• AI-embedded cellular modules, which accounted for 6% of total cellular IoT module shipments in 2023, are set to grow at CAGR of 35% until 2030.
• Cellular modules have advanced from simple baseband components to AI-enabled SoCs that integrate CPU, GPU, and NPU to boost functionality and performance.
• The demand for on-device AI is rising due to the focus on local analysis, real-time decision making, and enhanced security.
• Growth in AI modules by 2030 will be driven by application such as drones, automotive, POS & retail, healthcare, and industrial.

AI-embedded cellular modules are projected to comprise 25% of all IoT module shipments by 2030, up from 6% in 2023, with a CAGR of 35%, according to Counterpoint's AI Module Tracker and Forecast. AI has evolved significantly in recent times, particularly in areas like privacy, reliability, low latency, cost-effectiveness, energy efficiency, and personalization. Counterpoint categorizes IoT modules further based on their hardware integration capability and use cases.

1. Basic Cellular Modules: These modules include only a baseband or chipset and primarily provide connectivity for IoT devices to send and receive data.
2. AI-capable Modules (Smart Modules): These modules feature a CPU and GPU along with connectivity baseband, with a primary focus on connectivity and basic data processing.
3. AI-enabled Modules: These modules go a step further by incorporating advanced processors such as a CPU, GPU, and a Neural Processing Unit (NPU) or Tensor Processing Unit (TPU), or a dedicated AI engine for enhanced AI capabilities. AI-enabled modules can be further divided into two subcategories:
   • Low-level AI Cellular IoT Modules: These modules offer medium AI capabilities, typically conducting AI inference at less than 8 TOPS.
   • High-level AI Modules: These modules support AI inference above 8 TOPS and can handle more complex tasks.

Source: Counterpoint Research AI-embedded cellular modules will find applications across various industries, but few specific applications will particularly drive the adoption.

• In the automotive industry, the rise of digital cockpits will significantly boost the adoption of AI-embedded cellular modules. AI-powered virtual assistants enhance the driving experience by responding to voice commands, managing navigation, and controlling in-car entertainment systems such as music and video.
• In POS and retail systems, smart displays with AI-capable modules are increasingly adopted. As AI features like face detection and gesture recognition grow, both low and high-level AI cellular modules are integrated, aiding in customer behaviour analysis, inventory management, and fraud detection.
• In the future, AI-equipped routers could act as central hubs for managing smart home devices like lights, thermostats, and security systems. However, the adoption of these AI-enabled routers will be limited.

Apart from these applications, we will witness the adoption of AI-embedded modules in drones, rugged handheld devices, robotics, digital signage, security cameras, and more. We expect AI-embedded modules to be most adopted in drones and rugged handheld devices, though volumes will remain niche. Meanwhile, the automotive and POS sectors are expected to contribute the most to the overall AI-embedded cellular module shipments by 2030. For an in-depth analysis of application growth, market size, and the dynamics of module and chipset vendors, please refer to our full report here.