Global cellular IoT module shipments saw a three percent annual decline in the second quarter of 2023, compared with the year-ago period, according to the latest IoT module tracker by Counterpoint Research. The firm cited “lower demand and weaker economic sentiments”. China-based duo Quectel and Fibocom maintained their lead as the top-selling vendors, even as Quectel’s overall share was hit. China Mobile overtook Telit Cinterion in third place. Telit Cinterion remains the biggest western IoT module vendor, but was buffeted by the “market downturn”.
It is the first time the cellular market has shrunk since the Covid-19 pandemic. But the top three segments for cellular IoT – smart meters, point of sale (POS) devices, and automotive connectivity – all posted growth, finishing the quarter with over half (51 percent) of total shipments – up significantly as a combined quarterly share, from 41 percent, in the same period in 2022. Almost every other IoT segment saw a “sharp drop” in shipments, it said. Adoption of 5G has been “slower than expected”, due to high costs, patchy coverage, and lack of devices.
The post-pandemic rush on monitoring and tracking has passed, said Counterpoint, while the perceived jump in industrial IoT in factories and plants is yet to translate into IoT purchases. Mohit Agrawal, associate director at the firm, commented: “Many of the module players experienced declines as the market shrunk for the first time since the start of Covid-19. The pandemic-induced demand for connected devices is wearing off while the digital transformation efforts in industrial and other key verticals are yet to translate into shipments.”
India was the only country market to register positive overall shipment growth in the quarter. Quectel, the largest IoT module vendor, saw revenue (if not shipments) from international markets surpass its revenue from China, but its overall share of the market still declined. Counterpoint also warned on international sales for Chinese firms: “Chinese module vendors are increasingly coming under US scanner for security concerns. This scrutiny could potentially challenge their global expansion plans, paving the way for other vendors to seize more opportunities.”
By contrast, China Mobile surged into third place the period, ahead of Telit Cinterion, because of demand for smart meters, POS devices, and asset trackers in its home market. Counterpoint noted Telit Cinterion’s strategic move in India, “expected to be the fastest-growing market by 2030”, to partner with local original device maker (ODM) VVDN to produce IoT modules in the country – in a bid to “increase its presence there”. Somewhat cautiously, Counterpoint said shipments would pick up in the second half of 2023, leading to “almost flat” growth for the full year.
In the meantime, the whole cellular IoT market is waiting for the incoming reduced-capability (RedCap) version of 5G, which will take initial hold with POS equipment and router/CPE applications, said Counterpoint. Soumen Mandal, senior research analyst, said: “The market is showing early signs of recovery. But lower demand is influencing the market’s long-term growth trajectory, with the current demand shifting by two-to-three years. The adoption of 5G has been slower than expected, due to its higher costs, coverage issues, and maturity of the device ecosystem… 5G RedCap has the potential to become the industry’s game changer by offering a more affordable solution.”
