Survival of the Fittest: Uneven Growth and Vendor Challenges Ahead as 2024’s IoT Cellular Module Market Remained Flat
Recent reports from global technology intelligence firm ABI Research find that 2024 has proven to be a challenging year for many cellular IoT module vendors.
While initial sales have been completed, the full impact won’t be fully understood until April 2025 when annual reports are finalized. It’s possible that the pessimistic outlook for 2024 could worsen further. The market has already witnessed strategic divestitures of resource-intensive product lines and the consolidation of major players due to increased competition and pricing pressures.
“Additionally, a critical time-sensitive issue has emerged,” says Jamie Moss, Research Director, IoT Hardware at ABI Research. Moss explains, “The market is struggling in the wake of the overbuying that occurred by device OEMs in 2021 and 2022, after Covid and in the face of the chipset shortage, as manufacturers sought to secure supply chains. Any lack of a vital component would have meant an inability to produce, and an inevitable loss of sales to competitors. At the time of fulfilling pipelines and ensuring predictable turnover, if not profit margin, was more critical than ever. Throughout 2024 it was anticipated that OEM module inventory would soon be used up, but the delay in return to normal sales for vendors persisted quarter to quarter; and seems likely to carry on into 2025. Some vendors were down by as much as 50% on their cellular module line of business in 2024 versus 2023.”
The current expectation is that in 2024, 426 million units of cellular IoT modules were shipped worldwide, generating US$5.6 billion in revenue, in effect an identical market value to 2023.
The one big winner in 2024 was the market leader of the previous five years, Quectel, which managed to match its full year 2023 turnover already by the end of the third quarter 2024.
According to Moss, “Quectel has other lines of business, and although the bulk of its income does come from cellular modules, unlike most of its direct competitors, it also supplies the automotive and mobile broadband markets. Quectel’s market strategy is based on growing shipment and market share, it is not focused on profit margin, which has historically stood at an average of 3%.”
New vendors have emerged and made an impression in recent years, proving there are still new business opportunities, but their impact on the value of the cellular IoT module market has been minor. For example, Chinese vendor Unionman has been shipping tens of millions of units annually, but so far just for Cat-1/bis and NB-IoT, at a very low unit price, for a consummately low turnover in the tens of millions of dollars, and only in China.
Moss concludes, “The practical result of the current climate is that stalwart u-blox has decided to halt its cellular operations altogether to refocus on its other business units. But it is important to note that the IoT market is not failing, it’s the cellular module business specifically that is rebalancing, in an eventual return to normal, organic growth. However, with increasingly tight margins, not all vendors may be able to wait.”
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