The overall market size is likely to double this year. And it will all be in China.
Strategy Analytics’ comment on the risk of Simcon’s reliance on mature technology seems to indicate that they believe the GSMA’s PR story about 5G a little too much. Looking at what’s happening in China, IoT growth is very clearly around the much simpler NB-IoT standard. According to various players in that market, around 10 million chips were deployed last year, with a prediction of over 180 million by the end of this year - most of them in modules. That means the overall volume of the IoT module market will double this year and most of it will come from Chinese vendors. After MWC I counted seventeen companies developing NB-IoT chips, which will probably feed into between 50 and 100 module manufacturers.
Compared with anything that has gone before, even 2G and GPRS, NB-IOT silicon is simple and cheap. That poses a problem for traditional, higher margin module vendors like Gemalto, Telit and Sierra. NB-IoT module pricing in China is predicted to be $3 at the end of this year and $2 by the start of 2020. It means that the bulk of the companies that Strategy Analytics are looking at won’t be able to complete and will probably look higher up the food chain to 5G, where they have more scope to add value. But that’s not going to have much to do with IoT. If they do retreat from NB-IoT, then the consequence is that China effectively owns the comms portion of the IoT. Which means that Western companies need to concentrate on developing positions higher up the IoT value chain. It’s not just about numbers - it’s about what you’re doing.