China takes lead in worldwide cellular M2M module revenues

The big supply-side story from the Internet of Things (IoT) in 2019 was the rise of Chinese vendors to the number one position in cellular module shipments and revenue, for the first time.

ABI Research, a global tech market advisory firm, also confirms through its latest research that Chinese manufacturer Quectel is now the biggest cellular IoT module vendor worldwide. This success brings with it new challenges however, for once at the top the only way to go is down. Chinese vendors realise that they need to consolidate their success and are unable to rely on high volume and cheap prices ad infinitum. Long-term credibility comes from quality of product, and reliability as a supplier. Across the board greater quality control and cost control through independent manufacturing, differentiated designs, international support centres, and deliberate efforts to avoid price wars are coming into effect.

Jamie Moss, research director for M2M, IoT, and IoE explains what it means for the module market’s Western incumbents, “They have a challenge on their hands. But despite accounting for just 27% of global shipments, Western vendors still claimed nearly 40% of all revenue. The IoT is a large market with huge and possibly limitless potential remaining. How many things can we find value in measuring, and how many places can we conceive of placing a sensor? It is not necessarily the case that Western vendors are having their business taken away, rather than more of the new business opportunity is going to others. Historically Chinese vendors have had most of their fortunes coming out of China, but the majority are actively expanding internationally, and are increasing the non-domestic portion of their turnover each year.”

Jamie Moss

A powerful driver of China’s cellular module shipment success was NB-IoT, with 2019 being the year that NB-IoT finally became a mass-market module technology, albeit almost exclusively within China. The number of NB-IoT modules shipped in 2019 increased nearly 3 times to double-digit millions. 96% of all NB-IoT Modules came from Chinese vendors, with half of the global total coming from just one vendor, the afore-mentioned Quectel. In addition, 65% of NB-IoT module shipments were destined for use in China.

By comparison, LTE-M module shipments remained slow to get going, in part driven by one-third as many LTE-M networks worldwide as NB-IoT. Some module vendors did start to show promising low single-digit million LTE-M modules shipments during 2019. U-Blox, however, is still committed to launching its own dual-mode LTE-M and NB-IoT chipset in 2021.

Moss wraps up ABI Research’s coverage of the module market’s latest results with a word on 5G, “2019 saw the first 5G module shipments reported by vendors, although the numbers were very low, amounting to just a few thousand units. Most module vendors have 5G products in their portfolios, the majority of which are Sub-6 Ghz. Although Sierra Wireless and Telit have both confirmed the launch of dual-function Sub-6Ghz and mmWave modules, with SIMCom planning to do so before the end of 2020.

The first commercial use case for 5G in the IoT in 2019 was in fixed wireless terminals. Although some interesting test cases emerged – in China again – as part of the government’s strategy in combatting COVID-19; they were video conferencing for remote diagnosis, drones for information broadcasts, and lockdown curfew enforcement, and sanitation robots for systematically disinfecting streets. Nevertheless, 5G use cases are still developing with expectations that 5G low latency capabilities will be a significant growth catalyst but still several years away.”

These findings are from ABI Research’s M2M Embedded Cellular Modules market data report. This report is part of the company’s M2M, IoT & IoE research service, which includes written research, market data, and ABI Insights.

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