IoT Chipset and Module Vendors Seed the 5G RedCap Market: Will Device OEMs Choose to Upgrade?

In June 2022, the specifications for 5G New Radio (NR) Reduced Capability (RedCap), also known as 5G NR-Light, were finalized as part of Release 17 of The 3rd Generation Partnership Project (3GPP). RedCap involves a series of network optimizations that cater specifically to mid-range Internet of Things (IoT) devices, allowing them to connect to 5G networks with “reduced capabilities.” RedCap is seen as a pathway for IoT device Original Equipment Manufacturers (OEMs) that currently support 4G Long Term Evolution (LTE) Cat-1, Cat-4, and Cat-1bis to upgrade to 5G networks. The emergence of RedCap has been welcomed across the IoT value chain.

“RedCap is an important technology that will lower the cost and complexity of bringing 5G to countless IoT and consumer use cases,” said Cameron Coursey, Vice President of AT&T Connected Solutions. As network operators consider the modifications required on the network side to make RedCap a reality, hardware vendors are aligning their product portfolios in anticipation of growing worldwide demand.

In February 2023, Qualcomm unveiled the Snapdragon X35, the world’s first commercially available RedCap modem chipset. MediaTek soon followed suit, launching the M60 modem in November 2023 as part of its T300 RedCap platform. UNISOC, with the V517 chipset, and ASR Microelectronics, with the ASR1903, are also early movers in this market.

ABI Research’s latest update of the IoT Cellular Modules Model Tracker includes launches of the world’s first 5G RedCap modules. These have also revealed the integration of Qualcomm’s X35 chipset, and MediaTek’s T300 platform into RedCap modules. Notable examples include MeiG’s SRM813Q module, powered by the Snapdragon X35, and Quectel’s RG255G, which uses the MediaTek M60 modem. Fibocom, with the FG131-NA and FG132, and Neoway, with the N512A-CN, have also developed RedCap modules.

According to the tracker, 21% of 5G IoT module models that launched in 2023 already support RedCap as the primary connectivity technology, showing the early trends in chipset adoption; 39% of RedCap module launches were powered by the Qualcomm X35 and 13% ran on the MediaTek M60, while a chipset was not discovered for 48% of module launches.

Qualcomm and MediaTek hope their offerings will accelerate the migration of IoT devices to 5G network architecture, which can be divided into three key service areas relevant to the IoT: requirements for Ultra-Reliable Low Latency Communications (URLLC), Enhanced Mobile Broadband (eMBB), and Massive Machine-Type Communication (mMTC). While eMBB supports higher data rates and low latency, mMTC requires lower throughput and often involves battery-powered devices, where low power consumption is vital.

The 5G RedCap Release 17 standard includes multiple technical optimizations, including limiting the number of transmitter and receiver antennas to one apiece, lower-order modulation techniques, and the use of narrower bandwidths. The resulting power consumption, bandwidth, and latency outcomes sit between those for eMBB, mMTC, and URLLC. Consequently, 5G RedCap is tuned to meet the needs of mid-range IoT devices, with connectivity requirements that are not sufficiently met by existing 4G LTE and Low Power Wide Area (LPWA) offerings.

For example, Narrowband IoT (NB-IoT) is an LPWA technology that prioritizes low complexity, low cost, low power consumption, and widespread coverage, but has relatively high latency and only achieves low data rates. Conversely, applications using eMBB require higher data rates at a low latency, often required in mission-critical applications. For mid-range battery-powered IoT devices, such as Augmented Reality (AR)/Virtual Reality (VR) glasses or smartwatches, RedCap offers an upgrade for LPWA connectivity, achieving intermediate throughput and latency, while maintaining low power consumption.

Until the mass rollout of 5G RedCap on the major networks, 4G LTE technologies such as Cat-1 and Cat-4 are likely to remain the best option for mid-range IoT devices. 4G LTE Cat-4+ can achieve latency levels comparable to 5G networks, widespread coverage, and higher peak data rates than LPWA technologies.

To accelerate migration pathways toward RedCap, network operators, chipset manufacturers, and module vendors must show proof of value-add for device OEMs for their investments in RedCap hardware. Only when there is a sufficient number of device OEMs willing to migrate their hardware to RedCap from legacy LTE and LPWA technologies will these provide a worthwhile Return on Investment (ROI).

Qualcomm and MediaTek have focused on the energy and cost savings, and use case flexibility, for their RedCap chipsets in their message to implementers. According to Qualcomm, the X35 is optimized for 5G use cases such as “entry-level industrial IoT devices, mass tier fixed wireless access consumer premise equipment, mass tier connected PCs, as well as first generation IoT devices and premium wearables, such as XR direct-to-cloud glasses and smartwatches”. Meanwhile, MediaTek claims that their M60 offers “60% lower power compared to existing 4G IoT modem solutions” and “70% lower power compared to existing 5G eMBB modem solutions”. 

Establishing time frames for RedCap migration will be specific to each IoT system and use case. Early examples of RedCap adoption by IoT device OEMs include fixed wireless terminals, such as Digi International’s IX20 industrial router and EX15 enterprise router, which integrate Telit Cinterion’s FN920C04 RedCap M.2 card, and Qualcomm’s X35 modem. It remains to be seen whether the emergence of RedCap chipsets and modules will translate to mass adoption within core IoT systems. Many device OEMs will wait for 3GPP Release 18, which will specify enhanced iterations of RedCap, before committing to migration pathways.

In 3GPP Release 18, and in subsequent releases, we will likely see Enhanced RedCap (eRedCap), and then Further Enhanced RedCap (feRedCap) capabilities that will support higher bandwidths and lower latency for more power-hungry non-IoT devices. Mobile Broadband (MBB) will likely account for most RedCap connections and revenue over the coming years, which module vendors will seek to capitalize on as they ramp up RedCap shipments. The early seeding of the RedCap market with chipsets from Qualcomm and MediaTek, and integration of these chipsets by MeiG, Fibocom, and Quectel, has made RedCap hardware readily available on the supply side. However, whether device OEMs will see sufficient value in switching out their legacy technologies is an ongoing debate. Chipset and module vendors should consider the following to encourage developers of IoT systems that are considering 5G RedCap adoption:

• Chipset manufacturers have tuned their chips to Release 17 standards, but will need to keep a close eye on 3GPP Release 18 for further evolution of RedCap, which will further enhance capabilities of the standard. Chipset vendors should collaborate with network operators to determine how they are planning to modify their networks to accommodate RedCap, and the time frames for rollout. Integrating Qualcomm’s X35 and MediaTek’s M60 modems into existing 4G and 5G modules places them as front-runners to capture initial RedCap market share. While ASR Microelectronics and UNISOC are well-placed to serve the Chinese market, they will also have to provide evidence of ROI over existing LTE and LPWA technologies to incentivize adoption of their offerings. Incumbent RedCap chipset vendors should also work with device OEMs to determine the connectivity requirements needed in future generations of RedCap chipset offerings that will incentivize migration from LTE and LPWA.
• IoT cellular module vendors that are deliberating their RedCap strategies will need to establish a roadmap for developing RedCap modules. They should establish the perspectives of their device OEM customers to establish which industry verticals are likely to migrate to RedCap, and the time frames for adoption. While the market is still nascent, module vendors are ramping up RedCap development. For example, last month, at MWC 2024, Fibocom announced the release of the FM330 module series, which is to be powered by MediaTek’s T300. A cascade of module announcements are expected in 2024, revealing from where module vendors will source their modem chipsets. Module vendors that have not yet established a strategy for RedCap will need to look closely at their competitors’ movements, as RedCap hardware becomes more ubiquitous, connecting more IoT devices that currently support 4G LTE and LPWA. IoT cellular module vendors will need to collaborate with network operators to establish where and when RedCap is expected to roll out in the short, medium, and long term, to establish which regional markets to target.
• Developers of mid-range IoT devices seek a mixture of requirements based on throughput, battery life, coverage, latency, cost, and data rates that ultimately determine their choice of primary connectivity technology. For IoT devices with a longer lifecycle of 5 to 10 years, holding out for further optimizations may be preferable to ensure maximum ROI, rather than locking into Release 17 standards for existing chipset offerings, such as the Qualcomm X35 or the MediaTek M60. While RedCap offers flexibility for mid-range IoT devices, ascertaining which applications are suited to migration, and on what time frame, will depend on each specific use case.