The cellular modem market has seen substantial growth and innovation in recent years, with significant advancements in technology and an ever-increasing demand for reliable internet connectivity. As of 2023, the market is valued at US$ 5.2 billion and is expected to grow at a CAGR of 10.6%, reaching US$ 16.2 billion by the end of 2034. This growth is being driven by several factors, including the surge in broadband connections, the rise of portable 5G networks in the military & defense sector, and the expanding use of cellular modems in various applications like Internet of Things (IoT), consumer electronics, and automotive industries.

Key Drivers of the Cellular Modem Market

1. Surge in Broadband Connections

One of the primary factors fueling the growth of the cellular modem market is the increase in broadband connections worldwide. In emerging markets, where wired internet infrastructure may not be readily available, cellular modems offer a convenient and cost-effective alternative to connect users to the internet. According to Pew Research Center, approximately 90% of people in low- and middle-income countries still lack access to decent internet connectivity. This lack of wired infrastructure, particularly in sub-Saharan Africa and parts of Asia, is pushing the demand for affordable and efficient cellular modems.

The growing use of smartphones, laptops, and IoT devices is also propelling broadband adoption. In fact, more than 75 billion IoT devices are expected to be connected globally by 2025, significantly increasing the demand for cellular modem connectivity in a variety of sectors. Furthermore, India's broadband connections grew by 0.63% from January 2024 to February 2024, highlighting the surge in demand for mobile broadband connections and cellular modem technology.

2. Rise in Demand for Portable 5G Networks in the Military & Defense Sector

The military and defense sectors are embracing 5G cellular modems due to their ability to provide secure, high-speed, and resilient data exchange. In the military sector, the need for portable networks that support critical functions such as real-time surveillance, telemedicine, and augmented reality (AR) applications is expanding rapidly. 5G cellular modems are proving to be invaluable tools, enabling secure and reliable communication across various military operations.

For example, in June 2023, Fairbanks Morse Defense and Oceus collaborated to develop a 5G broadband kit for maritime defense, which will allow military personnel to access secure 5G connectivity on naval platforms. This represents a growing demand for portable 5G networks and the crucial role cellular modems play in such applications.

3. Adoption of 5G Technology

The adoption of 5G technology is having a transformative effect on the cellular modem market. 5G offers significantly faster data speeds, reduced latency, and greater bandwidth compared to its predecessors, making it ideal for high-demand applications such as streaming services, IoT devices, smart cities, and autonomous vehicles. Cellular modems are essential for enabling 5G connectivity, supporting applications ranging from smart agriculture to industrial automation.

In March 2024, Qualcomm Technologies announced a new collaboration with Apple, where they will supply 5G modems for iPhones through 2026, highlighting the growing role of cellular modems in consumer electronics. As 5G infrastructure continues to expand globally, the demand for 5G-enabled cellular modems will keep rising, particularly in industries where fast, reliable internet connectivity is essential.

Regional Outlook: Asia Pacific Dominates

The Asia Pacific region accounted for the largest share of the cellular modem market in 2023, and this trend is expected to continue throughout the forecast period. The region is a major hub for telecommunications infrastructure, consumer electronics manufacturing, and automotive technology. The rise of smartphone adoption, OTT services, and connected devices is driving the demand for cellular modems in the region.

India, for instance, is expected to become a US$ 1 trillion digital economy by FY26, and the electronics market in the country is already valued at US$ 155 billion. This presents significant opportunities for growth in the cellular modem market. The rise in demand for OTT content and the growing consumption of streaming services in countries like India and China is further boosting the need for high-speed internet solutions like cellular modems.

Market Challenges: Security and Hacking Risks

Despite the growth prospects, the cellular modem market faces some significant challenges. Wireless cellular modems are prone to security vulnerabilities. Weak encryption protocols can expose the devices to data interception and hacking attacks. A report by Forescout Vedere Labs in 2023 revealed that Sierra Wireless AirLink cellular routers were vulnerable to 21 new hacking risks. This issue underscores the importance of enhancing security protocols for cellular modem technologies, especially in critical sectors like military and defense.

Key Players and Developments

The cellular modem market is characterized by the presence of key players such as Qualcomm Technologies, TP-Link, Huawei, Digi International, and Cisco Systems. These companies are constantly working on product innovation, cost reduction, and enhancing connectivity performance.

In March 2024, Lantronix Inc. launched the M114 CAT-1BIS modem, which offers enhanced IoT security and device management capabilities. Additionally, Moxa Inc. introduced the CCG-1500 Series industrial 5G cellular gateways in 2023, enabling industrial sectors to embrace private 5G networks for IIoT applications.

Conclusion

The cellular modem market is poised for significant growth, driven by technological advancements and increasing demand from key sectors such as automotive, telecommunications, and military & defense. With a CAGR of 10.6%, the market is expected to reach US$ 16.2 billion by 2034. As industries continue to embrace 5G connectivity, IoT technologies, and portable networks, the role of cellular modems will continue to expand, supporting everything from consumer electronics to smart manufacturing and military applications.

The growth trajectory is further supported by the ongoing efforts to address security challenges, particularly for wireless modems. With innovative developments in low-power and high-performance modems, the future of the cellular modem market looks promising.