The IoT chips market is estimated to be valued at USD 539.44 Bn in 2024 and is expected to reach USD 1414.85 Bn by 2031, growing at a compound annual growth rate (CAGR) of 14.8% from 2024 to 2031. The widespread adoption of IoT devices across various industries such as manufacturing, healthcare, retail and automotive is driving IoT chips market.

Market Driver - Increasing Adoption of IoT Devices across Various Sectors

With the advancement in connectivity and sensor technologies, IoT devices are finding applications across various sectors. IoT chips which form the core of these connected devices are witnessing robust demand.

The industrial and manufacturing sector has been one of the early adopters of IoT. Use of IoT enabled sensors, machines and equipment on factory floors provides real-time data analytics capabilities to optimize production processes, reduce downtime and wastage.

Healthcare is another sector revolutionized by IoT. Remote patient monitoring through wearable medical devices and smart home healthcare solutions based on IoT are helping improve quality of life for patients. This expands the IoT chips market for IoT chips compliant with medical device regulations.

In the automotive industry, connected cars with advanced driver assistance, infotainment and telematics systems rely on IoT. Features like over-the-air updates, autonomous driving capabilities, vehicle tracking and predictive maintenance are driving the demand for powerful automotive grade IoT chips. All these trends in the automotive sector benefit the IoT chips market immensely.

Market Driver - Growth of Smart Cities with IoT Integration

Smart city initiatives across major cities worldwide are leveraging IoT at their core to improve infrastructure, transportation, healthcare, utility management and more. City administrations are implementing smart solutions for parking management, pollution monitoring, waste collection, street lighting, traffic management and public transportation with help of IoT. Subsequently, the large-scale roll out of smart meters and sensors creates more opportunities for IoT chip manufacturers.

Emerging transportation modes like electric vehicles, hyperloop, drones also leverage latest connectivity technologies. Their adoption as mainstream transportation options backed by smart city initiatives will require robust networking and computing capabilities throughout the system. Overall, smart city IoT projects touching upon various aspects of urban living are spurring relentless demand for relevant components.

Market Challenge - Concerns Over Data Security and Privacy

The IoT chips market faces significant challenges due to growing concerns over data security and privacy. Many IoT devices have weak security features which make them vulnerable to cyber-attacks. Hackers can infiltrate unsecured networks of IP cameras, smart home assistants and connected cars to spy on users or even hijack control systems. This poses serious risks to individual privacy and autonomous vehicle security.

Recent privacy breaches at large tech companies have eroded user trust in the industry. Strict data privacy regulations like the GDPR have increased compliance requirements and costs for companies operating in the European market. Addressing security vulnerabilities and assuring users about data management practices will be crucial for the widespread adoption of IoT.

Technology providers will need to focus on building robust security protocols, access controls and encryption into chip designs. Unless these issues are resolved satisfactorily, privacy and security fears could significantly hamper the growth of the IoT chips market.

Market Opportunity - Rise of Autonomous and Connected Vehicles

The growth of autonomous and connected vehicles presents a major opportunity for the IoT chips market. As vehicles become more automated, connected and electric, the need for more advanced automotive chips is rising exponentially.

Fully self-driving cars will need vaster amounts of computing power and data handling capabilities to process real-time inputs from sophisticated sensors, cameras and radars deployed all around the vehicle. They also need reliable broadband connectivity and edge computing capabilities to receive frequent over-the-air updates and interact with traffic infrastructure.

Apart from advanced logic ICs and microcontrollers, autonomous vehicles will rely on IoT hardware like system on chips (SoCs), graphics processing units (GPUs), field programmable gate arrays (FPGAs) and network processors. Autonomous driving technologies continue to find wider commercial use. So, they are projected to generate unprecedented demand for specialized automotive-grade semiconductors, fueling strong revenue growth for IoT chip vendors in the coming years.

Focus on technology leadership through continuous R&D - Intel introduced its Atom P3600 series in 2020 with up to 4x performance gains over previous generations. This helped them better support AI and 5G workloads in IoT devices.

Strategic partnerships and collaborations - In 2018 Qualcomm partnered with Microsoft to launch the Azure Sphere solution comprising of Qualcomm's IoT chips and Microsoft's security services. This helped gain significant traction for their IoT platform.

Offer comprehensive IoT platforms and solutions - MediaTek launched its LinkIt smart 7687B IoT development platform in 2019 which integrated the company's IoT chips along with connectivity, security, and development tools. This has boosted their market share among developers.

Focus on fast growing market segments - In recent years Intel accelerated its investments in AI and connected car technologies which now contribute over 30% of its IoT revenue.

Pursue M&A strategies to expand portfolio - A notable example in the IoT chips market is Intel's $16.7B acquisition of Mobileye in 2017 that strengthened their autonomous driving technologies leveraging Mobileye's leadership in computer vision. This enhanced their presence in the automotive IoT space.

Insights, By Hardware: Processor Contributes Most Due to its Core Function in IoT Devices

In 2024, the processor segment contributes 36.7% share in the IoT chips market classified by hardware. Most IoT devices rely on a processor to function. Advances in processing power and efficiency are also enabling more complex applications and use cases for IoT. With growing demand for real-time analytics, edge computing capabilities, and artificial intelligence-based features in connected devices, the role of high-performance processors is increasing.

Leading chipmakers are focusing on developing low-power system-on-chip solutions tailored for IoT workloads. Offerings like ARM Cortex-M and RISC-V microcontrollers have built-in wireless connectivity and are optimized for minimal energy usage.

Overall, critical hardware function performed by processors as the control center and brain of any IoT device is driving their prominence in this segment of the IoT chips market.

Insights, By Industry Vertical: Consumer Electronics Dominates Due to Early Adoption across Many Products Categories

The consumer electronics segment currently holds 28.9% share in the IoT chips market classified by industry vertical. Consumer product categories like smartphones, smart home devices, wearables and more were among the early adopters of IoT technology across their offerings.

The rise of connected personal devices has contributed significantly to the rapid growth of IoT. Smartphones with integrated sensors, wireless connectivity and powerful application processors became the ideal gateway for accessing and controlling other IoT systems. Devices like smartwatches and fitness bands utilize various sensors and low-power chips to offer wireless health and wellness features.

While industrial and commercial verticals offer vast opportunity, consumer goods have been a catalyst for mainstreaming IoT. Automakers too are embracing telematics and advanced driver assist features. The familiarity, mass adoption and continuous innovation happening across consumer product categories position them as leaders for fuelling IoT chips usage initially and in the near future.

• Healthcare Innovation: IoT chips are crucial in wearable health monitors, enabling real-time data tracking and remote diagnostics.
• Automotive Advances: Integration of IoT chips in vehicles for improved navigation, safety features, and autonomous driving capabilities.
• Regional Growth: Asia-Pacific is emerging as a significant IoT chips market due to rapid industrialization and adoption of IoT technologies in countries like China and India.
• Industry Impact: Industrial IoT (IIoT) is transforming manufacturing processes through automation and real-time analytics.

The major players operating in the IoT chips market include Intel Corporation, Samsung Electronics Co. Ltd, Qualcomm Technologies Inc., Texas Instruments Incorporated, NXP Semiconductors NV, STMicroelectronics NV., MediaTek Inc., Microchip Technology Inc., Analog Devices Inc, Infineon Technologies AG, and Broadcom Inc.

• In May 2024, Mindgrove Technologies, a semiconductor startup incubated by IIT Madras, introduced 'Secure IoT,' India's first high-performance System on Chip (SoC). This RISC-V-based chip is designed for IoT devices, offering programmability, flexibility, and robust security features.
• In June 2023, Qualcomm introduced two modem chipsets—the Qualcomm 212S and Qualcomm 9205S—to enhance satellite connectivity in IoT devices. These modems are designed to support non-terrestrial networks (NTN), enabling IoT devices to maintain connectivity in remote or off-grid locations.
• In January 2023, Microsoft announced its acquisition of Fungible Inc., a company specializing in data processing units (DPUs) aimed at enhancing data center performance. The acquisition was intended to bolster Microsoft's data center infrastructure, with the Fungible team joining Microsoft's data center infrastructure engineering teams to focus on delivering multiple DPU solutions, network innovation, and hardware systems advancements.

• By Hardware
  • Processor
  • Sensor
  • Connectivity IC
  • Memory Device
  • Logic Device
• By Industry Vertical
  • Consumer Electronics
  • Automotive & Transportation
  • Healthcare
  • Industrial
  • Others