TSR Market Update: MCU Embedded WiFi Market for IoT Applications

Apr 25, 2024

MCU embedded WiFi is used for a wide range of applications such as home IoT device, home appliance, industrial terminal, consumer IoT device, toy, healthcare, medical device and more. Home appliances, IP cameras, home IoT devices (lighting, smart plug, etc.), and industrial terminals are the main applications with large volume.

MCU WiFi market declined dramatically in 2022 by prolonged impact of COVID-19 in China and emerging countries, inflation, and weak consumer spending. 2023 market growth remains weak for inventory correction in the supply chain. However, fundamental of IoT demand is firm. We estimate the market growth return to normal in 2024 onwards, with 10% of CAGR from 2023 to 2028.

WiFi standard had been evolved to enhance data throughput by WiFi 5. WiFi 6 first set features for low power IoT applications. The new WiFi 7 standard is designed for broadband applications. The highlight of new WiFi 7 standard is Multi-Link Operation (MLO) to enhance the data throughput. WiFi 7 also support Time sensitive Networks (defined in IEEE802.11aa) to improve low latency communication for xR and mission critical applications.

Many of MCU-WiFi applications does not require high data throughput, therefore WiFi 4 with 20MHz bandwidth is the mainstream standard for MCU WiFi applications. On the other hands, low power operation, AI and computing, security, and multi-protocol are growing importance for IoT WiFi devices.

MCU WiFi 6 chipset has been introduced during 2022 and 2023. MCU WiFi 6 typically support TWT (target Wake Time) for low power operation, 20MHz bandwidth and single antenna.

For IoT application, WiFi alliance also standardized sub-GHz WiFi (WiFi HaLow) and started certification program in 4Q2021. WiFi HaLow target LPWA applications like remote monitoring, sensing, IP voice terminal, and low-resolution camera.

WiFi HaLow ecosystem is still immature, with limited number of suppliers and devices appear in the market. Currently, WiFi HaLow is used as a private network and the public sector. If the commercialization of WiFi HaLow proceeds smoothly, the market size is expected to grow to several hundred thousand units in 2024 and to exceed 1 million units in 2025-2026.

The MCU embedded WiFi module market grew rapidly to 508 million units in 2020 and 795 million units in 2021. Then it dropped sharply to the 612 million units in 2022, down 23% on YoY. In addition to the strong demand in 2021, the IC supply shortage led the strong the demand for inventory build-up. In 2Q-3Q/2022, however, the demand for home IoT devices, IP cameras or the like dropped sharply, resulting in excess inventory.

The main volume application of MCU WiFi are home appliances, IP cameras, home IoT devices (smart lighting, smart power plug, etc.), and industrial handheld terminals. In 2022, shipment volume of IP camera and home IoT device decreased significantly due to the weak consumer spending, inflation, and COVID-19 related lockdown in China. On the other hands, the demand for home appliances (air conditioners, refrigerators, etc.) is relatively stable, and industrial/commercial segment shows strong demand in 2022.

In 2023, although a recovery trend can be seen in the consumer IoT and home IoT segment, the overall market growth rate is expected to remain at around 1.3% due to the demand weakness in industrial/commercial segment, and continuous inventory adjustments. In 2024-2025, market growth is expected to return normal, double-digit growth in light of inventory normalization and economic recovery. The Matter standard will also support the smart home application market growth.

WiFi + Bluetooth (BLE) combo chip is increasing in the MCU WiFi market. It is estimated that 44% of the total in 2022 and about 60% in 2028 will be WiFi + Bluetooth combo chip. Bluetooth is not always used, but is in demand, especially for provisioning with smartphones.

2.4GHz single band WiFi 4 is the mainstream in current IoT devices. From 2024 to 2026, it is anticipated that the migration to WiFi 6 will proceed based on the design cycle of end devices. WiFi 6 market share is estimated to reach 23% in 2026 and 50% in 2028. The driving force of WiFi 6 in IoT application will be the product migration by IC suppliers, and the benefit of lower power operations.

The demand for 2.4GHz single band WiFi is strong in China and emerging countries where cost is a priority. While demand for 5GHz WiFi is growing in mature market or industrial/commercial applications to avoid interference in 2.4GHz band. The ratio of dual band/tri-band WiFi is anticipated to increase to less than 7% in 2022 to 15% in 2028.

Matter is the IP based connectivity protocol for smart home applications to make sure the interoperability between different device suppliers, Matter is developed by CSA (Connectivity Standard Alliance, former ZigBee Alliance) and global internet companies like Amazon, Google, Apple, and Comcast. As a connectivity, Matter support Zigbee/Thread, WiFi, and Ethernet, and Bluetooth for provisioning.

Smart Speaker plays a hub/ controller role in Matter based smart home use scenario. Amazon Echo products, Google Nest products, Android OS and Apple iOS 16 already support Matter during 4Q2022 to 1Q2023. At the same time, CSA released matter specification, SDK and certification in 4Q2022. Matter enabled end node is expected to be released in 2023. Followed by the Matter specification release, major MCU WiFi chip suppliers start to support Matter from the beginning of 2023.

Matter application is defined by protocols. Matter profiles that have been standardized to date include lighting, smart speaker, smart lock, sensor, TV remote, smart light, power plug, switch, window cover, sensor and others. New profiles like home IP camera, air conditioner, refrigerator, and robot cleaner are expected to be added in the near future.

Matter is expected to penetrate in the North America market first, then followed by EU and other developed countries, where Amazon/Google/Apple smart speaker is widely penetrated. China’s major smart home players such as Alibaba, Baidu, and Xiaomi does not participate Matter ecosystem, but promote proprietary protocol. Under the situation, China will not be the market for Matter standard.

In IoT WiFi market, cost is often the priority, but the WiFi data throughput is not matter. Major WiFi chip suppliers, Qualcomm, Broadcom, MediaTek, Intel… does not take major share in MCU WiFi market. Asian chip suppliers play as main supplier in the area. The other competitive factor in IoT WiFi is ease-to-use. modular solution, application, SDK and developer support are the key element. Suppliers such as Espressif, NXP, Infineon, Silicon Labs and Texas Instruments take advantage in the software and support part. The major MCU chip suppliers, ST, Renesas, Nordic Semiconductor (acquires many IoT developers through Bluetooth business) also have opportunity to gain the market share in the future.

In 2022, The major vendors in the MCU WiFi market are Espressif, Realtek, Beken, NXP and Infineon in shipments unit base. Espressif maintains top market share since 2016, from the early day of IoT WiFi market. On a revenue basis, Realtek, Espressif, Infineon, and NXP are taking the lead.

Followed by the weak home IoT and IP Camera trend, the main supplier Beken, Espressif, ASR are estimated to lose the share in 2022. On the other hand, the main suppliers to industrial and home appliances, NXP, Infineon, Realtek, Texas Instruments, gained the market share.

For Consumer and Home IoT segment, Chinese chip suppliers and Realtek accounts major share. In the industrial/commercial segment, Western WiFi chip suppliers, NXP, Infineon and Texas Instruments account major share, however, Espressif and Realtek increases presence in industrial/commercial segment.

The other IC suppliers include Bouffalo Labs, HiSilicon, Nordic Semiconductor, Qualcomm, Eswin, AIC Semiconductor, T-Head (Alibaba), WinnerMicro, WuQi, and more.

For WiFi 6, some of major suppliers and new players: Espressif, Beken, AIC Semiconductor, MediaTek, Infineon, NXP, SiliconLabs, Texas Instruments, Eswin, WuQi, iComm, Casemic, and Nordic announced or released WiFi 6 for IoT applications.