Our data also show these three segments as being among the largest, but our view is that discrete manufacturing is even bigger than predicted.

Although we believe that general industry predictions (including our own predictions) were too bullish, we do see strong evidence that the market is growing further and now believe that the projected 2020 IoT market size of $250 billion will be surpassed at some point in 2024.

The IoT market in 2023 and beyond

IoT technology in 2023 adds value to organizations in all verticals, from manufacturing (e.g., factories) to retail (e.g., warehouses) and transport (e.g., cars). The IoT market has moved past headlines such as the infamous “3/4 of all IoT projects fail” (Cisco 2017).

87% of all IoT projects meet or exceed expectations

In 2023, 87% of all IoT projects met or exceeded expectations, based on a 2023 survey of 300 IoT decision-makers that will be published in an upcoming IoT Analytics adoption report. Some companies have connected millions of connected IoT devices (e.g., Walmart, Tesla, and Hapag-Lloyd) and are looking to expand with more sophisticated software tools. Despite several key challenges remaining related to interoperability, skills and know-how, and chipset supply, companies do not question if they should do IoT but rather how it will be scaling from here.

IoT technology maturity framework

To understand how the IoT tech stack is changing and where the growth opportunities in IoT are going forward, one needs to consider a typical technology-focused maturity curve an IoT adopter goes through:

Stage 1: Enabling the asset

In the first stage, whether it is a smart washing machine, a heavy asset in a factory, or a ship at sea, companies need to invest in sensors and local controllers/gateways to be able to process IoT data. Despite a renewed edge computing investment cycle that is seeing many companies invest into more powerful and flexible hardware, many companies at this point have passed the first hurdle of ensuring they have basic IoT data to work with. We expect the spending for IoT hardware/devices to be the lowest growth category at 14% until 2027.

Stage 2: Establishing connectivity

In the second stage, enterprise end users establish and simplify the connectivity to their IoT hardware. While some technologies used have been around for decades (e.g., certain field buses), companies in recent years have invested heavily into higher bandwidth connectivity (like ethernet), wireless connections (e.g., 4G/5G and LPWAN), and more modern and lightweight protocols (e.g., OPC-UA and MQTT). Spending on connectivity is expected to grow by 18% until 2027.

Stage 3: Creating the software backbone

Data normalization and analysis are key to the third stage of IoT maturity. Companies invest in the software backbone that allows them to access various IoT data sources and build valuable services, e.g., using cloud storage and platform services, centralized data lakes, containerization, and modern databases. Many companies are currently in a major investment phase in this part of the maturity curve. That is why we expected spending related to IoT Platforms and middleware to grow 30% and 34% for Infrastructure as a Service (IaaS) until 2027.

Stage 4: Building value adding IoT applications

In the fourth stage of IoT maturity, IoT end users build cloud native or edge-based applications that make use of IoT data at scale. The ability to connect to any asset (stage 1) in a standardized fashion (stage 2) and having those data easily accessible (stage 3) enables a number of IoT use cases. Some of the early innovators (e.g., several automotive OEMs) have reached this stage and are building all kinds of internal (e.g., for their factories) and external (e.g., for their cars) IoT applications. We expect more companies to reach this stage of maturity in the coming years, which is why we expect the spending on IoT applications to exhibit a CAGR of 29% until 2027.

Stage 5: AIoT = infusing AI into IoT

Enabling business with AI is the fifth stage of IoT maturity. This is where companies explore ways to augment existing applications and build new applications by embedding AI. Machine vision and predictive maintenance are two of the most common AI-enabled IoT use cases today. Recent breakthroughs in generative AI may add a new dimension and are a driver for companies to rapidly adopt AI further.

The shift toward AIoT: Nearly half of all IoT applications to be AI-infused by 2027

Although some companies are still struggling to enable their assets (stage 1) and establish connectivity (stage 2), the future of IoT is the convergence of AI and IoT, also often referred to as AIoT.

The future of IoT is the convergence of AI and IoT

In 2022, we conducted a survey of 500 senior IT and engineering staff at manufacturing companies. 15% of those companies indicated having fully implemented their AI strategy (results are part of the Industry 4.0 Adoption Report 2022). Two key use cases with an AI component that were cited were machine vision and predictive maintenance, both scoring a consistently high ROI for these companies.

Based on the data we have and the discussions we lead with various organizations, we estimate that approximately 6% of IIoT applications today are AI-based, meaning that AI algorithms play a core role in enabling the use case (i.e., when using machine learning for vision detection in quality control). Another 11% of applications are classified as AI-augmented, meaning that AI does play a role for the use case, but the use case is not dependent on that AI functionality (e.g., AI-augmented AGV/AMR routing instead of using rules decided by operators).

We see a strong push toward embedding AI into IoT applications (e.g., by moving from condition monitoring to predictive maintenance) and expect a strong increase in the next years.

By 2027, we forecast nearly half of all IIoT applications to have some AI element with the share of AI-augmented applications tripling in that time frame (from 11% to 34%). Many software vendors are currently undergoing large internal exercises on how they can augment their existing software offerings with the use of AI. In May 2023, for example, SAP announced 15 new business AI capabilities across the existing ERP product portfolio, including nine new generative AI scenarios.

Not everything is required to be AI-based, however. Many legacy non-AI IoT applications that are already deployed may not be touched. Many rule-based applications will remain sufficient for some clients and uses cases, and not every dashboard will need to be AI-augmented.

The hype around ChatGPT and Generative AI is likely to impact the AI strategy of companies in the coming years. It is still early to tell if and how quickly the implementation of generative AI in IoT will lead to new large-scale use cases. Generative AI models predominantly focus on text and images, with only a few models centered around sensor data at this point.

Ravi Kumar, CEO, Cognizant, 2 February 2023: “We see a strong push now to bring AI into the business landscape, with the expectation that AI will reengineer enterprises as completely as enterprise software did three decades ago.”

Winning in IoT: How vendors are positioning themselves

With users more focused on building the software backbone, developing applications, and infusing AI, the combined IoT software opportunity is expected to amount to $193 billion by 2027. In 2022, no single vendor had more than 3% market share in the $201 billion global IoT market, and no single vendor had more than 9% market share in the IoT software market. (Note: IoT Analytics tracks 170+ vendors and their market share by IoT segment—see the most recent update of the IoT Enterprise Spending Dashboard.)

No single vendor has more than 3% market share in the IoT market

IaaS (top three vendors: 86% market share) and wireless connectivity (top three vendors: 44% market share) are the only IoT tech stack elements that are largely consolidated at this point—the other areas leave plenty of room for innovation and consolidation.

Here are examples of some of the strategies that leading IoT vendors are pursuing as they gear up for the next five to ten years in the IoT market:

Strategy 1: Multiplying the opportunity by building a strong ecosystem of partners

The complexity of IoT has led some of the leading organizations to build an ecosystem of complimentary partner companies to help in their go-to-market and delivery. This strategy is most notable with the leading hyperscalers Microsoft, AWS, and Google.

For example, at Hannover Messe 2023 (the world’s leading industrial fair), we counted 35 partners co-exhibiting with AWS, 25 with Microsoft, and 24 with Google (see our Hannover Fair event report for more details). Although these companies are technically also customers of the hyperscalers, significant time and resources go into developing joint solutions, building architectures together, and marketing the joint offerings. AWS, for example, marketed joint solutions with Element Unify, HighByte, Deloitte, and TensorIoT at the fair.

Strategy 2: Focus on solutions that solve customer problems

A few years ago, many vendors focused on selling a platform that would allow IoT adopters to build applications themselves. However, many IoT adopters, especially SMEs, have found that they do not have the resources to make this happen. Some of the vendors that previously provided an IoT platform have adjusted accordingly and moved on to providing IoT solutions to individual problems and use cases, rather than a universal, hard-to-maintain platform. In some cases, these solutions bundle existing hardware or sensors with access to cloud-based software so that IoT adopters can receive everything they require from one vendor.

For example, in 2022, Swedish sealing and bearing company SKF launched SKF Axios, a wireless predictive maintenance solution geared toward monitoring equipment and improving equipment uptime. The solution leverages several AWS cloud services and provides necessary sensors, gateways, wireless connectivity, and a ready-to-use application so that customers have the entire solution ready to go.

Strategy 3: Embedding a bold AI vision into the strategy

As the IoT enterprise market is starting to look at the fifth stage of maturity (AIoT), some vendors appear to be bolder and more committed to leading the AI race than others.

For example, Japanese industrial automation vendor Yokogawa is building the vision of industrial “autonomous operations” into the company strategy, believing that the future of manufacturing is AI-based. In March 2023, Yokogawa announced the adoption of Yokogawa’s Autonomous Control AI at an ENEOS Materials Chemical Plant. The field test demonstrated that AI could control distillation operations more effectively than existing human-controlled approaches, resulting in stable product quality, high yield, and energy savings.

Strategy 4: Acquiring missing puzzle pieces

Rather than partnering, some companies opt to acquire certain IoT technologies or applications that they consider high value.

In May 2022, for example, Emerson Electric acquired Aspen Technology to create a leading industrial software company. The acquisition, among other things, gives Emerson Electric access to a strong Industrial AI portfolio, including numerous asset intelligence solutions.

In June 2022, Siemens acquired Senseye, a provider of AI-powered solutions for industrial machine performance and reliability.

As part of our recent State of IoT—Spring 2023 report, we looked at the 100 most recent acquisitions in the IoT space. We found that the largest group (26%) of acquired companies was in the applications space—many with a strong AI footprint.

Strategy 5: Betting on open standards

Open standards promise to solve one of the biggest inhibitor to large scale IoT adoption: Missing interoperability and compatibility among various IoT devices and systems.

By aligning their solutions with open standards, vendors hope to significantly improve the customer experience, fostering innovation, flexibility, and scalability in their IoT deployments.

Schneider Electric, for example, is actively promoting the use of IEC 61499, a shared source runtime execution engine, developed by Universal Automation. The standard aims to create hardware-independent applications to bridge the existing gap between IT and OT.

In our Hannover Messe 2023 event report, we highlighted that we noticed several big brands aligning behind the Asset Administration Shell (AAS) framework to develop interoperable digital twins. Among many companies, Microsoft, Siemens, and SAP seem to be three of the most notable supporters.

Conclusion

IoT continues to offer tremendous opportunities, even if the market is not advancing as fast as some had predicted in the past. IoT enterprise spending is expected to increase to $483 billion by 2027. In a maturing IoT market, the biggest growth opportunity lies in the software, especially with (AI) applications.

The biggest IoT growth opportunity lies in software

Nearly half of all applications in 2027 will be AI driven. Leading IoT vendors, such as hyperscalers, industrial automation vendors, and connectivity providers, and also many start-ups position themselves to stay relevant in an AI-first IoT market. With a clear IoT strategy, companies have an opportunity to position themselves in what remains one of the biggest market opportunities of our generation.

The post Winning in IoT: The evolving IoT market appeared first on IoT Business News.

IoT Analytics today published its State of the IoT-Spring 2023 report on the current state of the Internet of Things including market update and forecast, latest trends, and more.

KEY QUOTES:

• Knud Lasse Lueth, CEO at IoT Analytics, comments:
  

  “Despite general economic uncertainty, the state of the IoT market right now remains predominantly positive. Industrial IoT projects and Industry 4.0 in particular stand out as driving forces in the current market environment. On the flipside we have recently seen IoT-related layoffs in the IT industry and we also do see that investment flows into IoT-focused start-ups has declined significantly.”

• Satyajit Sinha, Principal Analyst at IoT Analytics, adds: “As we look towards the future of IoT connectivity, two trends are noteworthy. The first is the convergence of LPWAN technologies, shifting the industry towards a multi-connectivity solution view. This shift will likely lead to new multi-LPWAN connectivity modules, providing end-to-end connectivity in verticals such as logistics and mobility. The second trend is the growing popularity of LEO-based satellite IoT connectivity, which offers extensive coverage, minimal delays, and strong reliability. With satellite IoT connections expected to grow at a CAGR of 25%, integrating satellite connectivity options into LPWA chipsets is expected to drive further innovation and growth in the IoT market.”

IoT connections market update—May 2023

The latest IoT Analytics “State of IoT—Spring 2023” report shows that the number of global IoT connections grew by 18% in 2022 to 14.3 billion active IoT endpoints. In 2023, IoT Analytics expects the global number of connected IoT devices to grow another 16%, to 16 billion active endpoints. While 2023 growth is forecasted to be slightly lower than it was in 2022, IoT device connections are expected to continue to grow for many years to come.

IoT connections forecast

According to our analysis, by 2027, there will likely be more than 29 billion IoT connections. Compared to our last IoT device market update a year ago, we lowered our five-year IoT market outlook for two important reasons:

1. Chipset supply to remain constraint for years to come in the face of surging demand

Chipset supply chains have considerably improved in 2023 as demand has weakened in the face of a slowing economy. Despite the demand slump, current chip lead times remain elevated compared to pre-COVID-19 levels. We believe that once the economy recovers and a new demand wave kicks in, chipset supply will become much more constraint again. While it is true that a lot of chip manufacturing capacity is being planned as we speak, fueled by government initiatives such as the US Chip and Science Act (2022) and the EU Chips Act (2022), it may take many years until supply matches or surpasses demand for the majority of different types of chipsets.

Make no mistake, the investments into new chip manufacturing capacity are enormous. TSMC has increased its capital expenditure from approximately $15 billion in 2019 to $42–$44 billion in 2022. Similarly, in 2023, Samsung announced that it plans to invest $230 billion in South Korea over the next 20 years to build new chip production capacity. However, these investments take time to materialize. Semiconductor plant constructions typically take three to four years to complete, and it can take another three to four years for facilities to reach full capacity.

2. China uncertainties

In the last years, China was the leading country for new IoT device connections, with active cellular IoT connections in China alone surpassing two billion in 2022. However, the high growth years may be coming to an end with the country facing a number of issues, including technological supply shortages on the back of renewed US–China trade tensions, most notably in the semiconductor industry. In October 2022, the US placed an export ban on China, causing significant disruption to these industries. Consequently, chip companies are relocating their facilities outside of China. Some companies, such as Infineon, TSMC, AMAT, and ASML, have announced that they are moving parts of their production out of China.

The leading IoT connectivity technologies: three technologies making up nearly 80% of the market

Global IoT connectivity is dominated by three key technologies: Wi-Fi, Bluetooth, and cellular IoT.

1. Wi-Fi. Wi-Fi makes up 31% of all IoT connections. In 2022, more than half of Wi-Fi-enabled devices shipped worldwide were based on the latest Wi-Fi 6 and Wi-Fi 6E technologies, which promise faster and more reliable wireless connectivity. The adoption of these technologies has made communication between IoT devices more efficient, leading to improved user experiences and overall performance. Wi-Fi technology is leading IoT connectivity in sectors such as smart homes, buildings, and healthcare.

2. Bluetooth. 27% of global IoT connections rely on Bluetooth. Bluetooth Low Energy (BLE), also known as Bluetooth Smart, has been continuously developed to allow IoT devices to maintain reliable connectivity while consuming limited power. As a result, BLE is now the preferred option for battery-powered IoT devices such as smart home sensors and asset tracking devices. Even the industrial sector is starting to show increasing interest in IO-Link Wireless technology, which is based on IEEE 802.15.1 (the technical standard for Bluetooth) and allows for wireless communication between sensors/actuators and an I/O master.

3. Cellular IoT. Cellular IoT (2G, 3G, 4G, 5G, LTE-M, and NB-IoT) now makes up nearly 20% of global IoT connections. According to the Global Cellular IoT Connectivity Tracker & Forecast (Q1/2023 Update) by IoT Analytics, global cellular IoT connections grew 27% YoY in 2022, strongly surpassing the growth rate for global IoT connections. This growth is due to the adoption of newer technologies such as LTE-M, NB-IoT, LTE-Cat 1, and LTE Cat 1 bis, as older technologies such as 2G and 3G are phased out. Although 5G module shipments also grew more than 100% YoY in 2022, the growth rate is still slower than many had expected. In 2023, the top five network operators—China Mobile, China Telecom, China Unicom, Vodafone, and AT&T—managed 84% of all global cellular IoT connections. In terms of IoT revenue, the top five network operators make up 64% of the IoT network operator market, with China Mobile, AT&T, Deutsche Telekom (including T-Mobile), China Unicom, and Verizon leading the market.

The analysis shows a few notable shifts over the years, for example:

I. China Mobile jumped from fifth place in 2012 to first place in 2021 and is expected to remain there in the foreseeable future.
II. AT&T, Verizon, and Deutsche Telekom have consistently ranked in the top five from 2010 to 2022 and are expected to maintain their positions through 2027.
III. China Unicom joined the top five in 2022 and is projected to remain among the leading network operators through 2027.

IoT connectivity trends to look out for

While the general IoT connectivity landscape only changes slowly (e.g., some devices remain connected for a decade or even longer), new IoT connectivity technologies do have an impact on the landscape in the long run. Here are two interesting developments we are monitoring (for more also visit our Embedded World conference 2023 takeaways and our MWC 2023 takeaways):

1. LPWAN technology convergence

In 2022, the LPWAN industry saw two significant events that shifted the focus from competition among LPWAN connectivity technologies to co-existence and convergence of those technologies. UnaBiz‘s acquisition of Sigfox and Semtech’s acquisition of Sierra Wireless paved the way for LPWAN companies to provide multi-connectivity of several LPWAN technologies at the same time. To make this convergence happen and be able to deploy any LPWAN technology, UnaBiz, for example, now collaborates with The Things Industries, Actility, Soracom, LORIOT, and others. This means that UnaBiz has become more than just a technology provider but rather a solution provider that also bundles all different technologies and orchestrates them on their own software platform. UnaBiz is just one example that shows how the industry is shifting from a single LPWAN technology view to a multi-connectivity solution view.

We anticipate that this LPWAN convergence may lead to the emergence of new multi-LPWAN connectivity modules in the future that would provide end-to-end connectivity in verticals such as logistics and mobility.

2. LEO-based satellite IoT connectivity

LEO satellite connectivity for IoT is gaining popularity because it provides extensive coverage, minimal delays, and strong reliability. The technology is especially useful in the agriculture, maritime, and logistics industries. LEO satellites are closer to Earth than traditional satellites, resulting in reduced latency and faster data transmission, which are essential for real-time data processing. This type of connectivity is more resilient and reliable, ensuring consistent communication, even in challenging environments or during natural disasters. Advancements in LEO-based IoT satellite connectivity continue to optimize performance and enhance the user experience.

According to IoT Analytics, satellite IoT connections are expected to grow from six million to 22 million between 2022 to 2027, at a CAGR of 25%. While this growth is expected to have a minor effect on the overall market, the integration of satellite connectivity options into LPWA chipsets by companies like Qualcomm could accelerate adoption. Sony Semiconductor already launched ALT1350, the first cellular IoT LPWA chipset to offer satellite connectivity, which opens up new possibilities for IoT devices to communicate beyond traditional network boundaries. This integration of satellite connectivity into LPWA chipsets is expected to drive further innovation and growth in the IoT market.

Other State of IoT (Spring 2023) research highlights

The 137-page report highlights a number of current developments in the IoT market. Here are three developments that are discussed in more depth in the report:

1. Predominantly positive IoT sentiment going into the second half of 2023

Despite a number of macro uncertainties and some (IoT-related) layoffs, the IoT market remains largely intact going into the second half of 2023. Most market participants have a predominantly positive outlook, with industrial IoT projects and Industry 4.0 initiatives driving the market. Below are some recent representative quotes from chip companies with a focus on IoT:

“We continue to secure major greenfield design wins, even amid macro uncertainty. The IoT market has incredible potential, with thousands of new applications on the horizon.” – Matt Johnson – President & CEO, Silicon Laboratories (1 February 2023)

“The industrial IoT markets are performing better than our expectations.” – Kurt Sievers – President & CEO, NXP Semiconductors (31 January 2023)

2. IoT platforms market is consolidating

Several major companies that were selling IoT platforms recently announced discontinuations, including Google’s IoT Core, Bosch‘s IoT Device Management, IBM’s Watson IoT Platform, and SAP’s IoT services. The reasons for the strategic shift away from IoT vary. The market dominance of Microsoft Azure IoT and AWS IoT in “generic” IoT platforms certainly played a role, in conjunction with the “the lack of profitability” in the offered IoT services. Several of these companies have announced a shift toward creating solutions specific to particular verticals or relying more on a few select partners to continue to support IoT initiatives (e.g., Google–Litmus Automation partnership).

“IoT services themselves don’t make enough money. The services like AWS IoT Core and Azure IoT Hub are expensive to build and maintain and by themselves they are likely not profit-making.” – Former IoT Product Lead, Microsoft

3. IoT-focused start-ups are struggling to secure funding

The amount of money invested in global IoT start-ups decreased significantly in the last 12 months. In the first quarter of 2023, we tracked 52 IoT-related funding rounds totalling $840 million, a 45% reduction in the value of investment in IoT start-ups companies compared to Q1/2022. Some of the larger recent IoT-related funding rounds include a $150 million Series D for US-based chipset manufacturer Astera Labs in November 2022 and a $43 million Series C for China-based connectivity chipset company XINYI Information Technology in March 2023.

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The enterprise IoT market is anticipated to rise at a CAGR of 13% from 2023 to 2033, surpassing US$ 2 trillion by 2033.

The market is anticipated to be worth US$ 595.42 billion in 2023.

The enterprise IoT market is driven by several factors such as the increasing adoption of IoT in various industries to improve operational efficiency and reduce costs. The increasing adoption of cloud-based IoT platforms is also expected to drive market growth.

In addition, the growing trend of Industry 4.0 and the increasing need for automation in various industries are also propelling the growth of the market. The increasing adoption of enterprise IoT in smart cities and smart homes, as well as IoT-enabled automation in various industries such as manufacturing and transportation, is also expected to drive market growth..

Another key driver of the enterprise IoT market is the increasing focus on digital transformation across various industries. With the rise of big data and analytics, organizations are looking to leverage IoT technology to gain valuable insights and make data-driven decisions. This is leading to increasing demand for enterprise IoT solutions in various industries such as healthcare, transportation, and manufacturing. Additionally, the growing trend of Industry 4.0 and the increasing need for automation in various industries are also propelling the growth of the market.

The increasing adoption of enterprise IoT in emerging technologies such as AI, ML, and big data is also expected to drive market growth during the forecast period. These technologies enable organizations to analyze large amounts of data generated by IoT devices and make data-driven decisions..

The growing demand for enterprise IoT in various industries such as agriculture and energy management is also expected to drive market growth. Government initiatives and regulations to promote the use of energy-efficient equipment are also anticipated to boost the adoption of IoT during the forecast period. These factors are making enterprise IoT an attractive investment opportunity for companies looking to tap into the growing market.

Key Takeaways:

• The hardware sector accounted for more than 45% of total revenue in 2022 and is expected to dominate the market over the projected period.
• During the projected period, the software and solutions category is predicted to grow at the quickest rate, with a CAGR of 15%.
• The small and medium-sized firm category held the biggest share of 68% in 2022 and is expected to lead the market from 2023 to 2033.
• Manufacturing held the greatest market share of 26% in 2022.
• The enterprise IoT industry in the United States is expected to grow at a CAGR of more than 15% between 2023 and 2033.
• The enterprise IoT industry in the United Kingdom is predicted to grow at a CAGR of 12% between 2023 and 2033.
• The enterprise IoT industry in Japan is expected to grow at a CAGR of more than 14.5% between 2023 and 2033.
• The enterprise IoT industry in China is expected to grow at a CAGR of more than 16% between 2023 and 2033.

Competitive Landscape

The enterprise IoT market is highly competitive, with a few major players holding a significant market share. Leading companies in the market are increasingly implementing growth strategies such as collaborations, partnerships, and product development & launches to maintain their market position. The market has a high entry barrier, making it difficult for small and medium players to enter. Technological advancements play a major role in driving the market, creating a differentiating factor between new entrants and established players.

• In October 2021, Cisco Systems, Inc. introduced its first global work index, which utilizes AI and mobile technology and operates on a hybrid model.
• Siemens AG and PTC Inc. have developed IoT solutions for use in industrial contexts such as manufacturing and transportation.
• Cisco Systems, Inc. and Bosch have created security solutions for protecting IoT devices and networks from cyber-attacks.

These insights are based on a report on Enterprise IoT Market by Future Market Insights

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• Quectel and Qualcomm dominated the cellular IoT module and chipset markets, respectively.
• NB-IoT is still popular among technologies but is expected to lose some market share to 4G CAT1.bis in 2023.
• 5G adoption to get a boost in 2024 if ASP declines to sub-$100 and 5G RedCap-based solutions become available.
• China continues to lead IoT module market, followed by North America and Western Europe.

Global cellular IoT module shipments grew 14% YoY in 2022 to register record high annual volume, despite macroeconomic headwinds, according to Counterpoint’s latest Global Cellular IoT Module and Chipset Tracker by Application report.

The resumption of smart meter implementation, ongoing retail POS upgrades, intelligent asset tracking and the continued growth in connected cars due to progress in electrification and autonomous capabilities were some of the key drivers for the double-digit percentage growth in demand for IoT modules..

China continued to lead the global cellular IoT module market in terms of demand, followed by North America and Western Europe. Meanwhile, India was the fastest growing market, followed by Latin America and North America. Although India has a smaller base, it has immense potential. Eastern Europe was the only region that registered a decline due to the prolonged Ukraine-Russia war.

Commenting on the competitive dynamics among cellular IoT module OEMs, Senior Research Analyst Soumen Mandal said, “In 2022, Quectel was the top cellular IoT module player in China, the world’s largest market for these components. Meanwhile, China Mobile and Fibocom captured second and third place, respectively, enjoying their tremendous scale in the domestic market. Outside of China, Quectel remained the leader followed by Telit and Thales which have merged and will commence operations as a new brand, Telit Cinterion, starting Q1 2023.

Quectel increased its focus in the consolidating automotive (NAD module) segment in 2022 and secured multiple design wins with major automakers. The competition in the NAD module market is intensifying as the industry transitions to 5G connectivity. With every transition of cellular technology, we have seen the market consolidate as it becomes increasingly challenging to serve the automotive segment, which requires heavy customization but garners a lower margin.

China Mobile, the world’s largest CSP and IoT connectivity player, is becoming more vertically integrated by leveraging its massive scale to capture maximum value. It has the potential to break into the top three global cellular IoT module rankings this year.. However, the company primarily operates in China and will need to expand into other verticals and markets via a robust partnership model to maintain its momentum.”

Commenting on the IoT cellular connectivity chipset player dynamics, Associate Director Ethan Qi said, “Qualcomm continued to dominate the cellular IoT chipset market in 2022 with nearly 40% shipments share. Qualcomm strengthened its position in the LTE CAT 4 and higher technologies while also maintaining a dominant position in the 5G market. Qualcomm recently launched its latest 4G CAT1.bis chipset, QCX216, to compete head-on with the LTE CAT1.bis leaders UNISOC and Eigencomm.

Qi added, “In 2022, UNISOC and ASR maintained their second and third positions due to strong adoption of the fast-growing LTE CAT1.bis and CAT 1 based modules, respectively. During the year, two new players from China, Eigencomm and Xinyi Semiconductor, broke into the top five cellular IoT chipset vendor rankings, filling the gap left by Hisilicon. Eigencomm focuses on NB-IoT and 4G CAT1.bis applications while Xinyi Semiconductor focuses on NB-IoT chipsets, both being low-cost but high-volume segments.”

Commenting on the technology landscape, Mandal added, “During 2022, NB-IoT remained the most popular LPWA IoT connectivity technology followed by the fast-growing 4G CAT 1 and 4G CAT 4 modules. Together, these contributed to 60% of the total IoT module market. For most of 2022, China was under lockdown due to the resurgence of COVID-19 which drove greater demand for products such as smart door locks, digital thermometers and wearables, mostly powered by NB-IoT.

NB-IoT saw strong adoption in China but has been less popular outside the country. In contrast, 4G CAT.1bis has been gaining traction globally and has the potential to be an alternative to several NB-IoT and existing 2G/3G applications such as smart meters. However, 5G saw slower adoption in IoT than in smartphones last year due to the higher module costs. The key initial 5G applications are PCs, CPEs and some industrial/enterprise applications.

We believe 5G will enter the mainstream market once the module ASP breaks the sub-$100 barrier and receives a further boost from the 5G RedCap commercialization in coming years.”

Commenting on the IoT market outlook for 2023, Associate Director Mohit Agrawal said, “Global cellular IoT module shipments (including NAD modules) are expected to register robust growth of 19% YoY in 2023. The growth of IoT module shipments in the high-value industrial segment will be key for the IoT projects that have struggled to move beyond the pilot stage and for companies that are focusing more on ROI in a tough macroeconomic environment. Nevertheless, shipments of IoT modules for the smart meter, point of sale (POS) and the automotive markets are expected to continue seeing strong growth, which will offset a slowdown in other segments.”

“The market has been undergoing consolidation across the IoT value chain from module players and connectivity management to IoT platform players. This has highlighted the importance of scale, choosing the right vertical and capturing value by striking the right partnerships or developing the right capabilities. We could see some more exits and mergers in 2023 because IoT, which is very vertical driven, has been seeing volatile growth due to internal or external factors.”

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IoT Analytics, a leading global provider of market insights and strategic business intelligence for the Internet of Things (IoT), AI, Cloud, Edge, and Industry 4.0, released an update for its IoT Enterprise Spending Dashboard and Tracker, which comprises the end-user spending of IoT markets.

This article highlights the IoT market growth in 2022, forecasts until 2027, and macro trends influencing the forecast.

Key insights:

• Overall enterprise IoT spending grew 21.5% in 2022 to $201 billion. IoT Analytics lowered the growth outlook for 2023 to 18.5% (from 24% previously).
• Macro trends largely dominate the growth expectancy for an otherwise robust digital transformation phase for enterprises.
• Lower-than-expected economic growth and general insecurity in 2022 and 2023 lead to cautious spending on digital transformation and IoT.
• Tech layoffs largely spared IoT-focused companies.

Key quote:

Philipp Wegner, Principal Analyst at IoT Analytics, says:

“We lowered our forecast for 2023 but the enterprise IoT market is surprisingly resilient. The number of layoffs of IoT companies is comparably small and healthy order backlogs show sustainable demand.”

IoT Market Update Q1/2023

The enterprise IoT market grew 21.5% to $201 billion in 2022, according to the January 2023 update of IoT Analytics’ Global IoT Enterprise Spending Dashboard. The market grew slightly slower than the 23% forecasted for last year and is expected to grow even slower in 2023. At our last forecast, we expected a faster recovery of the world economy, stronger supply chains, and sustained investment into new technologies to mitigate labor shortage. We ended up with estimated spending growth of 24% for 2023. However, nine months on from our last update, we must lower our forecast for 2023 to only 19%. At this point, IoT Analytics forecasts the IoT market size to grow at a CAGR of 19.4% to $483 billion from 2022 until 2027. Thereby, APAC is expected to outgrow other parts of the world with a CAGR of 22% between 2022 and 2027. North America (20% CAGR) is expected to grow slower than APAC but significantly faster than Europe (16% CAGR) until 2027.

Reasons for a lowered forecast

There are several reasons for the lower-than-expected growth of IoT enterprise spending. In our view, the three primary reasons are:

• Lower GDP growth
• Sustained inflation
• High interest rates

1. Lower GDP growth

One key reason for lower-than-anticipated growth of IoT enterprise spending in 2023 is the environment of low economic growth. In its latest world economic outlook growth projection in January 2023, the IMF expects a real GDP growth of 2.9% in 2023, down from 3.4% in 2022. To put this into context, at the end of January 2022, the IMF expected real GDP to grow by 4.4% in 2022 and 3.8% in 2023.

According to the IMF, the growth of real GPD is going to be lower in 2023 than in 2022 for nearly all major world economies:

APAC: India (+6.1% GDP growth expected for 2023) and China (+5.2%) are the major economies that grow the fastest. China will even grow much faster than in 2022 (+3.0%), being the exception after the end of lockdowns.

Europe: The Euro area (including Germany, France, and Italy) is expected to grow by only 0.7%, while the economy of the United Kingdom is likely to decline by -0.6%.

North America: The United States is expected to grow slower in 2023 (+1.4%) than 2022 (2.0%), and growth is likely to be even slower in 2024 (+1.0%).

2. Sustained inflation

In January 2023, inflation has finally shown a downward trend. However, in most developed economies, inflation is still higher than in the last decade(s). Tech firms, like many businesses, will encounter a workforce seeking higher salaries to cope with the rising cost of living and customers struggling to control expenses. Additionally, operating expenses will escalate with more office staff, travel, and on-site events, resulting in profit stress.

3. High interest rates

In the last year, central banks increased interest rates to fight inflation. The US Federal Reserve increased the federal funds’ target rate from 0.125% at the beginning of 2022 to 4.375% by the end of 2022. To fight inflation, other central banks followed suit (e.g., the European Central Bank [0%–2%] and the Bank of England [0.1%–3.5%]). Higher interest rates have multiple effects as they increase the cost of borrowing capital and put pressure on company margins. Higher interest rates make borrowing more expensive for companies, which can reduce their ability to invest in new projects or technologies.

Spending on digital transformation and new technologies is sidelined amid economic uncertainty

Ultimately, the increased uncertainty trickles down to enterprise investment and into digital transformation and IoT. In their most recent earnings calls, for example, the CEOs of Microsoft and PTC report customers being more cautious with spending on technology. They report most customers stretching the spending rather than cutting it altogether. However, while overall IT spending fell in 2022 and is expected to grow slowly in 2023, spending on enterprise IoT is still expected to grow by 19% in 2023 (according to the January 2023 update of IoT Analytics’ Global IoT Enterprise Spending Dashboard). Large backlogs of automation vendors such as ABB and Rockwell Automation emphasize the healthy demand for digital transformation and enterprise IoT solutions in the long run.

“What happens is typically you’ve got a purchase order, and it needs some level of approval. Maybe last quarter, it needed a higher level of approval, another signature, [and] maybe somebody sat on that signature because they’re saying, ‘Couldn’t we do this next quarter? Couldn’t we start this project a little later?’ […] And generally, it’s not being canceled because companies do need this technology. They’re just delaying a little bit.” – Jim Heppelmann, CEO, PTC, 1 February 2023

“Just as we saw customers accelerate their digital spend during the pandemic, we are now seeing them optimize that spend. Also, organizations are exercising caution given the macroeconomic uncertainty.” – Satya Nadella, CEO, Microsoft, 24 January 2023

“Many clients say that business is slowing and that they are looking to cut costs. Anyone who’s not nervous isn’t paying attention. Customers are saying [that] these are tough times.” – Matthew Prince, CEO, Cloudflare Inc., January 2023 at Davos

Tech layoffs could speed up digital transformation

Many technology companies announced layoffs in recent weeks and months. Microsoft, Amazon, Meta, Cisco, IBM, and SAP are only the most prominent examples. Layoffs.fyi, a tech layoff tracker, registered more than 300 layoff announcements of tech companies, with more than 95,000 employees affected as of early February 2023. However, so far, IoT-related job roles are seldom affected by the layoffs. On the contrary, companies like Schneider Electric and Boeing emphasize the upside as the tech shake-off allows them to hire highly talented and experienced employees. This eases the labor shortage and could speed up digital transformation initiatives.

“A slowdown in hiring in tech has made it easier for other companies to woo workers.” – Annette Clayton, CEO of North American operations, SchneiderElectric SE

“I think it’s going to take probably all of next year before things really do begin to stabilize because we begin to see layoffs in other industries. We definitely feel that in the software world, we’re not having any kind of trouble bringing in the engineering resources that we need, particularly as it relates to software development, because the rest of the industry that competes with us is beginning to soften considerably.” – Dave Calhoun, CEO, Boeing, 26 October 2022

There is also a flipside to tech layoffs in the US: Tech workers that are in the United States with a work visa often only have 60 days to find a new job or have to leave. Tens of thousands of highly skilled and experienced software engineers returning to their home country could potentially lead to faster digital transformation in those countries. So, while layoffs lead to short-term disruption, they might very well be the starting point for a healthy reshuffling in the tech market.

The light at the end of the tunnel: IoT companies are doing well

As discussed above, the global GDP outlook is lowered, and the overall macroeconomic outlook is uncertain. However, IoT enterprise spending is still estimated to grow by 19% in 2023. That is lower than IoT Analytics forecasted before. Despite this, most enterprise IoT-focused companies are staying tight and show a healthy outlook. Not only do they not lay off people on a massive scale, but they are also looking positively into the future. Industrial software company PTC and automation vendor Rockwell raised guidance for 2023 at the beginning of February 2023. During the earnings call on 2 February, Qualcomm CEO Cristiano Amon emphasized the huge potential of industrial IoT for his company: “In industrial IoT, digital transformation is still in the early phases, and the scale of the opportunity for Qualcomm in the long term across many verticals is significant.” The raised guidance and optimistic outlook are spotlights of an overall healthy IoT enterprise market.

Conclusion

IoT Analytics had to lower the IoT enterprise spending outlook for 2023 by five percentage points to 19% amid economic uncertainty and cautious spending on technology and digital transformation. However, going into 2023, it seems like most projects are delayed and not canceled. That is also emphasized by some healthy results of IoT-focused companies. Moreover, many IoT projects could get a boost by the influx of highly skilled (software) engineers that are victims of start-up and tech layoffs. The long-term growth potential of the IoT enterprise market is resilient and expected to reach $484 billion in 2027.

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Berg Insight presents a unique database covering the 500 largest cellular IoT deployments identified as part of the company’s world-class IoT market research activities since 2004.

The extensive list includes various types of projects and product categories deployed across all types of vertical markets including OEM automotive, aftermarket automotive, transport & logistics, utilities, infrastructure, buildings & security, retail, industrial, consumer electronics, healthcare and other. The database includes project size and geographical distribution by the end of 2021 as well as a 5-year forecast for each individual project.

“The projects included in the top-500 list together account for approximately 480 million active cellular IoT subscriptions”, said Rickard Andersson, Principal Analyst, Berg Insight.

He adds that this corresponds to as much as 22.8 percent of the total number of cellular IoT connections worldwide at the end of 2021. The 500 projects on the list are in the coming years forecasted to grow to 949 million units by 2026, corresponding to an overall compound annual growth rate (CAGR) of 14.6 percent.

“More than 90 deployments on the list have surpassed 1 million subscriptions and the top-10 projects alone account for over 159 million units”, continued Mr. Andersson.

Transport & logistics is the largest vertical in terms of the number of projects that made the top list, followed by aftermarket automotive, retail, utilities, OEM automotive, buildings & security, healthcare and industrial.

Mr. Andersson concluded:

“When comparing the number of active subscriptions represented by each vertical for the entries in the top-500 list, OEM automotive is instead the largest vertical, accounting for 157 million units, ahead of utilities at 89 million units and transport & logistics representing 96 million units.”

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Highlights:

• After declining in Q1 2022, the global cellular IoT module market recovered in Q2 2022 despite macroeconomic headwinds and lockdowns in China, the largest IoT market.
• The quarter also saw a series of consolidations in the highly competitive IoT module space.
• Asset-tracking reached the highest share ever at 7% to break into the top five applications.
• Smart meter, POS and industrial were the top three applications in this quarter.
• NB-IoT and 4G Cat 1 were the most preferred technologies for cellular IoT applications.

Global cellular IoT module shipments grew 20% YoY in Q2 2022, according to the latest research from Counterpoint’s Global Cellular IoT Module and Chipset Tracker by Application.

The global cellular IoT module market continued to recover despite a tighter supply chain, COVID-19 lockdowns in China and macroeconomic headwinds. The growth was driven by the ongoing digital transformation involving potential applications around critical infrastructure and logistics catered by some key fast-growing low-tier cellular technologies such as Cat-1 and NB-IoT. Further, module players modified their product offerings, striking partnerships across the value chain, from newer connectivity solution providers to acquiring some key competitors, as the IoT industry enters a very exciting growth phase.

China retained its position as the world’s largest IoT market, contributing to more than half of the demand despite the lockdowns. The country’s cellular IoT module market recovered slightly from previous months this year, driven by lockdown-triggered applications like smart locks, surveillance systems and routers. The North American and western European markets grew steadily and held their second and third positions respectively in the global cellular IoT module market. Again, India was the fastest growing IoT module market (+264% YoY), albeit growing on a lower base, driven by smart meter, telematics, POS and automotive applications.

Commenting on the market dynamics, Senior Research Analyst Soumen Mandal said, “The IoT module market is going through a critical phase where the Chinese brands have become bigger, making it very difficult for international brands to grow in silos. As a result, we have seen the first wave of market consolidation with Telit acquiring Thales’ cellular IoT module business as well as acquiring IoT solutions design house Mobilogix. Also, during the quarter, Semtech, one of the big component vendors and the key chipset provider for the proprietary LoRa-based IoT network, acquired leading cellular IoT and router vendor Sierra Wireless to build an end-to-end wireless IoT portfolio. This kickstarts an exciting phase where the Western vendors are trying to become more ‘integrated’ to capture more value across the value chain, even though the IoT market is a blue-ocean opportunity.”

Mandal added,

“With six out of the top 10 IoT module vendors being from China and with the rising geopolitical competition and data privacy concerns, international players see an opportunity to consolidate and carve out a dichotomy in this segment.”

“Further, having a robust portfolio and post-sales support is the key. Telit, Thales, u-blox and Sierra Wireless improving their offerings over the last 12 months has been a step in the right direction. With consolidation, these vendors can garner scale and some competitive edge to at least compete well on pricing and value against the competition.”

Market summary

The top three players accounted for more than half of the market. Interestingly, Quectel’s shipment share was equal to that of the remaining players in the top 10 list.

• Quectel: Quectel’s module shipments increased 47% YoY, further increasing its gap with the remaining players. During the quarter, Quectel launched 4G Cat 4 smart modules SC200E and SG150H, based on Qualcomm and UNISOC chipsets respectively. Furthermore, Quectel unveiled iSIM-supported LPWA module BG773A-GL with the help of Kigen, through which it will be able to target M2M applications such as POS, smart metering, asset tracking and wearable devices.
• Fibocom: The second largest module vendor, Fibocom, saw 12% YoY growth in its module shipments. Nearly 60% of its module shipments came from the China market. Fibocom has already entered partnerships with Qualcomm, MediaTek, UNISOC, Sequans and Autotalks to increase its share in international markets. This can help Fibocom bridge some of its wide gap with Quectel in the international IoT module market.
• MeiG: After a slow Q1 2022 due to China lockdowns, MeiG registered growth which helped it to enter the top three IoT module ranks globally. While focusing on higher-end IoT module applications, MeiG is expanding into the fast-growing 4G Cat 1 bis market, targeting applications such as POS, industrial, asset tracking, smart meter and enterprise. MeiG is also diversifying its supplier portfolio. It has partnered with fast-growing 4G chipset vendor ASR for the 4G Cat 4 module market, especially for the highly competitive China market and other low-cost international markets.
• China Mobile: China Mobile maintained its fourth position in the global cellular IoT module market by catering to its huge existing and prospective customer base and extensive cellular network. The operator partnered with Xinyi Semiconductor for focusing on lower-end applications. This has helped both to target 2G-to-4G transitioning IoT applications. China Mobile’s growing 5G footprint and partnerships across the value chain will help the world’s largest operator to rapidly scale its end-to-end 5G IoT solutions in the coming quarters.
• Sunsea: Sunsea (SIMCom + Longsung) has been consistently improving its performance over the last 10 quarters. Sunsea is following a strategy similar to that of other Chinese players to offer Qualcomm-based solutions for the international market and MediaTek/UNISOC/ASR/Xinyi-based solutions for the homegrown China market. Sunsea added ASR as a partner besides Qualcomm to cater to the increasing demand and offer affordable pricing in China.
• Telit: Telit is the first non-China player in the global IoT module vendors’ rankings. Telit is focussing on LPWA-Dual Mode, 4G Cat 1 and LTE-M technologies to target applications such as industrial, healthcare, asset tracking, router/CPE and energy. The vendor has launched 4G Cat 1 bis industrial grade module LE910R1 with 2G fallback to target the APAC and EMEA markets. With the sunset of 2G and 3G technology, this module can be used as a substitute for low-to-mid-end applications. After the acquisition of Thales, Telit has the potential to emerge as the largest module vendor outside of China and eventually match Quectel in scale.
• Among other players, Neoway performed well. It was the fastest growing in QoQ terms (+162%) among top vendors. Besides China, India is turning out to be an important market.
• u-blox recorded a strong quarter by remodeling and redesigning its products and clearing backlogs. The demand was strong for u-blox in industrial, automotive and healthcare applications.

Commenting on the key connectivity technology trends in the IoT space, Associate Director Mohit Agrawal said, “The top five technologies, including NB-IoT, 4G Cat 1, 4G Cat 4, 4G Cat 1 bis and LPWA-Dual Mode captured more than 80% of the shipments in this quarter. We are witnessing increasing shipments of 4G Cat 1 and 4G Cat 1 bis modules driven by the sunset of 2G and 3G technologies and higher demand in low-to-mid-end applications. Some module players are still shipping 2G modules to cater to specific low-cost applications in some emerging markets, like Africa, Asia and eastern Europe. The 5G IoT module shipments remain steady with prices still high and many projects still in pilot stages. It will take at least a couple of years to reach an inflection point. We expect the second half of 2023 to see a ramp-up for the 5G IoT modules with good pan-country 5G coverage and scale.”

The top five applications in Q2 2022 – smart meter, POS, industrial, router/CPE and asset tracking – captured more than half of the total IoT module market. Compared to the previous quarter, significant improvements were seen in the router/CPE and residential markets. The automotive connectivity market did not show much traction due to the poor performance of the automotive industry in China during this quarter.

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IoT Analytics published the Q2/2022 update of their “Global Cellular IoT Module and Chipset Market Tracker & Forecast”.

This tracker & forecast is a structured nested database containing 1.7 million data points, allowing a look at the quarterly cellular IoT module market with detailed drill-down options. The following article highlights some of the key insights derived from the data.

Key insights:

• The global cellular IoT module market has grown from two to 10 key technologies. At the same time, the market has grown 15 times since 2010 according to IoT Analytics’ latest research on the topic.
• Module companies have expanded their portfolio from hardware-only to bundling hardware, software, connectivity solutions, and services to provide end-to-end solutions.
• Recently, IoT module prices have significantly increased due to the global chip shortage.

Key quotes:

• Knud Lasse Lueth, CEO of IoT Analytics says:
  

  “The market for cellular IoT continues to be in a long-term cyclical uptrend with smart meter, Transportation, Supply Chain and Logistics, and Automotive and Telematics industries at the forefront of module consumption. From a competitive perspective, we expect to continue to see fierce competition between Western and Chinese module companies.”

• Satyajit Sinha, Principal Analyst at IoT Analytics adds: “In the digital supply chain age, end-to-end tracking demands multiple connectivity modes. Hence, the collaboration of cellular and LoRa technology is expected to be beneficial for end-to-end tracking. Cellular components had been missing from the Semtech portfolio prior to the acquisition. For example, if chipsets such as the Lora Edge LR1120 get embedded into a combined module with LTE-M or Cat 1, the resulting module covers almost all major wireless types of connectivity, including Sub-GHz LoRa, SATCOM S-band, 2.4 GHz Lora, and Cellular IoT.”

The evolution of cellular IoT modules from 2010-2022

Between 2010 and 2022, the cellular IoT module market grew 15 times, with approximately 2.5 billion modules forecasted to be shipped by the end of 2022. The market for IoT modules exploded at an unprecedented rate during this time, and the market dynamics have changed. For example, in 2010, the top five module companies contributed 82% of global cellular IoT module shipments, whereas in 1H 2022, that number reduced to 55%. To understand this change and evolution, we highlight 10 insights on how the technology landscape and the competitive landscape have changed since 2010.

Five key insights on the shifts in the cellular connectivity technology landscape

1. From two to 10 technologies

In 2010, the cellular IoT module market consisted of only two connectivity technologies, 2G and 3G, with 57% and 43% shipment shares, respectively. In 1H 2022, those technologies made up 5% and 1% market share, respectively. At the same time, eight major new technologies have been introduced to the market.

2. The rise of LTE-CAT 1

2014 marked the beginning of the rise of the LTE-Cat 1 technology standard. It is defined by 3GPP’s Release 8, which specifies that each IoT module comes embedded with two receiver (Rx) antennas based on either Intel or Qualcomm chipsets. LTE CAT 1 first started to become the go-to alternative for 2G and 3G IoT applications in North America when 2G networks were being retired by network operators at the end of 2017. The massive migration from 2G/3G to LTE-Cat 1 started in 2018.

3. Adoption of NB-IoT

In 2018, we started to see the first adoption of NB-IoT based on HiSilicon chipsets. NB-IoT became the new alternative for 2G IoT applications in China. At that time, most US operators relied on LTE-M. However, soon after, many started to opt for a dual model (NB-IoT+ LTE-M) LPWA strategy. Hence, since 2019, we have seen mass adoption of the LPWA dual mode module, with adoption still growing at a higher rate than LTE-M in 1H 2022.

4. The new LTE-Cat 1 bis

The absence of LTE-M in China and the technical limitations within NB-IoT in 2020 led to a rise in demand for a new segment: low-cost LTE-Cat 1 bis modules. Cat 1 bis, based on 3GPP Release 13, is characterized by a single antenna and is optimized for low-power applications. Further, LTE-Cat 1 bis is emerging as a viable alternative to LPWA technology, especially in Europe and Latin America. As predicted by IoT Analytics in last year’s IoT Module analysis, both LTE Cat 1 and LTE-Cat 1 bis shipments grew in 1H 2022 by 37% and 41% YoY, respectively.

5. The slow takeoff of 5G

The latest addition to the IoT connectivity stack was 5G, and it was expected to take off in 2021. However, due to inhibiting factors, such as the COVID-19 pandemic, the chip shortage, and increased prices and inflation, 5G today only stands at a 2% market share of global cellular IoT module shipments (1H 2022). We expect that after the 3GPP release 17, we will see a higher 5G adoption rate. We also expect that the first 5G red cap modules to be released in 2024.

Five key Insights on the shift in the IoT module competitive landscape

1. Early market leadership by Sierra Wireless and Gemalto

In 2010, Gemalto acquired Cinterion and became the 2nd largest global cellular IoT module provider behind Sierra Wireless. At that time, SIMCom was the only Chinese module player in the global cellular IoT module shipments ranking.

2. The rise of Quectel

In 2016, Chinese module maker Quectel entered the global top five rankings, replacing uBlox for the first time. Low pricing was Quectel’s key strategy for penetrating the market. In the same year, Telit acquired Novatel Wireless, strengthening its Security and Surveillance segment.

3. Quectel’s market leadership

In 2018, Quectel, for the first time, ranked #1 in China’s cellular IoT module shipments ranking, replacing Sunsea AIoT. In 2019, one year later, the company also, for the first time, ranked #1 globally, replacing Sierra Wireless in the top spot. Quectel is still leading the global ranking in 1H2022, and we expect the company’s market leadership to continue over the next four years.

4. The rise of other Chinese players

In 2017, Sunsea AIoT acquired both Long Sung Tech and SIMCom and remained ranked #2 for three consecutive years (2018–2020). In 2020, Fibocom entered the top 5 ranking for IoT module shipments outside of China for the first time. In 2021, China Mobile OneMo entered the top 5 ranking for the first time in China’s cellular IoT module shipments ranking due to the high-volume shipment of NB-IoT modules.

5. Divestments and acquisitions

While Chinese companies gained market share, Western companies refocused their activities and ownership structures. In 2019, Telit sold its automotive business segment to TUS International, while French aerospace supplier Thales acquired Gemalto. In 2020, Sierra Wireless sold its automotive business segment to Rolling Wireless. In July 2022, Telit and Thales jointly announced the formation of Telit Cinterion, with Thales holding a 25% stake in Telit Cinterion. Telit Cinterion plans to spin off the automotive IoT unit again after completing the merger. In August 2022, semiconductor company Semtech announced its intent to acquire Sierra Wireless. The announcement raised many eyebrows in the industry as Semtech had advocated for unlicensed low-power wide-area standard LoRa for a long time. It appears Semtech’s vision is to go beyond selling hardware. Semtech is looking to scale Sierra Wireless’ high-margin IoT Cloud services, which are part of Sierra Wireless’s end-to-end IoT product, connectivity, and services portfolio. Semtech will likely also allow its customer to opt for both licensed (NB-IoT and LTE-M) and unlicensed LPWA (LoRa) connectivity depending on the use cases and application requirements.

IoT Module market in 2022

In the last 12 years, the IoT Module market has undergone significant changes; the market has grown with significant market leadership changes. Module companies have also expanded their portfolio from hardware-only to bundling hardware, software, connectivity solutions, and services to provide end-to-end solutions (e.g., Telit’s deviceWise and OneEdge or U-Blox’s addition of Thingstream).
This month, IoT Analytics updated its research on the topic by publishing the Global Cellular IoT Module and Chipset Market Tracker & Forecast, which provides a quarterly look at the revenues and shipments of 36 cellular IoT module companies and 14 IoT chipset companies.
The data shows that in 1H 2022, global cellular IoT module shipments and revenue grew 22% and 38% YoY, respectively. At the same time, global cellular IoT chipset revenue grew by 42% year-on-year. The growth outperformance of chips vs. modules was due to higher adoption of more expensive integrated chipsets.

IoT module prices have also increased significantly on the back of the global chip shortage. The average cellular IoT chipset wholesale selling price grew 16 % in 1H 2022 (compared with 1H 2021). The average cellular IoT module chipset wholesale selling prices increased 13% in the same period. Although the chip shortage situation in 1H 2022 has improved compared with 1H 2021, chipset lead times are still far from pre-crisis levels.

Comments on recent M&A activity

Telit acquiring Thales’ IoT portfolio

“Telit Cinterion is expected to put further pressure on the other Western module suppliers due to its broadened portfolio including security and eSIM/iSIM capabilities. The company is also spinning off its automotive IoT unit to focus on Industrial IoT. We expect Telit Cinterion to become the second biggest IoT module company outside China when the acquisition closes.” – Satyajit Sinha, Principal Analyst at IoT Analytics

Semtech acquiring Sierra Wireless

“In the digital supply chain age, end-to-end tracking demands multiple connectivity modes. Hence, the collaboration of cellular and LoRa technology is expected to be beneficial for end-to-end tracking. Cellular components had been missing from the Semtech portfolio prior to the acquisition. For example, if chipsets such as the Lora Edge LR1120 get embedded into a combined module with LTE-M or Cat 1, the resulting module covers almost all major wireless types of connectivity, including Sub-GHz LoRa, SATCOM S-band, 2.4 GHz Lora, and Cellular IoT.” – Satyajit Sinha, Principal Analyst at IoT Analytics

Outlook: The cellular IoT module market until 2026

With 6 billion cellular IoT connections expected by 2026, the market for cellular IoT continues to be in a long-term cyclical uptrend with smart meter, Transportation, Supply Chain and Logistics, and Automotive and Telematics industries at the forefront of module consumption.

Shipments of 5G are expected to contribute toward 16% of shipment share by 2026. Furthermore, the rise of 5G and later 5G redcap is expected to play a key part in the market’s growth beyond 2026. There is also a trend towards the adoption of module-based design (vs. chipset-based design), especially in the industrial and enterprise spaces.

From a competitive perspective, we expect to continue to see fierce competition between Western and Chinese module companies. Prices continue to play a key role in gaining volume in the market. However, we do not think that IoT modules will end up as a pure commodity. Differences in implementation security, eSIM /iSIM, and end-to-end solutions (among others) remain some of the key features affecting the decision-making when opting for a specific module company.

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North America and Asia Pacific are Expected to Achieve the Highest CAGR.

Strategy Analytics latest report on IoT Cellular Connections forecasts a double-digit compound annual growth rate (CAGR) of 14% during 2022-2030.

According to Waseem Haider, Principal Analyst, Enterprise IoT at Strategy Analytics and author of the report “IoT Cellular Connections by Air Interface by Region: 2022-2030 Forecast Update”:
“the latest forecast update looks at the historical data as far as 2013 and forecasts IoT connections by Air Interface technology (2G, 3G, 4G, 5G) and by region (Asia-Pacific, North America, Western Europe, Central & Eastern Europe, Caribbean & Latin America and Middle East & Africa). Over the forecast period, North America and Asia-Pacific are expected to achieve the highest compound annual growth rate (CAGR) of 16% and 14% respectively.”

Between 2022-2030, the mix by technology will change with 5G making strong in-roads replacing 4G connections, from 4G comprising 71% of connections in 2022, to only 49% in 2030. Although, we expect an y-o-y decline in IoT cellular connections in 2022 due to Covid-19 lockdown in China, chip shortage/supply chain disruption and geopolitical conflicts. The overall IoT cellular connections will grow at 14% throughout the forecast period.

The outlook for the IoT cellular connections is clear: 4G will continue to dominate overall, driven by 2G replacements, especially in China, but also elsewhere. 3G phases out with most connections moving to 4G. We expect 5G to reach 47% of the connections mix by 2030, while 4G will remain the dominant technology at 49%.

Gina Luk, Director of Enterprise Research at Strategy Analytics, elaborated:

“The adoption of 5G will likely happen in different stages, with eMBB reaching mass adoption first, uRLLC gaining traction soon afterward, and mMTC showing the longest tail.”

“Adoption will be determined by the availability of 5G chipsets, the speed and coverage of 5G network, and as well as the evolution of regulations. The engine for driving 5G forward for fast growth and rapid adoption is its radio access technology, referred to as New Radio (NR). One recent example is NR support for reduced capability (RedCap) devices which can facilitate the expansion of the NR device ecosystem to cater to use cases include wearables (e.g., smart watches, wearable medical devices, AR/VR goggles, etc.), industrial sensors, and video surveillance, as these are not yet best served by the current NR specifications.”

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According to the June 2022 edition of the Ericsson Mobility report, the number of IoT devices connected by NB-IoT and Cat-M technologies is expected to overtake 2G/3G connected IoT devices in 2023.

The Massive IoT technologies NB-IoT and Cat-M – primarily consisting of wide-area use cases involving large numbers of low-complexity, low-cost devices with long battery life and low throughput – continue to be rolled out around the world. The number of IoT devices connected via 2G and 3G has been in slow decline since 2019, and NB-IoT and Cat-M technologies are the natural successors. The number of devices connected by these Massive IoT technologies increased by almost 80 percent and reached close to 330 million in 2021.

The number of IoT devices connected by NB-IoT and Cat-M technologies is expected to overtake 2G/3G connected IoT devices in 2023, and to overtake broadband IoT in 2027, making up 51 percent of all cellular IoT connections at that time. The growth of Massive IoT technologies is enhanced by a recently added network capability that enables Massive IoT co-existence with 4G and 5G in FDD bands, via spectrum sharing.

About 124 service providers have commercially launched NB-IoT networks and 55 have launched Cat-M.¹ These technologies complement each other, and around 40 service providers have launched both technologies.

In 2021, broadband IoT (4G/5G) overtook 2G and 3G as the technology that connects the largest share of all cellular IoT connected devices, accounting for 44 percent of all connections. Broadband IoT mainly includes wide-area use cases that require high throughput, low latency and large data volumes. By the end of 2027, 40 percent of cellular IoT connections will be broadband IoT, with 4G connecting the majority. As 5G New Radio (NR) is being introduced in old and new spectrum, throughput data rates will increase substantially for this segment.

North East Asia is the leading region in terms of the number of cellular IoT connections, and is forecast to reach 1.5 billion in 2022. The region is set to account for 60 percent of all cellular IoT connections in 2027.

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