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Can Semtech’s Acquisition of Sierra Wireless Change Offerings in IoT Space?

US-based semiconductor manufacturer and LoRa pioneer Semtech announced a $1.2-billion deal on Wednesday to acquire Canada-based cellular IoT module and device supplier Sierra Wireless. The deal comes after last week’s merger deal between Telit and Thales’ cellular IoT business. The IoT module market has entered a consolidation phase and we can expect a few more announcements in the near future.

The IoT module market is fragmented. Many brands are struggling to improve performance, scale up products and face competitors. Some players are moving towards services, which comprise 77% value of the total IoT value chain, for better revenue opportunities instead of sticking to hardware only. For example, u-blox acquired Thingstream in 2020 to generate more revenue and offer complete IoT solutions, from chipset to cloud. In some cases, companies are trying to build up their own supply chain ecosystem through integration. For example, Quectel entered the IoT antenna space last year. In the future, we may witness some large players offload their cellular IoT module business which is not a core business for them.

The Semtech-Sierra Wireless deal is an important announcement for the IoT space. It can change offerings in the IoT industry. Here are some key takeaways from this deal from Counterpoint analysts:

Sierra Wireless is mainly focused on the cellular business, whereas Semtech is focused on the non-cellular business. The ultra-low power benefits of LoRa and higher-bandwidth capabilities of cellular networks will bring innovation to IoT use cases. They can also solve problems faced in massive IoT adoption across all segments.
International brands such as Sierra Wireless, Telit, Thales and u-blox were struggling to compete with Chinese module vendors such as Quectel, Fibocom and MeiG in terms of scale and bringing innovation to the field.
Sierra Wireless divested its auto business in 2020 to focus on the router/CPE segment but the COVID-19 pandemic, supply chain disruptions and ransomware attack hit Sierra Wireless’ efforts to regain its market share last year. Interestingly, the automotive spin-off business was acquired by a consortium led by Chinese module vendor Fibocom.
We also witnessed a corner-room change at Sierra Wireless to revive brand glory when Phil Brace replaced Kent Thexton as the CEO in July 2021.
This year, Sierra Wireless divested its Omnilink offender monitoring business to Sentinel for $37.6 million. This was not a core business for the company and it offloaded Omnilink to focus more on the services industry. Product segments can generate revenue for one time, whereas services can generate revenue on a recurring basis. That is why we have been seeing many IoT module players shifting towards IoT platforms, cloud and services.
According to its chip-to-cloud strategy for IoT adoption, Semtech aims to offer solutions across the IoT value chain. However, it has no good presence in the module, device and platform categories. Moreover, LoRa isn’t suitable for each IoT application. LoRa and cellular technologies may complement each other in serving segments across the IoT value chain.
Sierra Wireless will bring a rich experience of cellular IoT modules, cellular gateways and cloud service platform to Semtech, while Semtech will offer LoRa chips, LoRa gateways and cloud services. In the future, we may see more hybrid cellular+LoRa solutions instead of dual cellular module-based solutions. In this type of application, the cellular module can be used for data communication and LoRa can be used for device management and other applications where a low payload is required. This can change offerings in the IoT module space and help Semtech increase its market share in the cellular space too.
Semtech already has a good hold on smart meter, smart city, industrial, smart grid and asset-tracking applications through LoRa solutions. The addition of Sierra Wireless products will help Semtech target high-end markets such as security cameras, gateways, fleet and PC.

Outlook

The combined entity is looking for a 10x growth opportunity to reach a $10-billion serviceable addressable market (SAM) by 2027. To achieve this figure, IoT platform and cloud services will play a pivotal role as these can contribute revenue on a recurring basis. At the same time, Semtech needs to be careful not to disrupt the standalone LoRa ecosystem partners and customers. We believe cellular+LoRa-based industrial applications such as security, smart campus, factory and private networks will be a big opportunity for Semtech.

Global Cellular IoT Module Shipments to Cross 1.2 Bn Units by 2030

5G shipments to overtake 4G by 2028 to become the leading technology in the global cellular IoT module market.
Smart meter, industrial, router/CPE, automotive and POS will be the top five applications in 2030 in terms of shipments.
5G RedCap mass adoption is expected to happen in 2027 and onwards.

San Diego, Buenos Aires, London, New Delhi, Hong Kong, Beijing, Seoul – May 9, 2022

Global cellular IoT module shipments are expected to cross 1.2 billion units by 2030 with a CAGR of 12%, according to the latest Global Cellular IoT Module Forecast from Counterpoint Research. The shipments will be mainly driven by 5G, NB-IoT and 4G Cat 1 bis technologies. 5G will be the fastest growing (60%) technology, followed by 4G Cat 1 bis, during 2022-2030.

With 5G becoming mature, we will see large module vendors such as Quectel, Fibocom, MeiG, Foxconn, Thales, Telit and Sierra Wireless consolidating their positions in the global cellular IoT module market. Longtail module vendors will struggle with scale and partnerships.

Commenting on the market dynamics, Senior Research Analyst Soumen Mandal said, “With the ongoing sunset of 2G and 3G networks across the world, most of the demand has been shifting to LPWA, 4G Cat 1 and 4G Cat 1 bis technologies until now. NB-IoT will still remain popular in parts of Asia, including China, and Europe, while 4G Cat-1-based modules proliferate over the next few years.

With LPWA technologies such as NB-IoT, LTE-M and 4G Cat-1 driving this initial adoption of cellular IoT, the global cellular IoT market will transition from 4G to 5G in the rest of this decade. This transition will be faster compared to the transition from 2G/3G to LPWA/4G in the IoT segment. 5G will be the leading technology in the global cellular IoT module market, followed by NB-IoT and 4G Cat 1 bis.

The rollout of 5G and introduction of 5G RedCap in coming years will see the adoption of 5G across intelligent IoT applications in industrial, asset tracking, POS, telematics, healthcare and wearables segments, mostly replacing traditional 4G IoT applications. We estimate that cumulative 5G shipments (excluding 5G RedCap) will reach 2.5 billion units, growing at a CAGR of 60% between 2022 and 2030.

By the end of this decade, we should see the introduction of 6G technology for IoT. However, 6G will be limited to higher-end applications such as enterprise and broadband in the initial years of adoption.”

Commenting on the cellular IoT module application landscape, Vice-President Research Neil Shah said, “Smart meter, industrial, router/CPE, automotive and POS will be the top five applications in 2030 in terms of shipments. 5G will be preferred for Industrial 4.0 (like robotics, automation and digital twins), router/CPE (like FWA and private networks) and automotive (like connected and autonomous mobility) applications, LPWA will be preferred for utilities (smart meter) and 4G Cat 1 bis and 5G RedCap for POS applications.

China leads in 5G adoption in the global cellular IoT module market. However, North America and Europe will have great potential in the future. 5G adoption in emerging markets such as India and Latin America will also grow faster and 5G RedCap may become popular in these regions.”

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

Counterpoint Research tracks and forecasts on a quarterly basis 80+ IoT module vendors’ shipments, revenues and ASP performance across 12+ chipset players, 18+ IoT applications and 10 major geographies.

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

Neil Shah

Counterpoint Research

press(at)counterpointresearch.com

Related Reports:

Global Cellular IoT Module Revenue Grows 58% YoY in Q4 2021; 5G, 4G Cat 1 Modules Fastest Growing

Quectel and Qualcomm led the global cellular IoT module and IoT chipset markets respectively in Q4 2021.
5G contributed to nearly a quarter of the cellular IoT module market revenue.
Automotive, router/CPE, industrial, PC and POS were the top five applications in the quarter.

San Diego, Buenos Aires, London, New Delhi, Hong Kong, Beijing, Seoul – March 31, 2022

Global cellular IoT module revenue grew 58% YoY in Q4 2021, according to the latest research from Counterpoint’s Global Cellular IoT Module and Chipset Tracker by Application. China, the leading region in the cellular IoT module market, accounted for more than 40% of the revenue. However, India was the fastest growing (154% YoY) cellular IoT module market. 5G was the fastest growing (324% YoY) technology followed by 4G Cat 1 (105% YoY). Router/CPE, PC and industrial were the top applications for 5G.

Commenting on the market dynamics, Senior Research Analyst Soumen Mandal said, “Quectel, Telit and MeiG held the top three positions in the global cellular IoT module market, accounting for 40% of the total revenue in Q4 2021. For 2021, global cellular IoT module shipments and revenue grew by 59% and 57% YoY respectively.”

Quectel’s cellular IoT module revenue grew more than 100% YoY in Q4 2021. Strong partnerships, superior service and a wide range of product offerings are supporting its growth. Quectel launched a new ODM brand, Ikotek, targeting the US market. We expect it to help Quectel increase its footprint in North America and Latin America. Moreover, the products can be customized and designed according to the regulatory requirements of a project.

Telit made a strong comeback after a relatively weaker performance in recent history. Telit has been expanding its offerings, which is helping its revival. Telit NExT is providing flexible connectivity plans across 190 countries to take advantage of emerging business models and removing major bottlenecks for many IoT device vendors. In Q4 2021, Telit’s focus on Latin America to help customers migrate legacy 2G and 3G modules to 4G Cat 1 modules helped it become the leading module supplier in the region to complement its strong position in North America.

MeiG is another Chinese player which is making continuous progress and made it to the top three in cellular IoT modules, both in shipments and revenue. It is focusing more on AIoT and smart module-based higher-end applications such as router/CPE, intelligent cockpit, video recordings, industrial PDAs, drones and AR/VR. MeiG entered lower-end applications in 2021. This product mix of higher-end and lower-end modules helped MeiG increase revenue by more than 100% in Q4 2021.

Thales, Rolling Wireless, Sunsea, Fibocom and Sierra Wireless are other key players. Out of the top 10 players, Rolling Wireless and LG are focussing on the automotive segment only.

Thales is performing well in Europe, North America and Japan targeting smart meter, healthcare and industrial applications. Sunsea improved its performance in the global IoT module market, but it wasn’t enough to prevent its share from going down. The industry is growing at a faster rate compared to Sunsea’s growth. Fibocom is showing a stronger presence in 4G Cat 1 bis technology. However, Fibocom slipped out of the top five module vendors rankings due to weaker performance of NB-IoT modules.

Rolling Wireless’s and Sierra Wireless’s revenues increased 105% and 87% respectively. After spinning off from Sierra Wireless’s automotive division last year, Rolling Wireless quickly made it to the top 10 module vendors list. Rolling Wireless and Sierra Wireless have been successful in targeting specific applications, such as automotive and router/CPE respectively.

Global Cellular IoT Module Revenue Share by Module Vendor, Q4 2021

Source: Counterpoint Global Cellular IoT Module and Chipset Tracker by Application, Q4 2021

Automotive, router/CPE, industrial, PC and POS are the top five cellular IoT applications in terms of revenue. However, drones, PC and router/CPE are the top three fastest growing segments. Smart meters is another key segment but the lower ASPs of NB-IoT and 4G Cat 1 modules mean it is not among the top five IoT applications in terms of revenue.

Global Cellular IoT Module Vendor Shipment Share Rankings by Key Geographies, Q4 2021

Commenting on the regional performance of module vendors and pricing dynamics, Vice President Research Neil Shah said, “International players made a strong comeback in Q4 2021 after weaker performance in the previous quarter. Quectel, MeiG and Sunsea were the top three cellular IoT module players in China in terms of revenue. For the rest of the world, Quectel, Telit and Thales were the top three cellular IoT module players.”

Quectel is leading in most regions except Latin America, India and Japan. However, as these regions currently represent a small share of the global cellular IoT module market, it doesn’t have much impact overall. Japan’s preference for LTE-M works against Quectel.

In China, MeiG overtook Fibocom to become the second largest cellular IoT module vendor.

Neoway, another Chinese module vendor, maintained its leading position in the Indian market. Strong partnerships with smart meter manufacturers and telematics providers are helping Neoway to maintain its position.

The overall cellular IoT module ASP increased 7% sequentially due to supply chain constraints, especially in 4G modules. Chinese chipset players are trying to reduce the 5G module ASP for mass commercialization. However, 5G adoption hasn’t picked up as expected. We see 5G peaking in the global cellular IoT module market after 2025.

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

Counterpoint tracks and forecasts on a quarterly basis 1450+ IoT module SKUs’ shipments, revenues and ASP performance across 80+ IoT module vendors, 12+ chipset players, 18+ IoT applications and 10 major geographies

*Note: We have updated regional ranking data as per industry feedback (as of Oct 2022) which indicates Quectel led in India shipment share during Q4 2021.

Background

Analyst Contacts:

Soumen Mandal

Neil Shah

Counterpoint Research

press(at)counterpointresearch.com

Related Reports:

Global Cellular IoT Module Shipments Grow 70% YoY in Q3 2021; 5G Module Shipments up 700% YoY

Quectel and Qualcomm led the global cellular IoT module and chipset markets respectively in Q3 2021.
NB-IoT contributed to more than one-third of the cellular IoT module market.
Smart meter, POS, enterprise, industrial and router/CPE were the top five applications in this quarter.

San Diego, Buenos Aires, London, New Delhi, Hong Kong, Beijing, Seoul – December 9, 2021

Global cellular IoT module shipments grew 70% YoY in Q3 2021, according to the latest research from Counterpoint’s Global Cellular IoT Module, Chipset and Application Tracker. In terms of overall revenue, the market crossed the $1.5-billion mark during the quarter. China continued to dominate in terms of volume, followed by North America and Europe. 5G was the fastest growing technology (+700% YoY) due to a lower base.

Commenting on the market dynamics, Research Analyst Soumen Mandal said, “Chinese module players performed well during this quarter while some international players struggled. Quectel, Fibocom and China Mobile were the top three cellular IoT module players in China in terms of shipments. For the rest of the world, Quectel, Telit and Thales were the top three cellular IoT module players.

Quectel’s cellular IoT module shipments grew nearly 80% YoY in Q3 2021. NB-IoT and 4G Cat 1 modules were major drivers for this immense growth. In this quarter, Quectel won some bids for 5G, including for 5G C-V2X with Great Wall Motor, high-speed rail applications with China Mobile, industrial applications with China’s industry and information technology ministry, 5G module with China Mobile and a customized project with China Unicom. We expect 5G module shipments to gain traction from early next year.

Fibocom maintained its second position in the global cellular IoT module market. The strong demand for NB-IoT modules helped Fibocom’s module shipments grow 84% YoY. Fibocom is also focussing more on 4G Cat 1 and Cat 1 bis modules. We expect to witness more competition in Cat 1 bis space next year.

China Mobile entered the top three module player rankings during this quarter. Its total shipments tripled annually in Q3 2021. The Chinese market is witnessing a lot of traction for NB-IoT and 4G Cat 1 modules as 2G or 3G modules are being replaced in most cases.

All the top five module players in Q3 2021 were from China. MeiG Smart is another Chinese player witnessing continuous growth. Automotive-grade NAD IoT module players Rolling Wireless and LG raced into the top 10 module players rankings as demand for connected cars continued to rise.”

Global Cellular IoT Module Shipment Share by Module Vendor, Q3 2021

Source: Counterpoint Global Cellular IoT Module, Chipset and Application Tracker, Q3 2021

Smart meter, POS and retail were the top three fastest-growing applications. The ongoing chip shortage had a negative impact on the automotive segment. Chipset dynamics are also changing depending on applications and technologies.

Global Cellular IoT Chipset Shipment Share by Chipset Vendor, Q3 2021

Source: Counterpoint Regional Cellular IoT Module, Chipset and Application Tracker, Q3 2021

Commenting on the cellular IoT chipset supplier landscape, Vice-president Research Neil Shah said, “Qualcomm is leading in the global cellular IoT chipset market with more than one-third share. However, the company lost nearly 4% market share compared to the previous quarter. Still, Qualcomm is the leading chipset provider across 4G Cat 4, 4G Cat Others, 5G, LPWA Dual Mode, LTE-M and 3G technologies.

UNISOC, the second-largest cellular IoT chipset player, surpassed Qualcomm to lead in the 4G Cat 1 market. Cat 1 bis has been gaining traction, boosting UNISOC’s market share. UNISOC was leading across the 4G Cat 1, NB-IoT and 2G technologies in Q3 2021, thanks to volume growth in China and declining share of Huawei HiSilicon, which though still remained the third-largest chipset supplier.”

The overall cellular IoT module ASP decreased by 3% sequentially thanks to the shift towards the cheaper NB-IoT and 4G Cat-1 modules during this quarter. However, 4G Cat 4+ and 5G IoT modules’ ASP rose due to tight supplies. This had minimal impact on total shipments, but if the supply situation doesn’t improve, it could slow down 5G adoption.

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

Counterpoint tracks and forecasts on a quarterly basis 80+ IoT module vendors’ shipments, revenues and ASP performance across 12+ chipset players, 18+ IoT applications and 10 major geographies.

Background

Analyst Contacts:

Soumen Mandal

Neil Shah

Counterpoint Research

press(at)counterpointresearch.com

Related Reports:

Global Cellular IoT Module Shipments up 50% YoY in Q1 2021 as Demand for 5G, LTE-Cat 1 Modules Soars

Quectel and Qualcomm maintained their top positions in the cellular IoT module vendor and chipset player market shares, respectively.
Automotive, router/CPE and industrial are the top three applications in terms of revenue.
5G captured nearly 20% share of the IoT module revenues during this quarter.

San Diego, Buenos Aires, London, New Delhi, Hong Kong, Beijing, Seoul – June 23, 2021

Global cellular IoT module shipments increased by 50% YoY and 11% QoQ during Q1 2021, according to the latest research by Counterpoint’s Global Cellular IoT Module, Chipset and Application Tracker. The market made a tremendous comeback during the quarter as the COVID-19 pandemic was under control globally in that period. Europe, North America and Japan registered healthy growth annually while Latin America was the only region that did not grow in terms of revenue during Q1 2021. China maintained its lead across geographies with a growing demand for cellular IoT modules.

Commenting on the market dynamics, Research Analyst Soumen Mandal noted, “Quectel continues to lead the global cellular IoT module vendor rankings in terms of volume and revenue. The Shanghai-based vendor saw its shipments and revenues climb 67% and 78% respectively during the quarter. Thales continued to maintain its second position. 5G revenues increased by more than 80% QoQ, which helped Thales decrease the gap with top-ranked Quectel and maintain the gap with Fibocom. The third-largest module vendor, Fibocom, is expanding globally beyond China with a strong focus on telematics, router and PC segments. We can expect strong competition between Fibocom and Thales in coming quarters for the second position in terms of revenue share.”

Exhibit 1: Global Cellular IoT Module Revenue Share by Vendor, Q1 2021

Source: Counterpoint Global Cellular IoT Module, Chipset and Application Tracker, Q1 2021

Mandal added, “Some of the leading incumbents such as Telit and Sierra Wireless continue to stay focused on specific Western markets, applications and expanding their services revenue. Both Telit and Sierra have divested their automotive businesses. Sierra’s automotive module business was acquired last year by a consortium of investors led by Fibocom to form Rolling Wireless, which quickly grew to become the fifth largest cellular IoT module vendor globally, serving high-ASP automotive applications. The rising contracts with leading automakers like Volkswagen, Audi, Porsche, Renault-Nissan and Stellantis, and scaling up of operations with a lower cost and higher quality are helping Rolling Wireless increase market share.”

The following exhibit showcases the competitive dynamics for IoT module vendors across different geographies, with a good divide between Western and Eastern markets. These dynamics are a function of the vendor’s IoT application focus, breadth and depth of portfolio, channel partnerships, certification across operators and the quality of FAE (Field Application Engineers) force in the respective regions.

Exhibit 2: Global Cellular IoT Module Vendor Shipment Rankings by Key Geographies, Q1 2021

Source: Counterpoint Regional Cellular IoT Module, Chipset and Application Tracker, Q1 2021

Commenting on the cellular IoT module chipset supplier landscape, Vice President Research Neil Shah noted, “While modules based on LPWA technologies such as NB-IoT and LTE-M continued to grow above the market average, LTE-Cat 1 and 5G became the fastest-growing cellular technologies in the IoT space this quarter. This adoption has helped Qualcomm strengthen its dominant position further to capture almost half of the market in terms of volume, offering different types of cellular IoT chipset solutions to these module vendors.”

Shah added, “Other notable vendors making strides in this market are Shanghai-based ASR Microelectronics, and Unisoc with growing design wins in the 4G Cat 1 segment. French chipset manufacturer Sequans is also in a growth mode with a robust 4G broadband, 4G Cat-1, LPWA, and 5G chipset and module portfolio. This should drive significant competition in the fast-growing LTE Cat-1 segment with the ASP of these modules falling below $10. MediaTek is expected to improve its share over 4G Cat 4, 4G Cat other and 5G technology. As IoT applications and project implementations are increasing, more chipset players are entering this space. GCT Semiconductor and XINYI Semi are the latest entrants in this segment. It will be interesting to see whether these new entrants are able to strike partnerships with larger module vendors to grow further.”

Currently, Counterpoint is tracking and forecasting 65+ IoT module vendors’ shipments, revenue performance across 12+ chipset players, and 18+ IoT applications across 10 major geographies on a quarterly basis, with a forecast up to 2025.

Full reports are available for subscribing clients through the following links:

Background

Analyst Contacts:

Soumen Mandal

Neil Shah

Counterpoint Research

press(at)counterpointresearch.com

Related Posts:

Global Cellular IoT Module Shipments Decline 28% Sequentially During Q1 2020

Quectel led the global cellular IoT module shipments with 28% market share during Q1 2020
Qualcomm led the global cellular IoT module chipset shipments, capturing a third of the market
Industrial, enterprise and automotive are the top applications for cellular IoT modules

San Diego, Buenos Aires, London, New Delhi, Hong Kong, Beijing, Seoul – August 26, 2020

Global cellular IoT module shipments reduced by 4% YoY and 28% QoQ during Q1 2020 due to the negative impact of COVID-19 outbreak, according to the latest research from Counterpoint Global Cellular IoT Module and Chipset Tracker. However, IoT module shipments based on the Low Power Wireless Access (LPWA) technology increased by 51% during this quarter, offsetting the decline in automotive and other mobility applications. The falling prices, lower power consumption and extended coverage are the major reasons for growing popularity of LPWA modules among other cellular technologies.

Research Associate Soumen Mandal said: “Driven by a wider geographic reach, faster time-to-market, excellent IoT application support, aggressive marketing and a broader portfolio, with the MC, M and BC series modules performing well, Quectel managed to retain top spot in the global cellular IoT module market. However, SLM152, ME909 and SIM868 modules from Meig, Huawei and SIMCom, respectively, did well to help these brands compete with Quectel. Further, cost-effectiveness is helping other Chinese players like Fibocom, MobileTek, Lierda and Neoway to increase share in the global cellular IoT module market. International vendors such as Gemalto, Sierra, Telit and u-blox continued to maintain top rankings behind Sunsea IoT and Quectel with strongholds in North America, Europe and other developed markets.”

Exhibit 1: Global Cellular IoT Module Shipments by Brand – Q1 2020

Research Associate Anish Khajuria said: “The average price of IoT modules decreased by 12% YoY in Q1 2020. The rising demand for low-cost LPWA modules such as NB-IoT, LTE-M and LTE Cat-1 has been driving the overall IoT module ASP down. Quectel, Sierra Wireless, Gemalto, Telit and Fibocom are top five players in terms of IoT module shipment revenues globally. However, the rise of long-tail but region-focused brands like Cheerzing, Cavli Wireless, AM Telecom, Kyocera and Yuge is witnessing good traction.”

“Industrial, enterprise and automotive are top application areas for cellular IoT modules. With the rising connectivity and autonomy in automobiles, demand for 4G and 5G modules will rise in coming years,” said Senior Analyst Aman Madhok.

Madhok added: “Again, smart manufacturing and smart industry applications in the age of Industry 4.0 will see increasing demand for cellular IoT modules to reduce power consumption, increase efficiency in the production process and connect machines to cloud for optimal business planning.”

Vice-President Research Neil Shah noted: “Qualcomm is leading the share of chipset shipments powering the IoT cellular modules. Diversifying product offerings, robust supply chain network, innovation and price competitiveness have helped Qualcomm maintain collaboration with major cellular IoT module players. With the shift in focus for Intel away from the cellular modem business, coupled with significant growth in NB-IoT, LTE-M and LTE Cat-1 technologies in key markets such as China, US and Europe, growth opportunities open up for other chipset brands. MediaTek, UNISOC, Hisilicon, Sony (Altair Semi) and newer players such as ASR and Nordic Semi will look to increase their overall market share globally.”

Exhibit 2: Global Cellular IoT Module Shipments by Chipset Vendor – Q1 2020

Commenting on future deployments, Research Associate Fahad Siddiqui said: “China will dominate the global cellular IoT module market in coming years, with North America and western Europe emerging as important markets. With more deployments of 5G network around the world, the demand for 5G modules will increase. Connected vehicles, CPEs and routers for FWA, industrial robots and video surveillance will be some of the key 5G IoT module driven applications, especially in markets such as North America, China, Korea, Taiwan, Japan and UK initially.”

The comprehensive and in-depth ‘Global Cellular IoT Module and Chipset Tracker 2018Q1-2020Q1’ report is a part of Counterpoint’s IoT (Internet of Things) Service. The report is available for download here for subscribing clients.

Background:

Counterpoint Technology Market Research is a global research firm specializing in Technology products in the TMT industry. It services major technology firms and financial firms with a mix of monthly reports, customized projects and detailed analysis of the mobile and technology markets. Its key analysts are experts in the industry with an average tenure of 13 years in the high-tech industry.

Analyst Contacts:

Soumen Mandal

Neil Shah

Aman Madhok

Anish Khajuria

Fahad Siddiqui

Counterpoint Research

press@counterpointresearch.com

Sierra Wireless Transforming into an End to End Solution Provider

In 2019, Sierra wireless, transformed its strategy from an IoT hardware-focused company to delivering end to end IoT solutions.

Sierra Wireless is one of the few module vendors that recognize that selling IoT module hardware alone is not enough to survive and thrive. Sierra Wireless has benefited from bundling the modules with IoT solution integration/support services, middleware, software platform, application development toolkits, cloud platform, analytics, and end-to-end security.

Key Highlights from 4Q and FY 2019 Result:

Revenue from the IoT Solutions segment grew by 1% YoY to $377.8 million in 2019 due to growth in enterprise gateway sales of 12% YoY. Sierra Wireless has a stronghold in its gateways business as it builds connectivity modules on a merchant basis to customers such as Cisco as well as for internal consumption. However, the growth of enterprise gateways was partially offset by lower revenue from integrated IoT solutions modules.

Revenue from the Embedded Broadband segment declined 20% YoY to $335.7 million in 2019 due to lower in-module sales for PC OEM customers and networking modules. However, the decline in PC OEM sub-segment was partially offset by the higher revenue from the automotive sub-segment. Clients like Volkswagen will push the growth of the automotive sub-segment, but automotive will generate lower gross margins. In 2020, the PC OEM sub-segment will lose $55 million in revenue as its contract with Lenovo and Dell is completed.
In 2019, Sierra wireless partnered with Microsoft to launch, Octave, an all-in-one edge-to-cloud IoT platform with advanced data orchestration. Further, the IoT connections increased by more than 400,000 during the year and by the end of 2019 Sierra wireless had 3.6 million global connections.

Source: Sierra Wireless

Sierra wireless also rolled out its Ready-to-Connect technology with out-of-the-box connectivity and cloud platform across all HL and WP series embedded modules. To ramp up the LPWA sales, modules bundled with subscription-based connectivity services. However, the growth was offset by a decline in 2G, 3G IoT module sales.
In January 2020, Sierra Wireless completed the acquisition of M2M Group in Australia with a total cash consideration of $20.7 million. The acquisition will lead to:
- Increase in IoT services and solutions in Australia and Southeast Asia.
- Boost the recurring subscription-based revenue model.

In early 2019, Sierra Wireless showcased 5G modules supporting both millimeter-wave and sub-6 GHz frequencies. These modules are now sampling with OEMs and system integrators in mobile computing, enterprise networking, and industrial IoT platforms. For Sierra Wireless, 5G will be crucial for its Airlink gateway business. In 2020, 5G IoT modules will be expensive and with a lower gross margin which will lower the impact of 5G in 2020.

5 Billion IoT Cellular Module Will Ship Globally During 2019-2025. 4G, LTE Cat-M & NB-IoT in Hyper-Growth

Seoul, Hong Kong, New Delhi, Beijing, London, Buenos Aires, San Diego

Jan 8^th, 2019

Top three players, Chinese vendor SIMCom (Sunsea AIoT), Quectel Wireless and Canadian vendor Sierra Wireless will take centre stage by competing neck to neck in volumes. However, Sierra Wireless still leads in revenue. Moving forward, 4G, LTE-M, and NB-IoT will be key volume drivers.

According to the latest research from Counterpoint’s IoT (Internet of Things) Service, global cellular IoT module shipments will grow by 79% YoY in 2018 driven by Low Power Wireless Access (LPWA) IoT applications. These applications include connected bikes, smart meters, smoke detectors, livestock etc.

Commenting on the competitive landscape in the cellular IoT module segment, Counterpoint Research Analyst, Satyajit Sinha, noted, “Unlike smartphones, the things or devices are being connected to the internet by integrating wireless IoT modules. These IoT modules which embed cellular capability have changed the entire IoT landscape by adding long-range, secure and scalable wireless connectivity. The IoT module industry has evolved a lot in the last year. The market which was once dominated by integrating low-cost 2G connectivity started transitioning to Cellular LPWA (dominated by NB-IoT) on one end and from 3G to 4G LTE/5G for higher bandwidth applications such as connected car, smart surveillance camera, etc.

The IoT cellular module market had been dominated by two suppliers, China-based SIMCom and Canada base Sierra Wireless. However, over the last 20 months, another low-cost Chinese module supplier, Quectel has grown swiftly capturing the second spot by IoT module shipments in 2018 surpassing Sierra Wireless. However, from an IoT module shipment revenue perspective, Sierra Wireless remains the market leader. However, the rise of LPWA technology such NB-IoT with growing scale in the market such as China, 2018 saw the rise of long-tail IoT module suppliers in China such as Neoway, Fibocom, Gosuncn, Lierda, Rinlink, and Yuge.”

Exhibit 1: Global Cellular IoT Module Shipments market share by Volume in 2018E

Source: Global IoT Cellular Module Tracker by Tech, by App: 2009-2025

Mr. Sinha, further added, “IoT System-on-chip (Soc)/System- in- package (SiP), where MCU is integrated with modem/baseband will be the next wave of IoT evolution and it will change the dynamics of the IoT module market. This is mainly driven by semiconductor players like Huawei, GCT, Qualcomm, MediaTek, Sequans, Nordic, Altair, etc. The player like Huawei is looking to drive NB-IoT SoCs to sub-dollar price points for example with Boudica series.”

Adding his perspective, Senior Analyst, Hanish Bhatia noted, “According to our research, global IoT cellular connections are slated to cross 5 billion bark by 2025 and NB-IoT is to contribute to nearly half. In 2018, we saw some of the cellular LPWA applications deployment adopting either LTE-M or NB-IoT depending on geography and respective operators’ LPWA network strategy. Ideally, for cost perspective, many of these applications would have been deployed cheaper NB-IoT solutions. This is being realized by some of the western operators which deployed LTE-M initially and now looking at the NB-IoT revolution in China and are adding NB-IoT to their IoT network strategy roadmap.”

Mr. Bhatia, further added, “Additionally, some operators have deployed hybrid wireless IoT networks with both licensed and unlicensed LPWA technologies such as NB-IoT/LTE-M and LoRa/Sigfox respectively. Cost and the ease of deployment using an unlicensed band are the key benefits for adopting LoRa/Sigfox technologies.”

Commenting on the latest trends of IoT module vendors, Senior Analyst, Ethan Qi, added, “Selling IoT module hardware alone is not enough anymore for the suppliers to survive. Companies like Sierra Wireless, Gemalto have benefited from bundling the modules with IoT solution integration /support services, middleware, software platform, application development toolkits, cloud platform, analytics, and end-to-end security. Even the low-cost Chinese suppliers such as SUNSEA AIoT (SIMCom+Longsun) entered into a strategic partnership with Ayla Networks to provide a cloud base IoT module. We believe this is the path to go to remain the market leader in IoT and capture maximum value across the IoT value chain.”

Exhibit 2: Global Cellular IoT Module Shipments market share by Revenue in 2018E

Source: Global IoT Cellular Module Tracker by Tech, by App: 2009-2025

Looking at future deployments, Mr Qi, added, “Industry is moving towards intelligent /smart modules always securely connected to the cloud, leveraging cloud computing. However, we will also see the increasing adoption of intelligence at the edge which is at the module level, leveraging AI driven edge computing capabilities. This edge computing is driven by top cloud computing players such as Google, Microsoft, Amazon, FogHorn, and others closely working with the number of semiconductor and module vendors such as ST-Micro, NXP, Qualcomm, silicon-labs, USI, etc.”

The comprehensive and in-depth report on “ Global IoT Cellular Module Tracker and Forecast By Technology By Application: 2009-2025” is a part of our Counterpoint’s IoT (Internet of Things) Service. This report is available for download here

Background:

Analyst Contacts:

Satyajit Sinha

satyajit@counterpointresearch.com

@Satya_Analyst

Hanish Bhatia
+91 9871849857
hanish@counterpointresearch.com

@Hanish2501

Ethan Qi

ethan@counterpointresearch.com

Counterpoint Research

press@counterpointresearch.com

@CounterPointTR

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