• u-blox has decided to discontinue its cellular IoT module business to refocus on its GNSS technology.
• The company saw a 60% YoY decline in cellular IoT module shipments in Q1-Q3 2024 vs Q1-Q3 2023 due to market softening and intense competition from Chinese vendors.
• Low-margin, high-volume dynamics, coupled with pricing battles and competition from Chinese manufacturers like Quectel and Fibocom, eroded profitability and hindered u-blox’s efforts to scale its cellular IoT business.
• By exiting cellular IoT modules, u-blox will save $32 million annually, allowing it to concentrate on high-growth markets such as automated driving, robotics, and asset tracking through its advanced GNSS solutions.

Swiss semiconductor company u-blox has announced that it will phase out its cellular IoT module operations and completely exit the business by 2025. This does not come as a surprise as shipments in the first three quarters of 2024 have been almost 60% lower than the same period in 2023. This decline was mainly due to a softening IoT market in regions where u-blox holds stronger market share, coupled with intensifying competition from Chinese module vendors.

Navigating the Challenges: u-blox's Bold Cellular IoT Journey
Recognizing the synergy potential between its existing GNSS expertise and the emerging cellular technology, u-blox acquired Italy-based NeonSeven in 2009, marking the beginning of its cellular IoT journey.

Integrating GNSS with Cellular Modules
With the new team in place, u-blox entered the cellular market with confidence. The company’s strategy was simple but powerful, leveraging its strong foundation in GNSS technology and combining it with cellular IoT modules to create integrated solutions. This combination of technologies caught the eye of the market, and u-blox appeared poised for growth.

Emboldened by this success, u-blox set its sights on dominating the Cellular LPWAN market. The opportunity was enticing – a chance to offer cellular solutions with higher margins and expanded market influence. But this would require bold moves and a long-term commitment to vertical integration.

Entering the Cellular Chipset Market
In 2012, u-blox took one of its most ambitious steps – it acquired UK-based Cognovo, a company with promising chipset technology. With the acquisition, u-blox hoped to develop proprietary cellular chipsets that would complement its modules. The vision was clear – own the entire value chain, reduce dependence on third-party suppliers, and dominate the market.

However, u-blox quickly discovered the complexities of cellular chipset development were far more challenging and expensive than expected. What began as an exciting opportunity turned into a financial and operational burden that strained u-blox’s relationships with its own chipset suppliers. u-blox was only able to launch a handful of products, none of which made a significant impact in the market.

As Cracks Began to Show, u-blox Exited the Cellular IoT Module Business
By 2024, cellular module revenues had stagnated, and broader market dynamics were turning unfavorable. Demand for cellular fell in 2024 due to overstocking in 2023 and the economic recession. Meanwhile, across Europe and North America, the two key markets for u-blox, a wave of low-cost competition from Chinese manufacturers like Quectel and Fibocom emerged.

Quectel and others rapidly gained market share, as many end users switched to cheaper Chinese suppliers to save money. u-blox found itself caught in a pricing battle that eroded margins. Things started to change from then.

Cellular modules, once seen as a key extension of u-blox’s GNSS business, were now a financial drag. Bundling cellular modules with GNSS solutions had failed to deliver the expected results, and the cellular business was no longer a strategic asset. In 2024, the company reviewed its operations and decided to shut down its module business in 2025. This decision was also driven by the absence of interested buyers for their module business. This move is expected to free up $32 million annually, allowing u-blox to refocus its efforts on its core strength – the GNSS technology.

A Return to Core Competencies and the Path Forward
With the cellular business out of the way, u-blox turned its attention back to what it does best, GNSS. Known for its unparalleled centimeter-level accuracy and cutting-edge technology, u-blox reaffirmed its position as a leader in the GNSS market. The exit from cellular modules is a strategic realignment. By focusing on its core competencies, u-blox will be better positioned to tackle the increasing demands of high-growth markets such as automated driving, mobile robotics, and asset tracking, especially in light of the growing competition from Chinese vendors in the GNSS space.

What’s Next for the IoT Module Industry?
u-blox's recent exit highlights the challenging realities of the cellular IoT module market – a low-margin, high-volume business. Technology fragmentation has limited smaller players' ability to achieve scale, while intense cost pressures are exacerbated by fierce competition from Chinese manufacturers. Apart from Telit Cinterion and, to a lesser extent, Semtech, there are no significant module players with origins outside of China. Together, Telit and Semtech hold only a low single-digit percentage share of the global market.

Over the past two years, the cellular IoT module market in North America and Europe has been sluggish but is now showing signs of recovery. The departure of u-blox will create opportunities for other players, especially in applications such as healthcare, asset tracking, and smart meters. However, given ongoing cost pressures, it is likely that Chinese manufacturers like Quectel and Fibocom will capture most of the market share.

The situation has grown more complex with the recent addition of Quectel to the 1260H list of entities by the US. While some customers may seek alternatives due to geopolitical pressures, they are likely to face limited options. Choosing non-Chinese suppliers would mean paying higher prices for IoT modules. However, Quectel’s addition to 1260H list does open a window of opportunity for other international players such as Cavli Wireless, Momagic, and some South Korean and Japanese vendors apart from Telit and Semtech.

For detailed research, refer to the following reports available for subscribers:

• Global Cellular IoT Module and Chipset Tracker, Q3 2024
• Global Cellular IoT Module and Chipset Tracker by Application, Q3 2024

Counterpoint tracks 1,500+ IoT module SKUs on a quarterly basis and provides forecasts on shipments, revenues and ASP performances for 80+ IoT module vendors, 12+ chipset players and 18+ IoT applications across 10 major geographies.