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Global Cellular IoT Module Shipments Jump 14% YoY in 2022 to Reach Highest Ever

Quectel and Qualcomm dominated the cellular IoT module and chipset markets, respectively.
NB-IoT is still popular among technologies but is expected to lose some market share to 4G CAT1.bis in 2023.
5G adoption to get a boost in 2024 if ASP declines to sub-$100 and 5G RedCap-based solutions become available.
China continues to lead IoT module market, followed by North America and Western Europe.

San Diego, Buenos Aires, London, New Delhi, Hong Kong, Beijing, Seoul – March 29, 2023

Global cellular IoT module shipments grew 14% YoY in 2022 to register record high annual volume, despite macroeconomic headwinds, according to Counterpoint’s latest Global Cellular IoT Module and Chipset Tracker by Application report. The resumption of smart meter implementation, ongoing retail POS upgrades, intelligent asset tracking and the continued growth in connected cars due to progress in electrification and autonomous capabilities were some of the key drivers for the double-digit percentage growth in demand for IoT modules.

China continued to lead the global cellular IoT module market in terms of demand, followed by North America and Western Europe. Meanwhile, India was the fastest growing market, followed by Latin America and North America. Although India has a smaller base, it has immense potential. Eastern Europe was the only region that registered a decline due to the prolonged Ukraine-Russia war.

Commenting on the competitive dynamics among cellular IoT module OEMs, Senior Research Analyst Soumen Mandal said, “In 2022, Quectel was the top cellular IoT module player in China, the world’s largest market for these components. Meanwhile, China Mobile and Fibocom captured second and third place, respectively, enjoying their tremendous scale in the domestic market. Outside of China, Quectel remained the leader followed by Telit and Thales which have merged and will commence operations as a new brand, Telit Cinterion, starting Q1 2023.

Quectel increased its focus in the consolidating automotive (NAD module) segment in 2022 and secured multiple design wins with major automakers. The competition in the NAD module market is intensifying as the industry transitions to 5G connectivity. With every transition of cellular technology, we have seen the market consolidate as it becomes increasingly challenging to serve the automotive segment, which requires heavy customization but garners a lower margin.

China Mobile, the world’s largest CSP and IoT connectivity player, is becoming more vertically integrated by leveraging its massive scale to capture maximum value. It has the potential to break into the top three global cellular IoT module rankings this year. However, the company primarily operates in China and will need to expand into other verticals and markets via a robust partnership model to maintain its momentum.”

Commenting on the IoT cellular connectivity chipset player dynamics, Associate Director Ethan Qi said, “Qualcomm continued to dominate the cellular IoT chipset market in 2022 with nearly 40% shipments share. Qualcomm strengthened its position in the LTE CAT 4 and higher technologies while also maintaining a dominant position in the 5G market. Qualcomm recently launched its latest 4G CAT1.bis chipset, QCX216, to compete head-on with the LTE CAT1.bis leaders UNISOC and Eigencomm.

Qi added, “In 2022, UNISOC and ASR maintained their second and third positions due to strong adoption of the fast-growing LTE CAT1.bis and CAT 1 based modules, respectively. During the year, two new players from China, Eigencomm and Xinyi Semiconductor, broke into the top five cellular IoT chipset vendor rankings, filling the gap left by Hisilicon. Eigencomm focuses on NB-IoT and 4G CAT1.bis applications while Xinyi Semiconductor focuses on NB-IoT chipsets, both being low-cost but high-volume segments.”

Commenting on the technology landscape, Mandal added, “During 2022, NB-IoT remained the most popular LPWA IoT connectivity technology followed by the fast-growing 4G CAT 1 and 4G CAT 4 modules. Together, these contributed to 60% of the total IoT module market. For most of 2022, China was under lockdown due to the resurgence of COVID-19 which drove greater demand for products such as smart door locks, digital thermometers and wearables, mostly powered by NB-IoT.

NB-IoT saw strong adoption in China but has been less popular outside the country. In contrast, 4G CAT.1bis has been gaining traction globally and has the potential to be an alternative to several NB-IoT and existing 2G/3G applications such as smart meters. However, 5G saw slower adoption in IoT than in smartphones last year due to the higher module costs. The key initial 5G applications are PCs, CPEs and some industrial/enterprise applications.

We believe 5G will enter the mainstream market once the module ASP breaks the sub-$100 barrier and receives a further boost from the 5G RedCap commercialization in coming years.”

Commenting on the IoT market outlook for 2023, Associate Director Mohit Agrawal said, “Global cellular IoT module shipments (including NAD modules) are expected to register robust growth of 19% YoY in 2023. The growth of IoT module shipments in the high-value industrial segment will be key for the IoT projects that have struggled to move beyond the pilot stage and for companies that are focusing more on ROI in a tough macroeconomic environment. Nevertheless, shipments of IoT modules for the smart meter, point of sale (POS) and the automotive markets are expected to continue seeing strong growth, which will offset a slowdown in other segments.”

The market has been undergoing consolidation across the IoT value chain from module players and connectivity management to IoT platform players. This has highlighted the importance of scale, choosing the right vertical and capturing value by striking the right partnerships or developing the right capabilities. We could see some more exits and mergers in 2023 because IoT, which is very vertical driven, has been seeing volatile growth due to internal or external factors.”

For detailed research, refer to the following reports available for subscribing clients and individuals:

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.

Background

Counterpoint Technology Market Research is a global research firm specializing in products in the technology, media and telecom (TMT) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.

Analyst Contacts

Soumen Mandal

Mohit Agrawal

Anish Khajuria

Counterpoint Research

press@counterpointresearch.com

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One in Four Cars Sold in China in 2022 Was an EV With BYD Powering Country’s Outperformance

China’s EV sales almost doubled in 2022 with 87% YoY growth.
BYD led the market, followed by GM Group, Tesla, Geely Holding and GAC Group.
China’s EV sales are expected to exceed 8 million units in 2023.

New Delhi, London, Beijing, San Diego, Buenos Aires, Hong Kong, Seoul – March 15, 2023

China’s passenger electric vehicle* (EV) sales almost doubled in 2022, growing 87% YoY, according to the latest research from Counterpoint’s Global Passenger Electric Vehicle Model Sales Tracker. EVs now account for one in four cars sold in China. Interestingly, the share of battery EVs (BEVs) in the country’s total EV sales decreased in 2022, with plug-in hybrid EVs (PHEVs) increasing their share to 24%. China was the second fastest-growing market among the world’s top 10 EV markets in 2022 in terms of sales. Japan was on top with a 119% YoY growth. Nevertheless, China accounted for nearly 59% of the global EV sales volume.

Commenting on the market dynamics, Senior Analyst Soumen Mandal said, “China’s EV market is the most vibrant globally. More than 94 brands cumulatively offer over 300 models ranging from just $5,000 to over $90,000. Local brands command 81% of the EV market, among which BYD, Wuling, Chery, Changan and GAC are a few of the top players. China also has a wide range of EV start-ups, like Nio, Xpeng, Neta, AITO, IM Motors, Zeeker, Aiways and Livan, which are performing well and are giving strong competition to established foreign brands.”

Mandal added, “In China, Tesla experienced a nearly 5% YoY drop in its market share due to production halts in April and May 2022 caused by the resurgence of COVID-19. Although production resumed at full capacity in June, Tesla faced challenges such as the availability of a limited product mix, increased costs due to a difficult supply situation, competition from affordable options offered by EV start-ups, and domestic sentiment that hindered its efforts to solidify its position in the Chinese market. Meanwhile, BYD increased its market share by more than 11% YoY in 2022, with six out of the top 10 models in the Chinese market coming from the brand, compared to just three in 2021.”

In 2022, the top 10 EV models accounted for almost 45% of the total EV sales, a 3% decrease from 2021. This suggests that new start-ups are offering strong competition to established players. Further, in Q4 2022, the BYD Song surpassed the Wuling Hongguang MINI EV as the top-selling EV model, ending the latter’s eight-quarter reign in the market.

Discussing the market outlook, Associate Director Brady Wang said, “We expect EV sales to exceed 8 million units in 2023. In January 2023, BYD raised its EV prices by $250-$900 due to the rising cost of raw materials and phasing out of EV purchase subsidies. Later, in February and following Tesla, BYD announced price reductions. The prices of the 2021 versions of the Han and Qin models were reduced by an average of $2,500. The prices of new BYD models were slashed by $860-$1,150. The phasing out of subsidies and the wealth of EV players can easily lead to a price war as brands fight for market share.”

*Sales refer to wholesale figures, i.e. deliveries from factories by the respective brands/companies.

*For EVs, we consider only BEVs and PHEVs. Hybrid EVs and fuel cell vehicles (FCVs) are not included in this study.

The comprehensive and in-depth ‘Global Passenger Electric Vehicle Sales Tracker, Q1 2018-Q4 2022’ is now available for purchase at report.counterpointresearch.com.

Feel free to reach us at press@counterpointresearch.com for questions regarding our latest research and insights.

Background

Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.

Analyst Contacts

Soumen Mandal

Abhik Mukherjee

Brady Wang

Neil Shah

Peter Richardson

Counterpoint Research

press@counterpointresearch.com

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Counterpoint Macro Index Caps off 2022 with Another Quarterly Drop; But Forecast is Raised for 2023

The Counterpoint Macro Index reading of 77.56 for December 2022 marks another quarterly drop and only the second month-on-month rise in the index during 2022.
Geopolitical tensions, inflation and slumping business sentiment pose the biggest strains on the tech sector.
However, our new forecast for 2023 has been raised significantly, thanks to the surprise reopening in China and ensuing economic growth, as well as a calmer geopolitical environment and inflation trajectory.

London, Boston, Toronto, New Delhi, Hong Kong, Beijing, Taipei, Seoul – January 30, 2022

The Counterpoint Macro Index, which tracks the environment and sentiment for the global technology industry, closed at 77.56 in December 2022. This is a small drop of 1.67 points from September.

December’s reading was only the second month-on-month rise in the index during 2022, after dropping to a post-pandemic low of 75.08 in November.

Unsurprisingly, the biggest headwinds for the index in Q4 were yet again the Ukraine war and inflation. Both issues weighed on the index throughout the year, as the war continues with no end in sight, while structural issues in the global economy, including rising interest rates, energy crisis and slumping consumer confidence, are unlikely to be resolved quickly.

Counterpoint Macro Index, Q4 2022 vs Q3 2022

The technology sector, which held up resiliently during the post-pandemic ‘boom’, was the latest domino chip to fall during the quarter. In Q4, we saw a slew of disappointing revenue forecasts (Samsung, Amazon, Alphabet, Meta, Tesla), capex cuts (TSMC, Intel, SK Hynix, Micron) and, more recently, layoff plans (Amazon, Meta, Microsoft, Salesforce). We see no let-up in the current earnings season. The supply chain sub-segment, in which Counterpoint covers a broad range of tech manufacturing metrics such as foundry capacity, pricing and inventory levels for key components and semiconductor equipment purchases, also deteriorated in the quarter. This is mainly due to the rapid turn in the semiconductor super-cycle where the demand-supply balance has tilted swiftly to a supply glut. Key chipset, memory and component manufacturers face rapidly retreating demand, inventory and pricing pressures, but at the same time cannot afford to cut spending and capacity for fear of another supply chain snarl-up.

On the other hand, a big rebound in politics and policy-related metrics was seen in Q4. Most prominently, the withdrawal of COVID-Zero restrictions by China, as well as the end of the crackdown on tech and real estate sectors in China helped end a precipitous slide in consumer and business sentiments in the country. Furthermore, a softening of China’s diplomatic tone may usher in a period of better relations with the developed world, and reduce the likelihood of military confrontation in the near future. The economic reopening and potential pent-up trade in China will be the biggest reason for optimism in 2023. In the US, anticipated political turmoil from contentious mid-term elections failed to materialize, as the Republicans underperformed while Democrats held onto the majority in the Senate. Support for Biden’s presidency also staged a small rebound after many months of consecutive declines as inflation peaked, with the Federal Reserve on the cusp of drawing back many months of rate hikes. Further afield, there were also important wins on the ESG front, as COP27 reached a historic agreement on providing financial assistance to developing countries for losses and damage caused by the climate crisis, while landmark policies were signed in the US and Europe to fund renewable energy and cut carbon emissions.

Risk-Impact Map, Q4 2022

We expect the same risks that cast a shadow over the global tech scene in 2022 to continue to exert a negative influence in 2023. However, looking toward 2023, we have revised our 12-month forecast significantly from 81.07 to 93.44 points (100 is the baseline). We believe the worst of the macro headwinds may have already passed, while an uplift can be expected from economic normalization in China and the end of the rate hike cycle in most of the developed world, which can both reduce the risk and impact of a recession. The war in Ukraine, however, will continue to be the biggest cause for caution in 2023 as there appears to be no end in sight, and there may be renewed troubles regarding food and energy supplies.

Counterpoint Research’s market-leading Macro Index is a monthly report that aims to capture the environment and sentiment for the global technology industry. We look at issues and measures in macroeconomics, domestic and international politics, supply chains, industry performance and outlook, and regulatory events and outlook. The index captures more than 130 data points every month. Below are some of the key data points that we track:

The service is available for subscribing clients.

Feel free to contact us at press@counterpointresearch.com for questions regarding our in-depth research and insights.

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Yang Wang

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Podcast #60: Key Macro Risks For Tech Industry in 2023

The macro-environment saw a rollercoaster ride in 2022, one where our Counterpoint Macro Index dropped from 106.17 to 82.88 between January and November. Several factors contributed to the decline, such as the war in Ukraine, high inflation, the possibility of a global economic recession, and China’s strict COVID-Zero policies.

Besides, interest rate hikes by the Federal Reserve not only slowed economic growth but also strengthened the US dollar, the effects of which were particularly painful in emerging markets. Technology firms that were previously thriving had to resort to mass layoffs, spending cuts and downward earnings guidance in preparation for a bleak economic outlook.

Moving into 2023, which of those macro risks will remain, and which new risks should the tech firms watch out for? Counterpoint Research analysts have voted on the top 10 macro risks that companies should pay close attention to.

In the latest episode of The Counterpoint Podcast, host Matt Orf is joined by Senior Analyst Yang Wang, based in Europe, and Research Analyst Archie Zhang, based in China. We bring on-the-ground and unique insights into the macro risks that cannot be ignored. The topics discussed in the podcast range from economic issues such as energy crisis and a potential global economic recession to geopolitical and political issues such as the US-China showdown and developments in US domestic politics.

Click the Play Button to Listen to the Podcast

You can read the podcast transcript here.

Podcast Chapter Markers

3:09 – Yang on factors contributing to an economic downturn in 2023, and the potential impact.

5:40 – Yang further talks about the economic downturn and how it will affect the technology world.

8:17 – Matt on the energy situation and the pressure points.

15:11 – Matt on some background and indication of the direction American policy might take in 2023.

19:09 – Archie on the US-China trade relationship.

22:54 – Archie further deep-dives with more details on China’s COVID-19 situation.

26:49 – Yang on emerging markets and problems they are more likely to face in the coming year.

Also available for listening/download on:

Top 10 Macro Risks For Tech World in 2023

Top 10 Macro Risks For Tech World in 2023

Counterpoint analysts say economic recession will be the biggest macro risk affecting the tech world in 2023.
Economic recession is followed by the ‘US vs China rivalry’ and ‘energy crisis’ risks.
There is a sense that the tech industry is at the whim of factors it cannot control, as most of the issues do not relate to tech itself.
China-related issues feature prominently on the ranking, appearing three times.

London, Boston, Toronto, New Delhi, Hong Kong, Beijing, Taipei, Seoul – January 24, 2023

Counterpoint Research has released its latest list and analyses of the top 10 macro risks that are most likely to impact the tech industry in 2023. In the list, which is a result of a survey conducted among Counterpoint analysts, the potential of economic recession ranks as the highest, by a large margin, followed by ongoing US and China tensions, and the energy crisis, which mainly stemmed from the Russia-Ukraine war.

Average Score of Top 10 Risks Rated by Counterpoint Analysts

The risk of economic recession continues to impact almost all industries, and tech has not been spared, despite the post-pandemic boom. The concerns about recession driving other macro risks resonate throughout our analysts’ primary concerns, such as in expected emerging markets’ pain, tech earnings retreat, and China’s recovery path. As we wrap up the report, there is a sense that the worst of the economic headwinds in the developed world may have passed, but there are still question marks over how much of the damage has already been inflicted, or how fast the economic rebound will be in the coming year.

In 2022, we also saw an escalation of tensions in the United States vs China rivalry. Most prominently, sanctions by US authorities against China’s fledging semiconductor industry are likely to hold back growth in this strategically important sector, with deep and long-lasting ramifications in China and beyond. Elsewhere, the two countries still hold many grudges, the most significant being the status of Taiwan, stance over the war in Ukraine, and trade tensions. Any of these have the potential to plunge the countries into deeper conflicts, but from our point of view, the fragmentation of the global system into potentially ‘two standards’ is the most serious threat for the tech industry, as innovation will slow while costs go up.

Inflation reached the highest levels in decades in the West in 2022. One of the key drivers of this inflation was, and remains, the energy crisis. The cost of energy spiked in 2022 as a consequence of Russia’s invasion of Ukraine, especially for European nations, as well as those in emerging markets. As we foresee no conclusive end to the war, energy will continue to be an unstable platform for the global economy in 2023, particularly as a large increase in energy demand is expected due to China’s reopening. There are positive signals on the renewable energy front, such as the EU and US passing landmark clean energy packages that are expected to increase investments and reduce emissions much more quickly than initially anticipated. But still, the world is many years and perhaps decades away from stopping its reliance on hydrocarbons as the main source of energy.

BONUS PODCAST: Key Macro Risks For Tech Industry in 2023

Here is a snapshot of the rest of the top 10 risks:

Emerging markets pain: The post-pandemic boom is absent in emerging markets, resulting in a notable drop in living standards. A strong US dollar, lack of inward investments, deteriorating fiscal and monetary positions, and continued volatility in energy and food supplies will hamper emerging markets’ growth potential.
Tech earnings retreat: Big Tech hired too many workers and took on too many poorly thought-out projects. Now, the withdrawal of ‘easy’ money is harshly exposing the less robust companies. Sectors exposed to geopolitical tensions, regulatory scrutiny, and business models accused of brewing social ills will be most under pressure.
China’s disorganized withdrawal from COVID-Zero: A sudden withdrawal from COVID-Zero has taken most of the population by surprise, leading to a massive infection wave and excessive deaths. An economic rebound is expected in 2023 with the release of pent-up demand, but the healthcare damage could linger on in the economy and society.
China’s long-term economic stagnation: China saw three ‘lost’ years during the pandemic when economic growth was put on the back burner. It will be a test to see if the country can rediscover its economic growth mojo, while tackling a range of structural issues including population decline, high debt levels and a fracturing real estate sector.
Cybersecurity: The pandemic and the war in Ukraine ushered in a period of persistent and high-profile cyberattacks, which will continue to pose grave risks to businesses and institutions in the coming years. There is a sense that defenders struggle to catch up with the attackers, who are richly resourced and operate nimbly, with some backed by malevolent state actors.
Supply chain ‘reshoring’ not living up to expectations: Talk of building a domestic and ‘resilient’ supply chain continues to gain traction, but the global recessionary environment, the nature of economic principles, and logistical realities pose daunting challenges for those looking to move established supply chains home.
Climate change: 2022 was the warmest year on record. Extreme weather caused significant human life and economic losses. Some progress has been made by the world’s most important actors, but it falls short of key climate goals. Companies are starting to modify their business practices to take a more responsible stance toward the environment, but sometimes this appears to be more of a marketing spin than real action.

Despite our gloomy tone, we would emphasize that the reason why negative shocks hit the tech industry hard in 2022 was that many were unprepared for the extent and concentration of the risks. In 2023, many of the risks we identified will become well known, and the nimblest companies will institute mitigating mechanisms to navigate the uncertain near-term future. Nevertheless, it is critical for all industry participants to be wary of potential risks and plan for potential opportunities, instead of being overwhelmed by short-term adversity.

Counterpoint subscribers can access the full report here.

We welcome questions, feedback and discussion with clients over the risks we set out here as well as the ones that didn’t make the cut.

Counterpoint Research’s market-leading Market Monitor, Market Pulse and Model Sales services for mobile handsets are available for subscribing clients.

Feel free to contact us at press@counterpointresearch.com for questions regarding our in-depth research and insights.

You can also visit our Data Section (updated quarterly) to view the smartphone market share for World, USA, China and India.

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Analyst Contacts

Yang Wang

Follow Counterpoint Research

Tesla Leads US EV Market, Eclipsing Next 15 Brands Combined

EV sales in the US grew by 52% YoY during Q3 2022.
Top 10 EV models constituted almost 70% of EV sales.
US EV sales are expected to exceed 10 million units annually by 2030.

New Delhi, London, San Diego, Buenos Aires, Hong Kong, Beijing, Seoul – January 4, 2023

The US electric vehicle* (EV) sales** grew by almost 52% YoY during Q3 2022 despite macroeconomic headwinds, according to Counterpoint Global Passenger Vehicle Model Sales Tracker. Battery EVs (BEVs) constituted over 80% of the total US EV sales. BEV sales grew by more than 78% YoY during Q3. Tesla’s Q3 sales eclipsed the next 15 brands combined.

Commenting on market dynamics, Associate Director Hanish Bhatia said, “Overall US passenger vehicle sales will likely suffer due to macroeconomic pressures until at least mid-2023. Higher interest rates are hitting both loan and leasing routes to ownership. However, the affordability of EVs will be revitalized once EV policies and credit subsidies take effect.”

Source: Counterpoint Global Passenger Vehicle Model Sales Tracker, Q3 2022

Market summary

Tesla sales in the US grew by more than 56% YoY during the quarter. Although Tesla has had some headwinds in meeting orders and delivering vehicles, it has remained the undisputed market leader for at least the previous 19 quarters. The Model Y and Model 3 are its most sold models.

Ford sold over 18,000 EV units during Q3, registering almost 132% YoY growth. With the introduction of the electric version of the best-selling F-150, the company has been able to mark its position in the US EV market.

Chevrolet catapulted its EV sales growth rate by 225% YoY to over 14,000 units. The Bolt and Bolt EUV are the only two Chevrolet EV models being offered currently. The Bolt EUV sales volume almost quadrupled from the previous year. The brand is on track to introduce three new EV models – Silverado EV, Equinox EV and Blazer EV.

The top 10 best-selling EV models constituted almost 70% of the country’s EV sales in Q3. Tesla’s Model Y has been the best-selling EV model since the third quarter of 2020.

Commenting on the market outlook, Research Director Jeff Fieldhack said, “Tax credits are expected to boost EV demand. Moreover, a price reduction is expected as more battery manufacturing firms are being set up across the North American continent. Batteries constitute 40% to 45% of the cost of EVs. The availability of multiple battery suppliers and a decrease in logistics costs for batteries will positively impact the US EV market. EV sales in the US are expected to exceed 10 million units annually by 2030 at a CAGR of 37%, according to Counterpoint’s Global Passenger Vehicle Forecast.”

*For EVs, we consider only BEVs and PHEVs. This study does not include hybrid EVs and fuel-cell vehicles.

**Sales refer to wholesale figures, i.e. deliveries from factories by the respective brands/companies.

The comprehensive and in-depth ‘Global Passenger Electric Vehicle Sales Tracker, Q1 2018-Q3 2022’ is now available for purchase at report.counterpointresearch.com.

Feel free to reach us at press@counterpointresearch.com for questions regarding our latest research and insights.

Background

Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media, and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects, and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.

Analyst Contacts

Hanish Bhatia

Jeff Fieldhack

Soumen Mandal

Moumen Badawi

Counterpoint Research

press@counterpointresearch.com

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Global PC Shipments’ Double-digit Crash in Q3

Taipei, London, Hong Kong, Boston, Toronto, New Delhi, Beijing, Seoul – October 25, 2022

Global PC shipments fell 15.5% YoY in Q3 2022 to reach 71.1 million units recording another wave of huge YoY declines after the severe annual and sequential falls in Q2, according to Counterpoint Research data. The Q3 2022 decline was largely due to demand weakness across both consumer and commercial markets, which was mainly driven by global inflation. Despite components shortage issues being largely resolved, OEMs and ODMs are holding a relatively conservative view on Q4 2022 and first half of 2023.

The lull in PC demand continued in the quarter despite broad promotional activities from major OEMs, especially for consumer product lines. In addition, inventory digestion processes have been activated to deal with abnormally high levels as we enter the second half of the year. Although it is the season of peak consumer device sales, PC OEMs believe the destocking process will continue into 2023. Based on our conversations with supply chain members, especially with components suppliers, the largest inventory numbers were in Q3 2022 and will likely begin to decline in coming quarters but there is uncertainty within the supply chain on when shipment growth will restart.

Global PC Inventory Accumulation Since 2022

Source: Counterpoint Research

Lack of consumer demand in the back-to-school season, shrinking enterprise purchasing due to economic uncertainty and increasing promotional events all created a drag on Average Selling Price (ASP) growth momentum and also impacted PC market revenue.

Apple reported a counter-market 7% YoY shipment growth amid muted market momentum, thanks to its new product launch in late Q2 with shipments refilled after the China lockdowns in Q2 that interrupted ODM manufacturing schedules. Meanwhile, Asus reported a 9% YoY shipment decline in the quarter, reflecting a relatively resilient performance due to its enterprise focused strategy, in line with management’s target of outperforming shipment in 2022.

Lenovo booked a 16% YoY decline, largely in-line with the global PC market, consumer demand weakness was partly offset by enterprise spending. Its 23.7% market share remains flattish compared to last year, reflecting Lenovo’s strong position efforts to cope with a shaky market.

HP took an 18% share in Q3 with 12.7 million unit shipments. This is the second quarter of lower than 20% market share by HP since 2016, largely due to its higher consumer mix, which meant it exited Q3 with a 26.5% YoY decline.

Dell also reported more than a 20% YoY shipment decline with and 17% market share. Its 12 million units were a bit higher than Q3 2020, right before Dell began to benefit from working style changes post the initial waves of COVID.

Global PC Shipment by Vendor, Q3 2022

PC market unlikely to grow until H2 2023

Overall, global PC shipments in the second half of 2022 will still be comparatively higher than the level before Covid broke out. However, Chip maker AMD claimed that PC market weakness already caused negative impacts to its results and outlook; while the management of Taiwan OEMs Acer and Asus, both shared their views that the PC industry will not recover until H2 2023.

Looking into 2023, the sky is still covered by dark clouds. We are also adjusting our 2022 shipment forecast to a 13% YoY decline on soft PC demand. Among all PC product segments, we believe Arm-based PCs and gaming PCs are poised to weather the market downturn best, with the help from Apple’s M-series offerings as well as incremental R&D efforts from chip makers and the wider ecosystem.

In Automotive Connectivity, Rolling Wireless Tops Module Market, Qualcomm Dominates Chipset Market in H1 2022

Qualcomm dominates automotive connectivity chipset market with more than 80% share
Rolling Wireless leads the automotive connectivity module market, followed by LG and Quectel
One in two connected cars will have 5G connectivity by 2027

San Diego, Buenos Aires, London, New Delhi, Hong Kong, Beijing, Seoul – September 22, 2022

Global automotive connectivity module and chipset shipments grew by just 3% YoY in H1 2022, according to the latest research from Counterpoint’s Global Automotive NAD Module and Chipset Tracker.

China is the largest region as electric vehicle players, including new start-ups such as NIO, Xpeng Motor and Seres, are offering infotainment systems with large displays and smart cockpit solutions that have a wide array of features, and ADAS that requires embedded connectivity. But during H1 2022, automotive connectivity module shipments in China declined by almost 7% YoY due to slow car production caused by supply chain disruption and COVID-19 restrictions.

Automakers across Europe are trying to generate significant revenues from in-car software services via subscriptions. For this, they are now offering embedded connectivity, even in lower vehicle trims. The Ukraine crisis derailed the European automotive market’s post-COVID recovery. Automotive connectivity module shipments in Europe declined by more than 10% YoY as car production in Germany, France, UK, and other European nations suffered due to the lack of components caused by the Ukraine crisis.

While the two biggest markets could not avoid the effects of the geopolitical crisis and fresh COVID restrictions, North America remained more resilient with automotive connectivity module shipments increasing by 27% YoY during H1 2022.

Commenting on the market dynamics, Senior Research Analyst Soumen Mandal said, “With the increasing adoption of digital features and ADAS, the requirement for embedded connectivity in passenger vehicles will increase. The sales penetration of connected cars surpassed those of non-connected cars for the first time H1 2022. Previously, embedded connectivity was prevalent in luxury models, but now mainstream players like Volkswagen, Toyota and Stellantis are offering connectivity for their mass-market cars.

Qualcomm has a dominant position in the chipset market with more than 80% market share. The strong product portfolio and partnerships with major tier-1 suppliers and automakers are all helping Qualcomm. And now, Qualcomm is offering complete solutions for automotive digital transformation starting with hardware and extending to cloud services with the Snapdragon Digital Chassis. This one-stop solution is helping ecosystem players reduce time to market and be more competitive.

MediaTek and Samsung launched 5G solutions last year. As the automotive sector is gradually adopting 5G connectivity, we expect MediaTek and Samsung to increase their market share in 5G automotive connectivity. However, they will likely require a more concerted effort to substantially grow their share and benefit from greater economies of scale.”

Source: Counterpoint Global Automotive NAD Module and Chipset Tracker, Q2 2022

Automotive specialists lead, but IoT giants aiming for slice of module market

Commenting on the automotive connectivity module player dynamics, Research Vice President Neil Shah said, “Automotive connectivity modules must pass various quality and compliance tests and certifications, hence special expertise is an advantage. Consequently specialist automotive connectivity module players such as Rolling Wireless and LG are leading the market. Quectel, the largest IoT module player, has broken into the top three rankings due to strong performance in its domestic China market. We have seen Quectel gain certification for automotive-grade modules with North American and European telecom operators. This will give strong competition to traditional specialist players like Rolling Wireless, LG, Continental and Harman.

The entry barriers are relatively high for IoT module players but the revenue opportunity afforded by the automotive transformation is attractive. Nevertheless, geopolitical trade tensions and data security concerns will likely be a barrier to Chinese IoT module players penetrating international markets.

Automakers will aim to multisource modules to offset supply-chain risks while supporting the growing demand for connectivity. In addition, we expect some emerging countries like India, Indonesia, Thailand and Brazil will try to build their own manufacturing ecosystem to have better control over the supply chain.”

Source: Counterpoint Global Automotive NAD Module and Chipset Tracker, Q2 2022

Discussing the market outlook, Research Vice President Peter Richardson commented, “Automotive connectivity module shipments are expected to grow annually by around 11% on average to reach 97 million units by 2030. The demand for 5G modules is increasing and we expect around a half of connected cars sold in 2027 will have 5G connectivity. The evolution of centralised architecture with digital cockpit, autonomous capability (ADAS L3+) and electrification will drive growth for 5G technology.

In terms of revenue, the automotive connectivity module market is projected to reach $5 billion by 2030. The multi-billion segment opportunity will ensure the segment remains vibrant and highly competitive.”

For detailed research, refer to the following reports available for subscribing clients and individual subscription:

Counterpoint tracks and forecasts on a quarterly basis 25+ NAD module vendors’ shipments, revenues and ASP performance across 10+ chipset players, and major geographies.

Background

Analyst Contacts:

Soumen Mandal

Neil Shah

Peter Richardson

Counterpoint Research

press@counterpointresearch.com

Related Reports:

Global Cellular IoT Module Shipments Grew 20% YoY in Q2 2022

After declining in Q1 2022, the global cellular IoT module market recovered in Q2 2022 despite macroeconomic headwinds and lockdowns in China, the largest IoT market.
The quarter also saw a series of consolidations in the highly competitive IoT module space.
Asset-tracking reached the highest share ever at 7% to break into the top five applications.
Smart meter, POS and industrial were the top three applications in this quarter.
NB-IoT and 4G Cat 1 were the most preferred technologies for cellular IoT applications.

San Diego, Buenos Aires, London, New Delhi, Hong Kong, Beijing, Seoul – September 20, 2022

Global cellular IoT module shipments grew 20% YoY in Q2 2022, according to the latest research from Counterpoint’s Global Cellular IoT Module and Chipset Tracker by Application. The global cellular IoT module market continued to recover despite a tighter supply chain, COVID-19 lockdowns in China and macroeconomic headwinds. The growth was driven by the ongoing digital transformation involving potential applications around critical infrastructure and logistics catered by some key fast-growing low-tier cellular technologies such as Cat-1 and NB-IoT. Further, module players modified their product offerings, striking partnerships across the value chain, from newer connectivity solution providers to acquiring some key competitors, as the IoT industry enters a very exciting growth phase.

China retained its position as the world’s largest IoT market, contributing to more than half of the demand despite the lockdowns. The country’s cellular IoT module market recovered slightly from previous months this year, driven by lockdown-triggered applications like smart locks, surveillance systems and routers. The North American and western European markets grew steadily and held their second and third positions respectively in the global cellular IoT module market. Again, India was the fastest growing IoT module market (+264% YoY), albeit growing on a lower base, driven by smart meter, telematics, POS and automotive applications.

Commenting on the market dynamics, Senior Research Analyst Soumen Mandal said, “The IoT module market is going through a critical phase where the Chinese brands have become bigger, making it very difficult for international brands to grow in silos. As a result, we have seen the first wave of market consolidation with Telit acquiring Thales’ cellular IoT module business as well as acquiring IoT solutions design house Mobilogix. Also, during the quarter, Semtech, one of the big component vendors and the key chipset provider for the proprietary LoRa-based IoT network, acquired leading cellular IoT and router vendor Sierra Wireless to build an end-to-end wireless IoT portfolio. This kickstarts an exciting phase where the Western vendors are trying to become more ‘integrated’ to capture more value across the value chain, even though the IoT market is a blue-ocean opportunity.”

Mandal added, “With six out of the top 10 IoT module vendors being from China and with the rising geopolitical competition and data privacy concerns, international players see an opportunity to consolidate and carve out a dichotomy in this segment. Further, having a robust portfolio and post-sales support is the key. Telit, Thales, u-blox and Sierra Wireless improving their offerings over the last 12 months has been a step in the right direction. With consolidation, these vendors can garner scale and some competitive edge to at least compete well on pricing and value against the competition”

Note: Figures may not add up to 100% due to rounding

Market summary

The top three players accounted for more than half of the market. Interestingly, Quectel’s shipment share was equal to that of the remaining players in the top 10 list.

Quectel: Quectel’s module shipments increased 47% YoY, further increasing its gap with the remaining players. During the quarter, Quectel launched 4G Cat 4 smart modules SC200E and SG150H, based on Qualcomm and UNISOC chipsets respectively. Furthermore, Quectel unveiled iSIM-supported LPWA module BG773A-GL with the help of Kigen, through which it will be able to target M2M applications such as POS, smart metering, asset tracking and wearable devices.
Fibocom: The second largest module vendor, Fibocom, saw 12% YoY growth in its module shipments. Nearly 60% of its module shipments came from the China market. Fibocom has already entered partnerships with Qualcomm, MediaTek, UNISOC, Sequans and Autotalks to increase its share in international markets. This can help Fibocom bridge some of its wide gap with Quectel in the international IoT module market.
MeiG: After a slow Q1 2022 due to China lockdowns, MeiG registered growth which helped it to enter the top three IoT module ranks globally. While focusing on higher-end IoT module applications, MeiG is expanding into the fast-growing 4G Cat 1 bis market, targeting applications such as POS, industrial, asset tracking, smart meter and enterprise. MeiG is also diversifying its supplier portfolio. It has partnered with fast-growing 4G chipset vendor ASR for the 4G Cat 4 module market, especially for the highly competitive China market and other low-cost international markets.
China Mobile: China Mobile maintained its fourth position in the global cellular IoT module market by catering to its huge existing and prospective customer base and extensive cellular network. The operator partnered with Xinyi Semiconductor for focusing on lower-end applications. This has helped both to target 2G-to-4G transitioning IoT applications. China Mobile’s growing 5G footprint and partnerships across the value chain will help the world’s largest operator to rapidly scale its end-to-end 5G IoT solutions in the coming quarters.
Sunsea: Sunsea (SIMCom + Longsung) has been consistently improving its performance over the last 10 quarters. Sunsea is following a strategy similar to that of other Chinese players to offer Qualcomm-based solutions for the international market and MediaTek/UNISOC/ASR/Xinyi-based solutions for the homegrown China market. Sunsea added ASR as a partner besides Qualcomm to cater to the increasing demand and offer affordable pricing in China.
Telit: Telit is the first non-China player in the global IoT module vendors’ rankings. Telit is focussing on LPWA-Dual Mode, 4G Cat 1 and LTE-M technologies to target applications such as industrial, healthcare, asset tracking, router/CPE and energy. The vendor has launched 4G Cat 1 bis industrial grade module LE910R1 with 2G fallback to target the APAC and EMEA markets. With the sunset of 2G and 3G technology, this module can be used as a substitute for low-to-mid-end applications. After the acquisition of Thales, Telit has the potential to emerge as the largest module vendor outside of China and eventually match Quectel in scale.
Among other players, Neoway performed well. It was the fastest growing in QoQ terms (+162%) among top vendors. Besides China, India is turning out to be an important market.
u-blox recorded a strong quarter by remodeling and redesigning its products and clearing backlogs. The demand was strong for u-blox in industrial, automotive and healthcare applications.

Commenting on the key connectivity technology trends in the IoT space, Associate Director Mohit Agrawal said, “The top five technologies, including NB-IoT, 4G Cat 1, 4G Cat 4, 4G Cat 1 bis and LPWA-Dual Mode captured more than 80% of the shipments in this quarter. We are witnessing increasing shipments of 4G Cat 1 and 4G Cat 1 bis modules driven by the sunset of 2G and 3G technologies and higher demand in low-to-mid-end applications. Some module players are still shipping 2G modules to cater to specific low-cost applications in some emerging markets, like Africa, Asia and eastern Europe. The 5G IoT module shipments remain steady with prices still high and many projects still in pilot stages. It will take at least a couple of years to reach an inflection point. We expect the second half of 2023 to see a ramp-up for the 5G IoT modules with good pan-country 5G coverage and scale.”

The top five applications in Q2 2022 – smart meter, POS, industrial, router/CPE and asset tracking – captured more than half of the total IoT module market. Compared to the previous quarter, significant improvements were seen in the router/CPE and residential markets. The automotive connectivity market did not show much traction due to the poor performance of the automotive industry in China during this quarter.

For detailed research, refer to the following reports available for subscribing clients and individuals:

Counterpoint tracks and forecasts on a quarterly basis 1,500+ IoT module SKUs’ shipment, revenue and ASP performance across 80+ IoT module vendors, 12+ chipset players, 18+ IoT applications and 10 major geographies.

Background

Analyst Contacts

Soumen Mandal

Mohit Agrawal

Counterpoint Research

press@counterpointresearch.com

Related Reports:

5G Infrastructure Vendors – Are They Immune To Recession?

Nordic vendors Ericsson and Nokia had a good second quarter. Ericsson reported a 13.7%* growth in revenue to $6 billion with net profit jumping 19.2 % to $451 million. Nokia’s revenue was almost identical at $6.1 billion, up 10.5%, while profits surged 31.1% to $478 million. Both benefited from favourable currency conditions, particularly in the US, their biggest market. The two vendors remain bullish for the rest of 2022 and into 2023.

Regional Trends

Ericsson reported growth across all its regions with the top markets in terms of revenue being North America, up 27.3%, Europe and Latin America, up 9.4% and South East Asia, Oceania and India, up 12.2%. The Middle East and Africa region also reported a strong 17.1% growth. Nokia reported growth across several regions (excluding Europe and India), with its strongest markets being North America, up 34.6%, Middle East and Africa, up 22.8% and Greater China, up 13.9%.

North America continues to be the preeminent market in revenue terms for both vendors. And as has been the case for several quarters, Nokia’s strong growth in the US was driven by a double-digit growth in Network Infrastructure and helped this quarter by a return to growth at its Mobile Networks business.

Network Infrastructure continues to be a star performer for Nokia with a 21% growth overall, led by Fixed Networks up 34% and Submarine Networks, up 27%. Nokia reports that increasing 5G and fibre access penetration is leading to increasing demand for backhaul solutions, which is driving sales of its IP routing and metro/backbone optical network solutions. Although Nokia expects its double-digit growth to continue in the short-term, maintaining this growth rate will inevitably become more difficult over time.

Nevertheless, Counterpoint Research expects that Nokia’s Network Infrastructure revenues will surpass Mobile Networks before the end of 2023, driven predominantly by continued growth in Fixed Networks. In fact, Fixed Networks revenue equalled IP Routing revenues for the first time at the end of Q2, and together the two businesses now account for 67% of total Network Infrastructure revenues. Exhibit 1 compares the growth of Nokia’s Mobile Networks compared to Network Infrastructure during the past two years.

Exhibit 1: Nokia: Mobile Networks versus Network Infrastructure Growth

Supply Chain Issues

Both vendors are carefully managing their supply chains but with perhaps a slightly different focus, with Ericsson seemingly more concerned on maintaining top-line growth. Overall, Ericsson claimed that supply chain issues have not had any impact on revenues up to now, with products delivered in quantity and on-time due to good supply chain management. However, increased inventory costs are clearly having an impact on its bottom line, denting its gross margin and reducing cash flow metrics.

In contrast, Nokia seems more focused on managing the bottom line and keeping costs under control. Throughout 2021, it faced challenging supply chain constrains with many of its suppliers. However, the vendor recently reported that these constraints are now more supplier specific, with a shortage of optical components being a particular concern. Faced with volatile lead times, Nokia increased inventory by $240 million in Q2 and will maintain this level of inventory until lead times become less volatile. Both vendors expect that supply chain challenges will start to ease in late 2022 and early 2023.

5G Outlook and Headwinds

Like most 5G vendors, the two Nordic vendors believe that the 5G capex peak will be higher and last longer than previous generations although there might be some normalization in 2024. Nokia continues to see strong investment in 5G connectivity and fibre deployments, two priorities for CSPs and their enterprise customers, as they deal with increasing data consumption and the need to improve productivity. To date, Nokia claims that it has not seen any major changes in customer demand and order intake remains strong with the company being more supply limited than demand limited. Ericsson also expects continued solid demand throughout 2022 and has increased its forecast revenues for North America.

However, a deteriorating macro environment could dampen customer demand over the next few months, particularly in emerging market countries, where currency fluctuations could impact the affordability of 5G products typically priced in dollars or euros. In addition, vendors are experiencing other headwinds such as inflation, higher R&D costs, etc. However, Counterpoint Research believes that both companies have a limited degree of pricing power, and by increasing prices and the cadence of new products, they should be able to offset some of the inflationary pressures, For example, offering new products that reduce opex costs – such as smaller, lighter, lower-power radios – would enable CSPs to justify additional investments.

Low 5G and Fibre Penetration

Counterpoint Research expects that the 5G market’s secular growth pattern will continue, as even in a worsening macro environment, CSPs need to invest in networks to increase bandwidth and improve productivity. The demand for enterprise digitization is also unlikely to wane in the short term. Outside China, the penetration of 5G and fibre remains low. For example, in North America, the penetration of mid-band 5G is less than 25% while in Europe it is under 15%. With such low penetrations, CSPs are extending 4G network coverage, densifying networks while at the same time transitioning to 5G. Unlike for many other industries, therefore, the impact of the impending recession could well be minimal for 5G infrastructure vendors.

* All revenue data is YoY, i.e. compared to Q2 2021 and is reported rather then adjusted constant currency revenue.

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