The IoT cellular module market experienced a downturn in 2023, with shipments declining by over 5% compared to 2022. This decline was largely driven by the effects of inventory stacking, a response initially spurred by the Covid-19 pandemic. However, amidst this challenging landscape, the growth of Cat-1bis has emerged as a significant bright spot. According to a new report from global technology research firm ABI Research, Cat-1bis is expected to replace nearly 70% of the Cat-1 market by 2029.
For years, many Cat-1 IoT devices were designed using only a single antenna which sometimes required carrier approval for use on their networks. LTE networks are ubiquitous with good coverage hence a single antenna was sufficient. But what device OEMs and chipset vendors realized is that Cat-1 module costs can be reduced even more by building a dedicated Cat-1bis chipset with send and receive functions delivered over a single antenna. Not only could power consumption be lowered but also component costs. The Cat-1bis standard in 3GPP Release 13 formalizes the common, yet informal use of single antenna Cat-1 devices. The original Cat 1 specification in 3GPP Release 8 required two antennas.
Dan Shey, Vice President of Enabling Platforms at ABI Research, noted, "China is leading the deployment of Cat-1bis. Outside of China, Cat-1bis penetration is lower as it typically replaces new device designs. Nevertheless, due to its benefits, Cat-1bis is projected to become the second most popular technology for cellular IoT applications by 2029."
Cat-1bis modules are significantly cheaper, particularly outside of China, where they are at least 30% less expensive. In China, the cost reductions are even greater. Another advantage is network roaming, as 4G roaming agreements are well-established, unlike the current challenges with NB-IoT and Cat-M. Additionally, the formalization of a single antenna in the Cat-1bis standard adds to its appeal. However, connection reliability for stationary applications remains a variable factor, especially for battery-powered IoT devices in areas with poor cellular coverage, which could impact battery life.
But there is also another view of Cat-1bis in the market. According to Shey, "Presently it is unclear if the chipset vendors will invest in new Cat-1bis chipsets. At Mobile World Congress, and more recently at Asia Tech Expo, RedCap was being pushed not only by module suppliers, but also the device OEMs and the chipset community. 5G RedCap is creating an opening to drive 5G device volumes in the IoT domain. The calculus by the 5G supplier community is 5G capabilities – low latency, location granularity, and future proofing against LTE sunsets, will convince more customers to invest in these higher revenue products."
With Cat-1bis representing the near-term opportunity and 5G RedCap the longer-term opportunity, both technologies are receiving increased investment across the supply chain. Chipset vendors will play a key role in module and device development for both technologies. Qualcomm, Sequans, UNISOC, and ASR are all supporting both technologies; development outside of China is led by Qualcomm and Sequans.
These findings are from ABI Research's M2M Embedded Cellular Modules and M2M Embedded Cellular Modules Update: 1H 2024 reports.
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