Increasing adoption of IoT solutions across industries, the proliferation of connected devices, and advancements in wireless communication technologies are anticipated to propel the IoT chipset market to a CAGR of 11.5% during the forecast period of 2024 and 2032. IoT chipsets are of utmost importance as they facilitate communication, data processing, and connectivity between IoT devices and networks. The market exhibits a wide array of hardware components, such as connectivity integrated circuits (ICs), processors, sensors, memory devices, and logic devices, which are tailored to meet the distinct needs of various Internet of Things (IoT) applications. However, market expansion is hindered by obstacles including interoperability, security concerns, and power consumption. A regional analysis reveals that North America holds a significant revenue share lead, while the Asia Pacific region exhibits promising prospects for expansion. Competitive trends suggest that a select few entities dominate the market, placing significant emphasis on strategic alliances and product innovation to take advantage of nascent market prospects. Throughout the forecast period, technological advancements, rising investments in IoT infrastructure, and rising demand for connected devices and intelligent solutions across industries are anticipated to propel the IoT chipset market to substantial growth.
Key Market Drivers
One of the primary factors propelling the IoT chipset market is the widespread adoption of connected devices and IoT applications, which is observed across various industries. The increasing prevalence of smart homes, industrial automation, connected vehicles, and wearable devices is propelling the need for Internet of Things (IoT) chipsets that offer uninterrupted connectivity, efficient processing capabilities, and energy savings. Market expansion is being driven by the expanding adoption of IoT technology in infrastructure and commonplace objects, which has wide-ranging applications including smart cities, healthcare, agriculture, and manufacturing.
Innovation in IoT chipsets is being propelled by developments in wireless communication technologies, such as 5G, Wi-Fi 6, Bluetooth Low Energy (BLE), and Zigbee. By providing increased data transmission velocities, decreased latency, and enhanced network coverage, these technologies facilitate the implementation of more complex and data-intensive Internet of Things applications. There is significant demand for IoT chipsets that support multiple wireless protocols and standards. These processors facilitate interoperability and uninterrupted connectivity in diverse IoT environments.
The adoption of advanced IoT chipsets is being propelled by the rising demand for edge computing and AI-enabled IoT devices. Edge computing is well-suited for applications that demand offline functionality, data privacy, and reduced reliance on cloud services, as it effectively mitigates latency, bandwidth demands, and cloud service dependence. Intelligent Internet of Things (IoT) devices that are equipped with machine learning capabilities and AI accelerators integrated into the chipsets are capable of predictive analytics and autonomous operation.
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Restraint
Notwithstanding the factors that propel the market, the IoT chipset sector encounters obstacles to interoperability, security, and power consumption. One notable limitation of IoT devices is their substantial power consumption, which poses a particular challenge for energy-constrained and battery-operated applications like wearable devices, sensors, and IoT nodes. Ensuring performance integrity while simultaneously prolonging battery life is of paramount importance to improve the dependability and efficacy of Internet of Things devices. Difficulties in interoperability emerge due to the heterogeneous ecosystem of Internet of Things (IoT) devices, protocols, and platforms. To guarantee smooth communication and integration, standardization endeavors and interoperability testing are necessary. Risks to IoT deployments are posed by security concerns, which encompass device authentication, data privacy, and network vulnerabilities. To protect sensitive data and mitigate cyber threats, it is imperative to implement strong security measures and encryption protocols.
Market Segmentation Analysis
Market by Hardware: Processors, connectivity integrated circuits (ICs), sensors, memory devices, and logic devices comprise the hardware market segmentation. Processors held the largest revenue share in 2023, primarily due to their significant contribution to data processing and computation in Internet of Things devices. On the contrary, with the increasing demand for Internet of Things (IoT) devices equipped with sensing capabilities for environmental monitoring, asset tracking, and predictive maintenance applications, sensors are anticipated to experience the maximum CAGR over the forecast period.
The market is segmented according to power consumption, which comprises IoT chipsets that have power ratings varying from below 1 W to over 10 W. The largest revenue share in 2023 was generated by IoT chipsets consuming between 1 W and 3 W of power. This was due to the widespread adoption of these chipsets in battery-powered IoT devices, including wearables, smart home devices, and industrial sensors. On the contrary, IoT chipsets that consume less than 1 W of power are anticipated to experience the most substantial CAGR over the projected timeframe. This can be attributed to the increasing need for energy-efficient IoT solutions and the desire for extended battery life.
By End-Use Application Market: Wearable devices, healthcare, consumer electronics, automotive & transportation, building automation, manufacturing, retail, BFSI, oil & gas, agriculture, and aerospace & defense are among the many industries that end-use application segmentation incorporates. The automotive and transportation industry held the largest revenue share in 2023, primarily due to the expanding implementation of telematics, in-vehicle infotainment systems, and connected vehicles. In contrast, the healthcare industry is anticipated to experience the most substantial compound annual growth rate (CAGR) over the projected timeframe. This can be attributed to the increasing need for remote patient monitoring, telemedicine, and Internet of Things (IoT)-)-enabled healthcare devices.
Geographic segmentation offers valuable insights into market dynamics, regional trends, and potential avenues for expansion throughout distinct geographical areas. North America surpassed all other regions as the largest market for IoT chipsets in 2023. This dominance was fueled by the early adoption of IoT solutions across industries, the presence of prominent IoT chipset manufacturers, and technological advancements. On the contrary, it is anticipated that Asia Pacific will demonstrate the most substantial compound annual growth rate (CAGR) throughout the projected timeframe. This can be attributed to the swift pace of urbanization, escalating investments in smart city initiatives, and the widespread adoption of connected devices and Internet of Things applications in developing nations including China, India, and South Korea.
Prominent companies including Intel Corporation, Qualcomm Technologies, Inc., Texas Instruments Incorporated, Broadcom Inc., NXP Semiconductors N.V., Analog devises Inc., Cypress Semiconductor Corporation, Invensense Inc., Mediatek Inc., Microchip Technology Inc., Nordic Semiconductor ASA, Samsung Electronics Co. Ltd, Silicon Laboratories Inc., STMicroelectronics NV. dominate the IoT chipset market, which is extremely competitive. To bolster their market position and obtain a competitive advantage, these businesses employ a variety of tactics, including product innovation, partnerships, mergers & acquisitions, and geographic expansion. Analysis of revenue projections for 2023 reveals Intel Corporation to be the market leader, with a portfolio of IoT chipsets that appeal to a variety of industries and applications. To maintain profitability and growth in the IoT chipset market, market participants are concentrating on developing customized solutions, improving product performance, and addressing emerging market trends in response to intensifying competition and changing consumer demands.
