IoT Chips Market - Global Industry Size, Share, Trends, Opportunity, and Forecast, 2021-2031

The Global IoT Chips Market is projected to experience substantial growth, expanding from USD 1.26 Trillion in 2025 to USD 3.35 Trillion by 2031, reflecting a CAGR of 17.70%. These specialized integrated circuits, which encompass sensors, connectivity modules, memory units, and microcontrollers, are explicitly engineered to enable data processing and wireless communication within connected device ecosystems. This market expansion is primarily underpinned by the rising demand for operational efficiency via industrial automation and the simultaneous rollout of high-speed 5G infrastructure, both of which require high-performance processing components. This strong demand is mirrored in the broader component industry; according to World Semiconductor Trade Statistics, the Logic integrated circuit category, which includes essential IoT processors, was forecast to grow by 16.9 percent in 2024.

Despite this positive growth trajectory, the market encounters a major hurdle regarding the elevated privacy and security risks resulting from massive device interconnectivity. The rapid increase in endpoints widens the potential attack surface for cyber threats, necessitating that manufacturers invest significantly in complex encryption and hardware-level security standards. This need for strict security protocols often raises development costs and extends time-to-market, which potentially hinders the pace of adoption across cost-sensitive enterprise and consumer sectors.

Market Drivers

The rollout of 5G and advanced wireless connectivity acts as a fundamental market driver, necessitating the production of integrated circuits capable of supporting low-latency and high-bandwidth data transmission. This network evolution compels semiconductor manufacturers to engineer chips with energy-efficient modems and enhanced radio frequency capabilities suitable for massive machine-type communications. Increased network accessibility is directly linked to hardware adoption, as device makers require compatible components to utilize faster speeds for applications ranging from autonomous vehicles to remote monitoring. Highlighting this infrastructure expansion, 5G Americas reported in a June 2024 press release that global 5G wireless connections rose to 1.9 billion in the first quarter of 2024, illustrating the growing foundation supporting the demand for advanced connectivity modules.

Simultaneously, the integration of edge computing and artificial intelligence is transforming component architecture by shifting data processing from the cloud to the device level. This trend forces chipmakers to embed accelerators and dedicated neural processing units within microcontrollers, enabling automated decision-making and real-time analytics in industrial and consumer applications.

Consequently, the demand for on-chip intelligence necessitates substantial upgrades in semiconductor performance to manage complex algorithmic workloads. According to Rockwell Automation’s 'State of Smart Manufacturing Report' from February 2024, 83 percent of manufacturers planned to deploy generative AI in their operations in 2024, driving the need for processors capable of data-intensive tasks. To meet these technological needs, SEMI projected that global semiconductor manufacturing capacity would rise by 6 percent in 2024, ensuring the supply chain can accommodate the increased volume of intelligent sensors and logic devices.

Market Challenges

The primary obstacle hindering the Global IoT Chips Market is the intensified security and privacy risk associated with widespread device interconnectivity. As the number of connected endpoints multiplies, the potential attack surface for cyber threats expands, creating critical vulnerabilities within the ecosystem. This situation compels semiconductor manufacturers to integrate hardware-level security measures and complex encryption protocols directly into their chip designs to prevent data breaches and unauthorized access.

This requirement for rigorous security standards directly impacts market growth by increasing development costs and extending the time-to-market for new components. The engineering resources required to implement secure enclaves and cryptographic accelerators significantly raise the final price of the chips. Consequently, cost-sensitive sectors such as industrial logistics and consumer electronics may delay adoption due to these rising expenses. The magnitude of this security burden is evident in the sheer volume of devices requiring protection; according to the GSMA, licensed cellular IoT connections reached 3.5 billion in 2024, representing a massive scale of endpoints that necessitate distinct security architecture. The financial and technical strain of securing such a vast infrastructure restricts the pace at which manufacturers can deploy affordable solutions.

Market Trends

The accelerated adoption of the RISC-V Instruction Set Architecture is fundamentally reshaping the market by offering a license-free, open-standard alternative to proprietary processor designs. This architecture allows manufacturers to custom-design cores optimized for specific IoT workloads, such as embedded processing or ultra-low power sensing, without the prohibitive royalty costs associated with traditional architectures. This flexibility is driving massive volume shipments as major semiconductor players integrate these cores into their portfolios to enhance supply chain resilience and design agility. According to the RISC-V International Newsletter from December 2024, NVIDIA estimated that it would ship between one and two billion RISC-V cores in 2024 alone, underscoring the rapid industrial transition toward this modular architecture for embedded applications.

Concurrently, the adoption of Next-Generation Wireless Standards, particularly Wi-Fi 7, is addressing the critical need for deterministic latency and cross-vendor interoperability within local device networks. Unlike the broad coverage focus of 5G, Wi-Fi 7 utilizes features like Multi-Link Operation (MLO) to simultaneously transmit data across multiple bands, ensuring the reliability required for dense industrial IoT environments and bandwidth-heavy smart home applications. This evolution is rapidly materializing in commercial hardware as device makers upgrade connectivity modules to support these advanced specifications. According to the Wi-Fi Alliance’s January 2024 'Wi-Fi Certified 7 Arrives' press release, it was expected that more than 233 million Wi-Fi 7 devices would enter the market in 2024, signaling a major shift toward these high-efficiency local connectivity solutions.

Key Players Profiled in the IoT Chips Market

• Intel Corporation
• Qualcomm Technologies, Inc.
• Texas Instruments Incorporated
• NXP Semiconductors N.V.
• Broadcom Inc.
• STMicroelectronics N.V.
• MediaTek Inc.
• Microchip Technology Inc.
• Renesas Electronics Corporation
• Infineon Technologies AG

Report Scope

In this report, the Global IoT Chips Market has been segmented into the following categories:

IoT Chips Market, by Product:

• Processor
• Sensor
• Connectivity IC
• Memory Device
• logic Device

IoT Chips Market, by End-user:

• Healthcare
• Consumer Electronics
• Industrial
• Automotive
• BFSI
• Retail
• Building Automation

IoT Chips Market, by Region:

• North America
• Europe
• Asia-Pacific
• South America
• Middle East & Africa

Competitive Landscape

Company Profiles: Detailed analysis of the major companies present in the Global IoT Chips Market.

Available Customization

The analyst offers customization according to your specific needs. The following customization options are available for the report:

• Detailed analysis and profiling of additional market players (up to five).

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