Despite 2023 Decline, Cat-1bis and RedCap are Bright Spots for IoT Cellular Module Market

Inventory stacking, a response to the COVID-19 pandemic, drove cellular module growth in 2021 and even into 2022. However, in 2023, it was a major headwind, driving a shipment decline of over 5% relative to 2022. What has buoyed the spirits of the cellular module market has been the growth of Cat-1bis. According to a new report from global technology intelligence firm ABI Research, cellular module forecasts show that Cat-1bis will 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, device OEMs and chipset vendors realized that Cat-1 module costs could 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 so could 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.

Commenting on the new data, Dan Shey, Vice President, Enabling Platforms at ABI Research, says, “Like many new developments in the cellular IoT market, China is leading with deployment of Cat-1bis. Outside of China, Cat-1bis penetration is much lower since it is typically the replacement technology for new device designs. Regardless of region, based on the benefits of Cat-1bis relative to other cellular technologies, we see Cat-1bis becoming the number two technology choice for cellular IoT applications by 2029.”

Cat-1bis benefits include lower cost – outside of China, Cat-1bis modules are at least 30% cheaper, with even greater reductions seen in China. Network roaming is also a benefit as 4G roaming agreements are well established, unlike the challenges seen today with NB-IoT and Cat-M. Finally, the Cat-1bis standard formalizes the use of a single antenna. The only question that will vary by use case and application is connection reliability for stationary applications. For battery-powered IoT applications, fixed placement of a Cat-1bis device where cellular network coverage is poor could shorten battery life as single antenna devices struggle to connect to the cellular network.

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 by 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. This report is part of the company’s IoT Hardware & Devices research service, which includes research, data, and ABI Insights.

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