2023 cellular IoT module & chipset market: 18% decline due to destocking and softening demand in key segments – IoT Analytics

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Key insights

  • In 2023, shipments for global cellular IoT modules and their corresponding chipsets are expected to drop approximately 18% year-over-year, according to IoT Analytics’ latest market tracker and forecast.
  • Economic challenges and geopolitical concerns have largely contributed to this decline.
  • Amid this decline, connectivity technologies like 5G and LTE Cat-1 bis see notable shipment in the global IoT module and chipset market.
  • The top 5 companies by shipment—Quectel, Fibocom, Telit Cinterion, Sunsea AIoT, and China Mobile—account for approximately 61.4% of the global market in 2023.

Cellular IoT module and chipset market overview

In 2023, the global shipments of cellular IoT modules and their chipsets are projected to decline 18% year-over-year (YoY), according to IoT Analytics’ latest data from the Global Cellular IoT Module and Chipset Market Tracker & Forecast, updated in December 2023. This drop in shipments resulted in an 11% YoY decline in revenue for these vital components. However, two communications technologies made noticeable gains during this downturn: 5G and LTE-Cat 1 bis.

The cellular IoT module and chipset market only accounts for approximately 3% of the IoT enterprise market, so this segment’s impact on the total IoT market is limited. That said, this trend reflects the broader challenges and evolving dynamics within the IoT enterprise market, one of several coverage areas where IoT Analytics monitors data at a granular level and reports on quarterly.

Market decline factors

An amalgamation of geopolitical and macroeconomic factors largely explains the cellular IoT module and chipset market’s downtown. In 2020, the COVID-19 pandemic and trade tensions between the US and China resulted in a module and chip shortage. This shortage spooked device manufacturers, and in 2021 and 2022, they began placing orders for modules and chips well in advance, resulting in a 50% YoY increase for cellular IoT modules in 2021.

By 2023, macroeconomic factors, such as inflation and higher interest rates, and renewed trade uncertainties between the US and China have led many companies to re-evaluate their technology investments, particularly for IoT connectivity modules, leaving device manufacturers sitting on an oversupply of modules and chips. To address this oversupply, manufacturers have implemented inventory optimization strategies, such as deferring new orders for device components until they deplete their supplies.

Segments contributing most to the decline

While the factors above negatively impacted almost every industry, the transportation, supply chain, & logistics and smart cities segments are projected to have experienced the largest drop in cellular IoT module demand.

  1. Transportation, supply chain, & logistics –This segment is expected to experience a 27% YoY drop in cellular IoT module shipments by the end of 2023. This segment includes applications for monitoring and tracking vehicles and goods along the distribution chain, connected public transport, and shared mobility.
  2. Smart cities –This segment is forecasted to experience a 24% YoY drop in shipments by the end of 2023. This segment includes applications for monitoring and managing assets and infrastructure of a city and its public services.

Select quotes on the oversupply situation based on IoT Analytics’ research into the cellular IoT module and chipsets market:

This firm reported a significant dip in demand for its IoT modules from retailers, citing reduced user spending as a core issue.

– Chinese module vendor

We are shifting towards just-in-time inventory practices to reduce overheads and adapt to the fluctuating market demands.

– Automotive module vendor

Most of our [device manufacturer] customers have postponed orders due to the efforts to balance their inventory levels, mainly due to inventory problems and careful spending related to global macroeconomic trends.

– Western module vendor

Growth prospects with 5G and LTE-Cat 1 bis

5G module shipment growth

The tracker forecasts an approximately 65% YoY shipment increase for the 5G modules segment by the end of 2023. This growth highlights the continued interest and investment in 5G technology amid a decline in general technology investments by companies.

IoT Analytics recently noted that manufacturers have successfully implemented private 5G networks. While lower latency and faster speeds seem like key adoption drivers, analysis of 22 industrial case studies showed improved reliability over Wi-Fi and enhanced cybersecurity—leading to the ability to access data locally––were key motivating factors.

Steady growth in LTE Cat 1 bis

Alongside 5G, module shipments for LTE Cat 1 bis modules are also expected to experience growth, albeit at a more modest rate of approximately 8% YoY. Although not as pronounced as in the 5G segment, this growth indicates a steady demand for LTE Cat 1 bis technology, known for its balance of performance and efficiency, particularly in applications where ultra-high-speed connectivity is not a prerequisite.

Cellular IoT module competitive landscape

Top 5 cellular IoT module companies

The top five companies (based on projected total shipments)—Quectel, Fibocom, Telit Cinterion, Sunsea AIoT, and China Mobile—account for nearly 61% of the global shipments of cellular IoT modules and chipsets. The first three were atop our list for Q1 2023 market leaders by revenue.

Here are additional insights about these top 5 modules and chipsets vendors:

  1. Quectel: As the projected market leader for total 2023 shipments, Chinese IoT module manufacturer Quectel is forecasted to experience an approximate 18% YoY decline in shipments.
  2. Fibocom: Chinese wireless module manufacturer Fibocom is expected to experience only an approximate 3.7% YoY drop in shipments, a gentle dip compared to other of its competitors. Likely helping to soften this drop, Fibocom acquired Luxembourg-based Rolling Wireless in early 2023, which expanded Fibocom’s portfolio by adding automotive, fixed wireless access, and other mobility industry verticals.
  3. Telit Cinterion: As the product of a merger between Telit and Thales’ IoT module unit in early 2023, there are no benchmarks to measure Telit Cinterion’s growth or decline in 2023. However, it holds the third position in terms of shipments in 2023.
  4. Sunsea AIoT: Chinese IoT connectivity solutions provider Sunsea AIoT—represented by its two IoT module subsidiaries, SIMCom and Long Sung Tech—is anticipated to experience a 19% YoY decline in shipments.
  5. China Mobile: Chinese telecommunications and IoT services provider China Mobile is expected to experience an approximate 8.4% YoY decline in global shipments.

Geopolitical landscape

Of note, in September 2023, US Federal Communications Commission (FCC) Chairwoman Jessica Rosenworcel asked US government agencies to consider whether Quectel and Fibocom, among others, pose national security risks related to possible remote device access/management. (See IoT Analytics reporting from September 2023). This followed two ranking members of the US House of Representatives Select Committee on China asking the FCC to consider adding these two companies to the so-called Covered List—a list of companies from which the federal government is barred from purchasing.

For their part, a US spokesperson for Quectel said that once the modules are delivered, the data belongs to the customer and that remote management is only achievable through original equipment manufacturer platforms. They also noted that the company retained US-based security firm Finite State to audit and test the security of its modules.

There have not been overt signs of US agencies moving to declare these companies as threats; however, if it were to happen, addition to the Covered List could lead to losing the US market and that of others who may follow suit.

Market outlook heading into 2024

As we approach 2024, IoT Analytics forecasts that the aforementioned top five companies will see increased QoQ shipment levels in Q4 2023, with all five seeing a QoQ increase in Q1 2024 as well. Though some level of inventory control may initially remain, these initial shipment bumps for the top five shippers in late 2023 and early 2024 suggest possible market recovery and growth in 2024.

There are other positive signs for this market. In mid-December 2023, the US Federal Reserve recently kept interest rates at July 2023 levels and suggested it could start cutting rates in 2024, which indicates a potential cooling down in inflation. It is too early to tell if companies will see this as a cue to restart technology investments in the near term, especially since concerns around interest rates and economic uncertainty remain a top topic in corporate boardroom discussions (the What CEOs Talked About in Q4 2023 report and blog article is due to be published in mid-December 2023).

However, as the economy stabilizes and use cases for private 5G and LTE Cat 1 bis become more apparent, IoT Analytics assesses there will be renewed interest in developing and deploying IoT solutions, paving the way for growth. Readers can subscribe to IoT Analytics’ quarterly updates to the global cellular IoT modules and chipsets tracker to monitor movement and forecasts in this dynamic market.

More information and further reading

Are you interested in learning more about the cellular IoT module and chipset market?

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 Q3 2023, including a quarterly and annual forecast from Q4 2023 to 2027.

  • 38 cellular IoT module brands
  • 13 cellular IoT chipset companies
  • 10 regions
  • 9 technology splits
  • 16 industry verticals
  • 150 unique model-level chipsets
  • 737 unique model-level modules

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