• In the first three quarters of 2024, China’s cellular module shipments grew 25% YoY driven by 4G Cat 1 bis.
• Regulatory authorities introduced several policies in 2024 to guide the cellular IoT industry toward 5G and 5G Redcap adoption and intelligent development.
• In 2025, the demand for 5G and 5G Redcap modules is expected to grow further, driven by the expansion of downstream applications and enhanced network infrastructure.

Cellular IoT module shipments in the Chinese market grew 25% YoY in the first three quarters of 2024, according to Counterpoint’s latest Global Cellular IoT Module and Chipset Tracker report. The primary driver of this growth was the 4G Cat 1 bis module, whose shipments doubled during the period and share in total shipments rose from 40% to 64%.

Due to the completeness of China’s 4G network and market competition in recent years, 4G Cat 1 bis has become the optimal choice for most low-to-medium-speed application scenarios, even replacing lower-cost NB-IoT modules in some application scenarios. eMBB 5G module shipments also grew by 73% in the same period. As for 5G Redcap, despite widespread attention in 2024, the relatively high pricing and unclear application scenarios resulted in shipments not meeting industry expectations.

Source: Global Cellular IoT Module and Chipset Tracker, Q3 2024

Note: Numbers may not add to 100% due to rounding

In 2020, with maturing 4G infrastructure and the beginning of 5G commercialization, China’s Ministry of Industry and Information Technology (MIIT) released guiding policies to officially initiate the shutdown of 2G/3G networks, which became an opportunity for the rapid growth of 4G Cat 1 industries. Similarly, In 2024, the MIIT released multiple documents guiding the development of cellular IoT, especially for 5G and 5G Redcap. The number of 5G IoT connections was projected to reach 100 million by the end of 2027. The government also indicated the development direction of cellular IoT applications. Three key areas – industrial digitalization, intelligent administration and smart living – will drive more demand in applications such as high-precision tracking, smart grids, smart sensors, smart homes, healthcare and automotive.

The integration of IoT and AI is another key area to explore. Cellular IoT is no longer centered solely on data transmission. With the growing adoption of AI modules and enhancement of edge computing capabilities, more advanced functionalities will emerge, significantly increasing the overall value of the IoT industry. Under the strong push from the government, 2025 will be a critical year for the next phase of cellular IoT development towards 5G.

Unlike the well-developed 4G IoT ecosystem, the widespread adoption of 5G IoT relies not only on expanding downstream applications but also on network infrastructure support. According to MIIT guidelines, the number of 5G base stations per 10,000 people is projected to increase from the current 30 to 38 by the end of 2027. Continuous coverage for 5G Redcap networks also requires further enhancement. Besides, in industrial applications, one of the most critical scenarios for 5G, building virtual private networks and standalone private networks has become a key focus for development in the coming years. As such, the development of 5G and 5G Redcap relies heavily on network operators transitioning into the role of capability integrators to drive the overall growth of the 5G ecosystem.

Cellular IoT modules, serving as a critical bridge between networks and applications, are being promoted with varied strategies by different operators. China Unicom, for instance, has reduced the cost of 5G modules by customizing chip frequency bands, achieving shipments of more than 200,000 units in the first three quarters of 2024 and taking a leading position in the CPE application segment. Meanwhile, China Mobile continues to employ an aggressive sales strategy, enabling the company to capture a 9.2% share of global module shipments in Q3 2024.

Compared to the rapid growth of 4G IoT, where module and chip manufacturers played a leading role, network operators are set to take on a more pivotal role in the development of 5G IoT. Counterpoint Research forecasts a 42% YoY increase in 5G and 5G Redcap module shipments in China in 2025. It is the technology with the highest projected growth.