An article by Takeshi Niwa, Marketing Analyst at TSR (Techno Systems Research Co., Ltd).
2021 was a busy year for cellular IoT module industry. Demand for cellular module increased rapidly, though semiconductor supply shortage caused module supply constraint. Cellular IoT module market will achieve remarkable volume growth in 2021. Based on the current supply situation, strong market growth will continue in 2022. However, over-supply concern is raised, market growth slowdown could in 2023.
Figure 1: Cellular M2M Module Market Forecast by Standard
After the weak 2020, we estimate 391 million units of cellular IoT module shipments in 2021 (for industrial and automotive, excluding cellular module for computing, consumer and broadband devices), 28.6% of strong YoY growth. Since months of order backlog remains in multiple module suppliers, strong market growth is expected to continue in 2022. We estimate nearly 20% YoY growth in 2022. On the other side, supply shortage caused possible over-stocking and over-booking in channel and end customers, several suppliers concern order cancellation, inventory correction in the near future.
Considering historical market growth, 2021-2022 market growth looks too strong. We assumed low single digit growth in 2023, then return to historical, high single digit annual growth after 2024.
Regarding cellular standard, many industrial IoT applications do not require high data throughput but requires wide geographic coverage. In 2020-2021, about 80% of module shipments are 2G/3G or low category LTE/LPWA. Legacy 2G and 3G market shrinks continuously, cellular LPWA (LTE Cat.M/ NB-IoT) and LTE Cat.1 accounts nearly 60% in 2021.
In 2021, we observed:
- Keen LTE Cat.1 market growth in China, but moderate growth outside China. EU operators shows interest to low cost LTE Cat.1 modem for 2G/3G migration.
- LTE Cat.M module market will achieve 70% of strong growth in 2021, main in North America and Japan. The demand for LTE Cat.M/NB-IoT is also seen in Europe and APAC for covering multi-carrier network in single SKU.
- NB-IoT market growth slowed in 2021 in China. NB-IoT market grew outside China, but the volume is still small.
LTE Cat.1 shipments increased more than three times YoY in 2021, surpassing the NB-IoT shipments to become the largest standard. LTE Cat.1 is skyrocketing in the Chinese market from 2020-2021, replacing 2G and part of LTE Cat.4.
Initially, NB-IoT was said to address broad use cases. However, its main applications remain unchanged, for smart metering and smoke sensors. In China, LTE Cat.1 became main cellular standard for asset tracking, logistics, telematics, smart payment, and sharing economy.
Broadband LTE and 5G module market accounts around 20% in 2021-2022. The main use case of broadband module are, OEM telematics, industrial gateway, surveillance camera, camera based monitoring, high end smart payment, facial identification, Drone, AGV, robot… many of applications are associated with camera, the demand for smart module is growing. Smart module employs smartphone SoC, integrates Android OS, camera AI, media processing into the module.
Figure 2: Cellular M2M Module Shipments by Area and by Vertical, 2021
For geography, thanks to the government-lead digitalization, China becomes the biggest cellular module market for years. China also generated several new use cases of cellular industrial modules. China alone accounts over 50% market share, followed by Europe and North America. Cellular module market is relatively small in many developing countries.
As for applications, we estimate that smart meter/ utility and asset tracking accounts over 20% in 2021, followed by retail/payment, transportation and car OEM telematics. LPWA adoption in water meter and gas meter supports the cellular smart meter market growth. Asset tracking market showed strong growth in 2021 thanks to the increasing demand for logistics and supply chain management, share device market recovery in China. OEM telematics market also grew rapidly in 2021, despite global car sales remained sluggish.
Figure 3: Cellular M2M Module & Modem Chip Market Share, 2021
Thanks to the strong demand, most cellular module suppliers increased its sales in 2021. However, the growth rate of each module suppliers vary by procurement of semiconductors.
Quectel continues to gain market share, accounting nearly 40% market share in 2021. SunSea, Fibocom, Telit, Thales, CMCC-IoT, Neoway, Rolling Wireless, Sierra Wireless, Gosuncn Welink, MeiG follows after Quectel. In revenue basis, Western module suppliers and module suppliers which provide module to automotive market have relatively large market share thanks to the higher average selling price.
Major Chinese module vendors are expected to increase shipment volume by around 40-50% YoY, while Western module suppliers record 15-30% of YoY growth in 2021..
Other than Quectel, Fibocom, Rolling Wireless, MeiG and Telit are expected to increase module shipments significantly. Sierra Wireless has been restrained from the growth due to the influence of COVID-19 lockdown in Vietnam. Also, TCXO supply shortage caused by fire in AKM factory affected the number of module suppliers which combines GNSS and cellular module.
The main module vendors by cellular standard are as follows:
- LTE: Quectel, SunSea, Fibocom, Rolling Wireless, MeiG, LG Innotek, Thales
- LTE Cat.1 outside-China: Telit, Thales, Quectel, Sierra Wireless, ublox, WNC, Abit
- LTE Cat.1 China: Quectel, Fibocom, SunSea, Neoway, MeiG, Gosuncn Welink, MobileTek, Lierda
- LTE Cat.M: Telit, Sierra Wireless, u-blox, Thales, WNC, Murata, Taiyo Yuden
- NB-IoT: Quectel, CMCC IoT, SunSea, Gouncn Welink, Neoway, Lierda
The main cellular modem IC suppliers differ by cellular standard. Overall, Qualcomm, UNISOC, ASR Microelectronics, HiSilicon, MediaTek and Intel are the major chipset suppliers for the cellular IoT module. There are several small-size chip suppliers which focus to cellular LPWA technologies..
The major chipset suppliers for each standard are as follows:
- GSM: MediaTek, UNISOC, Intel
- 3G: Qualcomm, Intel
- LTE: Qualcomm, Intel
- 5G: Qualcomm, HiSilicon, UNISOC
- LTE Cat.1 outside China: Qualcomm, Intel, Sony, Sequans
- LTE Cat.1 China: UNISOC, ASR (2022-: Eigencomm, Xinyi, M-Link)
- LTE Cat.M: Qualcomm, Sony, Nordic, Sequans, u-blox
- NB-IoT: HiSilicon, UNISOC, MediaTek, Eigencomm, Xinyi, M-Link
Among major suppliers, MediaTek and Intel mainly provides legacy 2G/3G modems, therefore its market share is shrinking year by year. MediaTek was the major supplier of NB-IoT chipset in early stage, but it is retreating from NB-IoT market because of fierce price competition. HiSilicon has been a major supplier of NB-IoT chip. However, because of the sanction from US government, HiSilion currently unable to produce new chips based on advanced process node.
In 2021, ASR Microelectronics and UNISOC significantly gained market share along with the expansion of LTE Cat.1 in China. Several Chinese domestic suppliers are expected to participate China LTE Cat.1 chipset market in 2022. Among other suppliers, Eigencomm, Xinyi, M-link, Sony and Nordic Semiconductor each increased market share. Major suppliers of cellular LPWA standard are expected to gain market share in volume in coming years.