LPWA market is still in early stage

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An update on the Cellular LPWA Market, Module and Chip Players, by Takeshi Niwa, Marketing Analyst at Techno Systems Research (TSR).

Despite bright market outlook from industry, the LPWA market is still in early stage. TSR estimates that market volume of major LPWA standards amounts to about 83M units in 2018. We expect steady growth over the years, to reach up to 430M units in 2023.

LoRa has been leading among LPWA standards. Cellular LPWA Standards, LTE Cat.1, Cat.M and NB-IoT combined, has been in tiny by 2017, finally pick up with 38M units of shipments in 2018.

In the long term, LoRa and NB-IoT are expected to acquire a major part of the market. In addition, LTE Cat.M market will open up in 2019 and take 3rd place in 2021.

Chart 1 : LPWA devices market forecast by standard 2016-2023

chart: TSR lpwa devices market forecast by standard 2016-2023

Cellular LPWA market

Looking into cellular LPWA market, LTE Cat.1 goes ahead than other standards. LTE Cat.1 is deployed mainly by mobile operators which is planning LTE Cat.M. In the context, many of LTE Cat.1 applications can migrate to LTE Cat.M in the long term. Currently, LTE Cat.1 is often used as the replacement of 3G applications. The main applications of LTE Cat.1 are telematics/ tracking, smart meter, home/building security, and wearable.

Commercial LTE Cat.M network announced by US operators back in early 2017, however, the module market is still tiny by 3Q2018. We estimate LTE Cat.M market will start to grow at around end of 2018 in the US, then open up in Australia, Japan, South Korea, part of Europe, and China in 2019-2020. LTE Cat.M operators also will support NB-IoT and provides both network according to applications. Specifically, LTE Cat.M is used for applications requiring high-speed mobility, high-speed data communication, or voice. Currently, only Verizon Wireless announced to support voice over LTE Cat.M, however, we assume that VoLTE over LTE Cat.M will gain popularity for long term.

The NB-IoT market opened up in China in the end of 2017. In 2018, it is estimated that slightly less than 15M units will be shipped, and the majority of them will be directed to the Chinese market. In Europe and other regions, NB-IoT remains at a trial level, and the market will open up in 2019 and beyond.

In China, mobile operators provide subsidies for NB-IoT module to accelerate market growth, also to fill the price gap between GSM and NB-IoT module. On the other hand, as the NB-IoT area is still limited to urban areas in China, it is expected that it will be popularized in full scale from 2020 onwards.

At the same time, Chinese operators require to cost down the NB-IoT module. We estimate that NB-IoT module price will go down to same level as GSM by 2021. This price drop will help NB-IoT module to penetrate into outside China market.

In many emerging countries, NB-IoT, which is capable of building a network by switching the GSM network, is likely to become the main LPWA network.

Currently, the main applications of NB-IoT are smart meter, tracking device, and home/building security. In the long term, remote monitoring and tracking applications from broad range of verticals: public, industrial, transportation, logistics, retail, and agriculture…will expand.

Chart 2: Matrix of Cellular/LPWA protocol and Application

Chart : Matrix of Cellular/LPWA protocol and Application

Module and Chipset

Cellular module market share becomes more and more fragmented. In addition to traditional module players like Sierra Wireless, Gemalto, and Telit, we have seen some new module suppliers, Quectel, SIMCom (SunSea group), Fibocom, Neoway, u-blox, and so on, emerge since early 2010’s. After 2016, more module suppliers which dedicate to LTE and LPWA module, and mostly from APAC regions, are entering into the market. It is said that there are over 30 cellular module suppliers only in China market.

Many of new Asian module players stick into local market, but a few module players, like Quectel and SIMCom, expand module business in outside China.

Chart 3: Market Share Position of Cellular M2M Module and Chip Player

Chart : Market Share Position of Cellular M2M Module and Chip Player

Though high category LTE chip suppliers are consolidated, we see increasing number of players in low category LTE chipset. There are 18 companies launched, or announced cellular LPWA chip so far.

Altair semiconductor (Sony group) and Sequans grab market share among big players, Qualcomm and Intel in LTE Cat.1. Major LTE Cat.1 Suppliers (except Intel) also expected to be the major LTE Cat.M players. More chip suppliers, Nordic Semiconductor, GCT Semiconductor, Riot Micro… are expected to join in LTE Cat.M market in 2019.

HiSilicon (Neul) pioneered in NB-IoT chip market, expected to have over 60% of NB-IoT chip market share in 2018, followed by MediaTek and UNISOC. As price pressure is strong to NB-IoT module, we think Chinese startups with strong price competitiveness, likely to acquire some market share in the future.

Chart 4: Cellular LPWA Chipset Players

Chart : Cellular LPWA Chipset Players

As LPWA is expected to be Low Price, Wide range of Applications, we think module and chip market share will become more diversified, more new companies enter into the market.

This article and data is based on our market research report “2018 Cellular Broadband Device and Module Market”. Please contact to us if you are interested in details.

Author: Takeshi Niwa, Marketing Analyst at Techno Systems Research (TSR).
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