Cellular IoT Module Market Update

2022 a turning point. Supply shortage to over-supply concern, western module suppliers regain momentum.

After the strong 36% of YoY growth in 2021, cellular industrial module market growth is expected to calm down to approx. 10% in 2022. Cellular module demand remains strong in the western market, while China market start to saturate in 2Q2022. In 2023, the market growth is likely to be flattish or slight increase globally due to the softening of the macro economy, recession in Western market. However, there is a possible downside risk in 2023 depending on the demand and inventory. We expect the market growth rate normalize in 2024 forwards

Followed by the demand softness, supply chain situation completely changed during 2022. After the continuous supply shortage, semiconductor supply is easing in the 2nd half 2022 along with the soften market demand. Currently industry concerns possible overstock in the channel.

In the article we share cellular IoT module market situation, outlook and supply chain players.

Cellular Industrial/Automotive Module Market Forecast by Vertical Application

The main uses of industrial cellular module are listed in descending order:
Smart Meter (Electric, Gas, Water Meter)
Transportation (Telematics, Vehicle Tracking, Train, Marine)
GPS Asset Tracking (Logistics)
Payment/Retail (Point of Sales, ATM, Vending Machine)
Security/ Automation (Security Camera, Gate System, Alarm, Sensor)

Smart meter, transportation (including telematics), and asset tracking represents major vertical application of cellular IoT modules, together account for about 60% of total market.. Other applications include health care/medical, industrial computing, industrial automation, and remote monitoring.

Along with the wide adoption of LPWA, small trackers, gas/water meters, wearable health monitoring, security sensors, home/building automation, or the like are driving market expansion as new applications.

5G also creates new use cases such as utility monitoring, Industrial automation, robot remote control, broadcast, AR glass, and the like. However, industrial 5G module market volume is only 1.4 million units in 2022. Industrial 5G module market will start picking up in 2024 followed by the wider adoption in automotive telematics, and the commercialization of 5G RedCap modules.

Cellular M2M Market Forecast by Standard

Many industrial IoT applications do not require broadband communication, though a mature, reliable network (security, wide area coverage, stable connectivity) is required. In 2022, about 78% of module shipments are lower class connectivity: 2G, 3G, LTE Cat.1 and LPWA. It is estimated to maintain a market share of around 80% in the future.

Cellular M2M module market trends by cellular standard are as follows:

• Drastic contraction of 2G/3G module market
• Expansion of LTE Cat.1 and LTE Cat.M
• Rapid expansion of LTE Cat.1 (bis) in China among LTE Cat.1
• Sluggish growth of NB-IoT
• Long-term shift from LTE to 5G (eMBB, 5G RedCap) (after 2025)

In 2022, proportion of cellular standard shows as follows: 2G: 10%, 3G: 2%, LTE 22%, 5G: 0.3%, LTE Cat.1: 32%, LTE Cat.M: 10.4%, NB-IoT: 24 %. About two-thirds of LTE Cat.1 shipments are low cost Cat.1 bis. By 2027, the ratio will be as follows: 2G/3G: decrease to about 3%, LTE: 16%, 5G: 7.5%, LTE Cat.1: 38.3%, LTE-M: 16.4%, and NB-IOT: 18.6%. The share of LTE Cat.1 and Cat.M is expected to increase. Among LPWA standards, the share of NB-IoT will drop.

LTE Cat.1 market boomed in China in 2021. After the widespread in China, it increases significantly in the European market in 2022. LTE Cat.1 is expected to make progress in spread in Europe, APAC and others in the form of replacing 2G/3G modules.

The LTE Cat.M market grows significantly, with a 85% YoY-based growth in 2021 and a 64% YoY-based growth in 2022. In addition to the growing demand for replacement of 2G/3G in the North America, LTE Cat.M/NB-IoT dual mode module is also increasing in the European market for taking advantages of multi-national roaming, for the devices which will be shipped to multiple countries in Europe. In Europe, cellular LPWA standards varies by countries and mobile operators.

NB-IoT market will grow by 19% on YoY in 2022. The main factor behind the market growth was the special demand for NB-IoT door sensors in China in 2022 during the lockdown period. Excluding door sensors, the market will decline on a YoY basis. For longer term, wider NB-IoT deployment in India is expected to boost the market growth after 2025.

The industrial 5G market launched in China in 2021 with the support of the government. Yet, the market size in 2022 is expected to remain flat due to the impact of the Chinese local government’s spending restraint in light of the deterioration of the economy. Meanwhile, the 5G telematics market will launch in China in 2022. Outside China, industrial 5G is still in the small-scale deployment or trial stage, and it is likely to take time to grow on a large scale. The 5G module market is anticipated to expand after 2024 by the wider adoption in telematics, and 5G RedCap commercialization.

Cellular Module & Modem Chip Market Share

Quectel keeps top market share since 2017. After Quectel, China Mobile IoT, Telit, Fibocom, SunSea, Thales, Sierra Wireless, MeiG, ublox, Neoway, Gosuncn Welink, and Rolling Wireless follows in 2022, based on shipments. For telematics cellular module in particular, Rolling Wireless, Quectel, LG Electronics, LG Innotek, WNC, and Kyocera are recognized as the main suppliers.

China, the biggest cellular module market is completely dominated by local suppliers, because of the closed supply chain and ecosystem, and fierce price competition.

In 2022, several Chinese module suppliers have decreased in shipments and revenue due to the sluggish Chinese market. In the western market, some of enterprises start to see “China risk”, trying to reduce the dependence on Chinese suppliers, which also impacts market share. This geographic decoupling trend could promote western module suppliers to regain the share in North America and European market.

Among major Chinese module suppliers, Sunsea, Fibocom, and Neoway are expected to go through a YoY decline in shipments. Quectel’s module shipments increased significantly in Europe and North America, although the market share will be flattish due to the weak demand in China.

All major western module suppliers are likely to perform strongly in shipments and sales in 2022. In particular, Sierra Wireless and ublox, which were notably affected by factory closures, semiconductor shortages in 2021, are expected to significantly increase their shipments from the previous year.

The main module vendors by cellular standard are as follows:

• LTE Module: Quectel, Fibocom, Rolling Wireless, SunSea, MeiG, LG Electronics, LG Innotek
• LTE Cat.1 Module (outside-China): Telit, Thales, Quectel, Sierra Wireless, ublox, WNC
• LTE Cat.1 Module (China): Quectel, Fibocom, SunSea, Neoway, MeiG, Gosuncn Welink, MobileTek, Lierda
• LTE Cat.M Module: Telit, Sierra Wireless, u-blox, Quectel
• NB-IoT Module: Quectel, ChinaMobile IoT, Lierda, MobileTek, SunSea, Gouncn Welink, Goldcard, Luat

The chipset market share for cellular M2M modules is more fragmented than other applications, as there are several smaller size companies play in cellular LPWA chip market. Based on the shipment volume, Qualcomm, UNISOC, ASR, Eigencomm, MediaTek, Xinyi, Intel, and HiSilicon are the major suppliers.

Major chipset suppliers by cellular standard are as follows:

• GSM: MediaTek, UNISOC, Intel
• 3G: Qualcomm, Intel
• LTE: Qualcomm, Intel, Sanechips, ASR
• 5G: Qualcomm, UNISOC
• LTE Cat.1 outside China: Qualcomm, Intel, Sequans
• LTE Cat.1 China: UNISOC, ASR, Eigencomm
• LTE Cat.M: Qualcomm, Sony, Nordic, Sequans, u-blox
• NB-IoT: Eigencomm, Xinyi, UNISOC, HiSilicon, MediaTek, M-Link

LTE Cat.1 chipset market share is completely different inside and outside China. Outside of China, Qualcomm has a large market share, followed by Sequans. China LTE Cat.1 chip market is dominated by UNISOC, ASR, and Eigencomm. However, the number of new entrants is increasing, and the market share is expected to diversify.

In the LTE Cat.M Chipset market, Qualcomm and Sony together occupy about 90% of the market. Others include Sequans, Nordic Semiconductor and ublox.

Until 2020, HiSilicon, MediaTek, and UNISOC had a large market share in the NB-IoT chipset market. From 2021 to 2022, Eigencomm and Xinyi have expanded their market share, while HiSilicon and MediaTek have shrunk. In 2022, Eigencomm, Xinyi and UNISOC together account for more than 80%.

Qualcomm and UNISOC are major suppliers in the industrial 5G market. UNISOC have more than half of the China industrial 5G module market. MediaTek’s 5G modem has been adopted for MBB, CPE and PC, but less for industrial 5G. For automotive 5G, Qualcomm takes lead, followed by MediaTek.