5G IoT Device Market Outlook, Chipset trend

5G standard is designed to address broad applications beyond smartphone. In first 3 years, 5G had been predominantly applied in smartphones. However, with the commercialization of 3GPP Rel.16 5G modem, 5G adoption in broad IoT applications start to accelerate in 2022.

5G RedCap standard in 3GPP Rel.17 will open up the new industrial 5G use cases, push further market growth after 2024-2025.

5G Standard Roadmap

3GPP published the latest Rel.17 standard in June 2022. 5G modem compatible with 3GPP Rel.17 is expected be commercialized in 2023. The Rel.17 standard will extend IoT use cases as well as extension of mobile broadband. In addition to NR positioning improvement and sidelink (device to device communication) improvement, NTN (non-terrestrial network = satellite communication), 5G RedCap (Reduced Capacity: 20MHz bandwidth) will be added as new features.

The new 3GPP Rel.18 standard will be published in 2Q/2024. For 3GPP Rel.18, existing functions will be added and have functions for xR (AR/VR). In the 5G standard, more emphasis is placed on edge computing, AI/ML-based networks, resource management between base stations, and cooperation between base stations and terminals for low-latency communication and network resource efficiency for IoT use cases.

3GPP Rel.18 to Rel.20 are positioned as 5G-Advanced. Standards after 3GPP Rel.21 are defined as 6G. Based on 3GPP roadmap, 6G devices will be commercialized around 2028-2029.

5G Device Market Forecast

Non-handset 5G device market grows by 157% YoY to 28.8 million units in 2022. 5G device market growth will be accelerated in 2025 with expansion of 5G telematics and industrial IoT use cases.

Among 5G applications, cellular tablet and broadband CPE are earlier in supporting 5G. By 2022, 37% of cellular tablet, 34% of cellular CPE support 5G respectively. 5G tablet and 5G CPE accounts about 80% share in non-handset 5G device market in 2022.

In 2022, 5G CPE market has grown rapidly, not only replacing LTE CPE but also acquiring fiber broadband subscribers in North America, Japan and Middle East.. After 2023-2024, the 5G FWA market is expected to expand in Europe and emerging markets followed by the 5G network expansion and decline in 5G CPE device price.

Industrial 5G/ private 5G deployment is slow, though several private 5G project will shift from trial to commercial service, larger scale deployments in 2023. 5G telematics market start picking up in China in 2022, though wider deployments will start in 2024-2025.

For industrial 5G, one of the challenges is that it is difficult for economies of scale to work, especially in the module and IC business. Industrial 5G use cases such as factory automation, remote robot control, AI robotics, realtime video streaming… have small volume scales, making it difficult to reduce hardware cost. Especially when using a dedicated frequency band for local 5G services, the cost becomes a bigger.

For automotive telematics, 5G has been adopted in the Chinese market in 2021 ahead of other countries. Outside of China, 5G telematics will be commercialized in Europe: 2023, North America: 2024, and APAC: 2024-2025. The share of 5G is expected to start increasing in 2025-2025 and reach 33% in 2027. The demand for V2X, drive assistance, and autonomous driving become the trigger of 5G adoption in vehicles.

5G RedCap standard with reduced performance and cost will accelerate 5G adoption in industrial and wearable, which does not require broadband connectivity or lower power consumption. The first 5G RedCap chipset will be commercialized in 2023, and mass-production will begin in 2024. China will take 2-3 years ahead in 5G RedCap deployments. The Chinese government will promote 5G RedCap, and it is expected to be adopted for smart electric meters, industrial automation, and so on. In rest of world, the adoption of 5G RedCap is likely to start up around 2027.

Early applications of 5G RedCap include electric power utilities, IP camera (including drone, factory automation), industrial IoT (AR glass, AGV, monitoring camera, remote robot control…) and so on. Consumer wearable is expected to adopt 5G RedCap after 2026.

The challenges of 5G RedCap are the module cost and network infrastructure. Mobile operators need to invest their 5G network to support 5G RedCap, therefore it will take a few years for mobile operators to extend 5G RedCap network in wide area. For module cost, 5G RedCap chipset cost is expected to be over double compared with current LTE Cat.4 chipset in the beginning. Industry expects that Chinese mobile operators subsidize 5G RedCap module to narrower the gap between the costs of LTE Cat.4 module.

Millimeter Wave (mmWave) 5G market is very small so far. It is estimated to reach 0.9M units in 2021 and 1.7M units in 2022. In 2022, the market grew due to the increase in mmWave 5G for tablets (iPad). Excluding tablets, the market size only increased slightly to 0.4M units in 2021 and 0.5M units in 2022.

Although mmWave 5G frequencies have been allocated in an increasing number of countries, investment to the network has not progressed and the available area is limited.

Private 5G (used in indoor, or local area) and fixed wireless access (FWA) are likely to be the applications which take advantage of the features of mmWave 5G. However, mmWave 5G FWA typically requires the use of outdoor antenna units to receive signals from base stations, which hinders its widespread use especially for home broadband. Private 5G has a small business scale and does not contribute to market expansion.

5G Chipset Competition

The cost of 5G chipset is one of fundamental challenges in wider 5G adoption globally. Currently, only three companies, Qualcomm, MediaTek and UNISOC provides 5G chipset in non-handset market. More chip suppliers are expected to enter the 5G modem chip market in 2023-2024.

In 2022, Qualcomm takes dominant position in non-handset 5G modem market with over 80% market share. MediaTek focuses more on mobile router, CPE, and cellular notebook PC market, with early success in 5G CPE market. UNISOC develops low-end 5G chipset and got some design in 5G devices for China and emerging countries.

5G slim modem chipset prices vary by applications, the range is from around $65 to $25 as of 2022.. Because of the semiconductor material cost increase and inflation, chipset price will not decrease significantly in 2023. From 2024 onwards, market expansion and competition are expected to lead to price declines, especially in the mid-end and low-end segment.

Non-Handset 5g Modem Roadmap

Qualcomm and MediaTek are currently commercializing 5G chipsets for the high end and mid end. UNISOC is commercializing low end 5G chipset with low communication speed. UNISOC 5G chipset has been adopted in China and emerging markets.

All 5G chipsets after 2021 are 3GPP Rel.16 compliant.. 3GPP Rel.17 5G chipset is expected to be commercialized in 2023.

Qualcomm and MediaTek commercializes 5G chipsets optimized for specific application. In addition to slim modem (x55, x62/65) for module, Qualcomm has developed smartphone chipset for smart module and tablet, and has commercialized module (315) for industrial IoT, 5G chip (SA515) for automotive. Qualcomm’s new chipset (x72/75) is a SoC optimized for CPE and mobile router. MediaTek introduces SoC for MBB/CPE (T750, T830), for automotive (MT2735), and T900/1300 for tablet.

5G chip suppliers are expected to increase in number in 2023. GCT Semiconductor, ASR, Sanechips, Cygnus, and TD-Tech are likely to commercialize new 5G chipsets. Also, Sequans may commercialize a 5G chipset in 2023-2024.

For 5G modem ICs, there is a tendency to use cutting-edge process technology for lower power consumption and better performance.. Qualcomm and MediaTek 5G chipset in 2021-2022 employs 4/5nm process. On the other hand, smaller IC suppliers choose lower-cost 7/8nm and 12nm process.

5G RedCap Chipset

The schedule for 5G RedCap chipset is anticipated as follows: sample shipment in 1H/2023, chipset mass production in 2H/2023, and module and equipment are expected to appear in 2024.

Currently confirmed 5G RedCap chipset suppliers and schedules are as follows:

• 2H/2023: TD-Tech, Qualcomm (x35)
• 2024: UNISOC, ASR Microelectronics, MediaTek?
• 2025-2026 (?): Sanechips, Cygnus, C-Mind, Eigencomm, Xinyi
• 2026-2027: Sony Semiconductor, Sequans

Excluding Qualcomm, Chinese IC manufacturers are expected to take the lead in 5G RedCap chip development. TD-Tech is the earliest, followed by UNISOC and ASR. In addition, Sanechips, Cygnus, C-Mind, Eigencomm, Xinyi and others may commercialize 5G RedCap chips after 2025. MediaTek is also considering commercializing 5G RedCap. There are challenges in terms of funds, human resources and LTE, 5G IP assets for the 5G RedCap chip development by startup companies.

Among Western chipset makers other than Qualcomm, Sony Semiconductor and Sequans are planning to develop 5G RedCap chip. However, the schedule is not firm yet as 5G RedCap commercialization schedule is not clear in markets other than China.

5G RedCap chipset is initially expected to be dual mode with LTE Cat.4. The baseband logic size is expected to be the similar as LTE Cat.4, but the RF circuit is increased compared to LTE.