Cellular IoT Faces Tough Year Ahead as Some Vendors Experience 50% Decline

Key Takeaways

The cellular IoT sector faced significant challenges in 2024, with a reported 50% drop in sales for some vendors.
Companies like u-blox are exiting the cellular IoT market due to losses, while others like Qualcomm are pivoting to 5G technology.
Despite current struggles, ABI Research believes the broader IoT market will eventually rebound, although margins for many companies will remain tight.

Market Overview and Trends

The cellular IoT sector experienced a tumultuous 2024, characterized by a lack of sales growth and significant consolidation. ABI Research warned of a possible worsening of the already bleak outlook for the industry. Jamie Moss, ABI Research’s research director for IoT hardware, noted that the sector struggles in the aftermath of device manufacturers overbuying components during the pandemic and subsequent chipset shortages.

Manufacturers aimed to secure supplies to avoid losing sales to competitors, resulting in excess inventory that has yet to be depleted. Sales for some vendors plummeted by 50% compared to 2023, with ABI Research projecting shipments of 426 million cellular IoT modules in 2024, equating to approximately $5.6 billion in revenue—similarly to the previous year.

A significant impact is seen with Swiss IoT maker u-blox, which announced its plans to discontinue its cellular IoT business by mid-2025 after reporting substantial losses. The company generated CHF 27 million ($29.6 million) in revenue during the first half of 2024 but faced adjusted losses of over CHF 15 million ($16.45 million). This move reflects the broader trend of Western brands struggling against their Chinese counterparts in a market that is predominantly controlled by Asian entities.

In another strategic shift, French chipmaker Sequans divested its LTE-based cellular IoT business to Qualcomm to concentrate on developing 5G technology, moving away from lower-powered IoT markets. The market was also impacted by AT&T’s decision to discontinue its NB-IoT network while continuing to champion other cellular IoT innovations.

Despite these setbacks, Moss reassured that while the cellular module sector is undergoing a pivotal rebalancing, the overall IoT market remains intact. He warned, however, that tight profit margins may not allow all vendors to survive this transitional period. Nevertheless, companies like Quectel, which has been the market leader for five years, have adapted successfully. By the end of Q3 2024, Quectel had achieved its full-year 2023 turnover, emphasizing its diversified business model that includes automotive and mobile broadband markets.

Moss highlighted the emerging opportunities within the IoT space, even amidst challenges, pointing to new entrants like Chinese vendor Unionman. This vendor demonstrates that there are still avenues for growth, shipping “tens of millions” of low-cost Cat-1/bis and NB-IoT units annually. As the market continues to evolve, the focus will be on how established companies navigate their challenges and whether new players can capitalize on the ongoing transformation.

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