The cellular Internet of Things (IoT) module landscape is undergoing a significant transformation, with global shipments marking a 15 percent year-over-year increase during the first half of 2026. This growth marks a new era where the shift away from legacy 2G and 3G networks is no longer the sole engine of expansion. Instead, technology selection, component availability, and supplier diversity are now central to how device manufacturers plan their next generation of connected products.
Market momentum accelerated sharply in the second quarter, with shipments rising nearly 21 percent compared to the same period last year, and 15 percent over the first quarter. Driving this surge is LTE Cat 1 bis, which has emerged as the dominant technology for high-volume applications. Cat 1 bis module shipments jumped approximately 34 percent year-over-year in the first half, capturing more than half of the market’s incremental growth. In the second quarter alone, Cat 1 bis volumes rose over 45 percent sequentially, accounting for roughly three-quarters of the total monthly increase. Use cases fueling this demand include asset tracking, point-of-sale terminals, IP surveillance cameras, and smart meters. Analysts project that Cat 1 bis will represent about 43 percent of all cellular IoT module volumes by the end of the decade.
The rise of Cat 1 bis signals more than just a step in the LTE evolution; it represents the practical replacement path for legacy cellular technologies in applications that do not require the full capabilities or cost structure of advanced 4G or 5G modules. Meanwhile, the market share of NB-IoT has stabilized from its earlier peak, and newer standards like RedCap and eRedCap are still in the early stages of commercialization.
Despite strong demand, the supply chain is showing signs of renewed strain. The average selling price of cellular IoT modules increased by roughly 2.5 percent year-over-year in the first half of 2026, breaking a streak of four consecutive quarters of price declines. Memory shortages have become a particular bottleneck, with vendors reporting extended lead times across multiple module categories due to pressure from memory chips, resistors, capacitors, and printed circuit boards. For original equipment manufacturers (OEMs) and system integrators, module selection can no longer be based solely on connectivity features and unit cost. Component exposure and supply availability are now critical factors influencing design and procurement. While low-cost Cat 1 bis products are helping to moderate overall price increases, they remain subject to broader semiconductor and component market dynamics.
The competitive landscape is also evolving rapidly. The top five suppliers by shipment volume in the first half of 2026 are all headquartered in China. These vendors have extended their influence well beyond the domestic market, accounting for roughly 59 percent of cellular IoT module shipments destined for regions outside China in the first half—up from about 35 percent in 2018. One major player alone commands approximately 38 percent of the international market, while a second approaches 10 percent. Even the automotive sector, traditionally more diversified, is seeing a shift: Chinese module suppliers shipping into embedded automotive applications grew around 33 percent year-over-year, far outpacing the segment’s overall growth of 12 percent.
The data indicates that the current upswing is not merely a cyclical rebound. Cat 1 bis is solidifying its position in high-volume use cases, Chinese manufacturers are expanding their global footprint, and component constraints are once again shaping pricing and sourcing. The resulting technology landscape is becoming increasingly segmented rather than converging on a single standard. Full 5G remains confined to high-value applications, while RedCap develops as a middle ground dependent on the rollout of 5G standalone networks. Consequently, relying solely on shipment volumes provides an incomplete view of the market. The mix of technologies, supply chain dependencies, and the changing composition of the supplier base will be just as important as headline growth numbers as the industry moves through the remainder of 2026 and into 2027.
**FAQ**
**Q: What is driving the current growth in cellular IoT module shipments?**
A: The primary driver is the rapid adoption of LTE Cat 1 bis, which offers a balanced mix of cost-effectiveness and cellular connectivity for applications that do not need full 4G or 5G capabilities. Asset tracking, smart meters, and IP cameras are major demand drivers.
**Q: Why are module prices increasing after a period of decline?**
A: Prices are rising due to supply chain pressures, particularly memory shortages and longer lead times for components like resistors, capacitors, and PCBs. This has caused the average selling price to rise after four consecutive quarters of annual declines.
**Q: Who are the leading suppliers in the cellular IoT module market?**
A: The top five suppliers by volume are currently all based in China, reflecting a significant shift in global manufacturing and supply dynamics over the past several years.
**Q: Is full 5G replacing older cellular technologies in IoT?**
A: Not entirely. While full 5G is growing, it is mostly concentrated in high-value applications. Technologies like Cat 1 bis are absorbing much of the volume growth, and RedCap is emerging as an intermediate option, though its expansion depends on the availability of 5G standalone networks.
**Conclusion**
The cellular IoT module sector in 2026 is defined by a complex interplay of high-volume technology adoption, geopolitical shifts in manufacturing, and persistent supply chain vulnerabilities. As Cat 1 bis continues to dominate volume growth and Chinese vendors expand their global market share, businesses must look beyond simple shipment numbers. Understanding the nuances of component availability, pricing pressures, and technological segmentation will be essential for navigating the next phase of the IoT market. Thank you for reading
