Global cellular IoT module shipments grew 14% in 2022 to register record high annual volume, despite macroeconomic headwinds, according to market watcher Counterpoint.

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.

“In 2022, Quectel was the top cellular IoT module player in China, the world’s largest market for these components,” said senior research analyst Soumen Mandal. “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.”

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 customisation but garners a lower margin,” said Mandal.

China Mobile, the world’s largest CSP and IoT connectivity player, is becoming more vertically integrated by leveraging its massive scale to capture value.

“It has the potential to break into the top three global cellular IoT module rankings this year,” said Mandal. “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.”

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 Cat 1.bis chipset, QCX216, to compete head-on with the LTE Cat 1.bis leaders Unisoc and Eigencomm.

“In 2022, Unisoc and ASR maintained their second and third positions due to strong adoption of the fast-growing LTE Cat 1.bis and Cat 1 based modules, respectively,” said Counterpoint associate director Ethan Qi. “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 Cat 1.bis applications while Xinyi Semiconductor focuses on NB-IoT chipsets, both being low-cost but high-volume segments.

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 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 1.bis has been gaining traction globally and has the potential to be an alternative to several NB-IoT and existing 2G and 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 and 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 commercialisation in coming years,” said Mandal.

Global cellular IoT module shipments including NAD modules are expected to register 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 smart meter, PoS and automotive markets are expected to continue seeing strong growth, which should 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,” said Mandal.