• Memory cost pressure is becoming long-term as AI demand shifts capacity away from legacy DRAM and flash, leading to uneven impact across technologies.
• Smart modules, 5G and RedCap are the most affected, while Cat 1 bis and NB-IoT remain relatively insulated due to lower memory requirements.
• As a result, 2026 IoT module growth is revised down to 4% YoY (from 8% estimated in Q3 2025), with slower adoption of higher-end modules.
• Near-term margin pressure may lead to a gradual shift toward better pricing discipline and higher margins.

The impact of rising memory prices on the cellular IoT module market is becoming increasingly structural rather than cyclical. As memory vendors continue reallocating capacity toward HBM and advanced nodes to support AI workloads, legacy DDR3, DDR4 and certain flash segments are tightening. This reprioritization of wafer capacity is beginning to affect smart modules, 5G Modules and high performance IoT devices.

According to Counterpoint Research’s Cellular IoT Module Forecast, Q4 2025 report, global cellular IoT module growth in 2026 is now expected to remain broadly flat at 4% YoY, compared to the previous expectation of 8% YoY. Adoption of smart modules, 5G and 5G RedCap modules is likely to slow as memory constraints and elevated component costs weigh on deployment plans.

However, overall market volumes will continue to be supported by lower-tier segments such as Cat 1 bis and NB IoT, which are less exposed to high-density memory requirements and therefore comparatively insulated from the current pricing pressure.

Global Cellular IoT Module Shipments YoY Growth Forecast and Revisions, 2026

Impact on Smart Modules and Industrial Devices

4G and 5G smart modules that integrate application processors and 2GB to 16GB LPDDR4 are the most exposed. Although these modules accounted for only ~6% of total cellular IoT module shipments in 2025. These modules power smart handheld terminals, Smart POS, surveillance cameras, drones, robotics and industrial HMI panels. If LPDDR4 supply remains constrained amid rising demand from edge AI segments, BOM costs will increase, putting pressure on margins unless module prices are raised.

Beyond standalone modules, memory tightness will affect integrated systems such as industrial routers, gateways, high-end IP cameras, industrial PCs and edge computing terminals. These platforms often rely on 2GB to 8GB DDR4 configurations for video processing and analytics. Rising memory ASPs will therefore increase system level costs, particularly in enterprise and industrial segments with longer product lifecycles.

Demand-side Impact: Indirect Pressure on Module Shipments

In addition to supply-side cost pressures, rising memory prices are also impacting demand at the end-device level. Even in cases where module prices remain stable, higher memory costs increase the overall bill of materials (BOM) of end devices, which can slow down deployment cycles and reduce shipment volumes. For example, in the smart POS and security camera segments, device prices have increased by around 20%-30%, impacting adoption and shipment volume. This indirectly reduces demand for cellular modules.

This shows not only direct module pricing dynamics but also downstream demand trends across end devices also play an important role in shaping overall module shipment volumes.

Flash and DRAM Pressure Extends to 5G and RedCap Modules

The immediate pressure is visible in 5G and RedCap modules that typically integrate 1GB to 2GB flash and external DRAM. Vendors began anticipating price increases in May and June 2025 and placed advance orders to secure inventory. However, by the end of 2025, some of these orders were cancelled as pricing escalated sharply.

By November and December 2025, flash pricing in certain configurations was reported to be six to seven times higher than earlier levels. Even at elevated prices, supply remained constrained. Some module vendors believe memory suppliers were holding back inventory in anticipation of further price increases.

Vendors are now aligning procurement with their 2026 production plans and securing flash supply primarily to ensure availability, provided pricing remains within manageable thresholds. The focus has shifted from cost optimization to supply assurance.

Memory Tightness Impact Across IoT Technologies

The Impact is Uneven Across Categories

5G and 4G Smart Modules are the most exposed due to higher flash and memory density requirements. In contrast, Cat 1 bis and NB-IoT modules which account for the majority of IoT module shipments remain relatively insulated in the short term, given their lower memory dependency and positioning in the low-impact segment.

Early feedback indicates that supply pressure became visible in Q4 2025. Some Chinese vendors have secured partial RAM allocations for 2026, but coverage remains limited. Module pricing has not yet broadly increased, although selective adjustments are being implemented on a case-by-case basis. The Chinese domestic market is likely to see early and more pronounced impact on pricing and demand due to its scale and high price sensitivity.

Short-term Margin Pressure, Long-term Reset

In the short term, memory inflation is negative for module vendors. Larger players with stronger inventory buffers can maintain pricing stability to protect market share, while smaller vendors face margin compression. Pricing discipline may improve if vendors avoid selling below cost, but the transition phase is likely to remain uneven.

However, in the longer term, this cycle may trigger a structural reset. In recent years, intense competition drove module ASPs to historically low levels with thin margins. With memory and other component costs rising simultaneously, the previous pricing structure is becoming unsustainable. Vendors increasingly believe that the market may gradually transition toward a higher margin equilibrium, particularly for 5G and RedCap platforms where performance requirements justify premium pricing.

The current memory cycle differs from previous downturns. AI driven demand is structurally absorbing advanced capacity, and suppliers remain disciplined in expansion. This increases the likelihood that legacy DDR3, DDR4 and certain flash segments remain tight longer than expected.

For the Cellular IoT Module Ecosystem, Three Implications Stand Out

• Smart modules and 5G will face the greatest pressure, driven not only by pricing but also by tight LPDDR4 availability, especially through 2026 and possibly 2027.
• Supply constraints are emerging as a bigger risk than pricing, potentially disrupting production for vendors reliant on LPDDR4-based designs.
• Vendors will need to accelerate migration to LPDDR5, similar to trends seen in the smartphone ecosystem, to ensure continuity and future readiness.
• Vendors with stronger supply chain leverage and inventory management will gain competitive advantage.
• Vendors with stronger supply chain leverage and inventory management will gain a competitive advantage, while sustained component inflation may reduce extreme price competition and redefine module pricing benchmarks.

Memory is no longer just a smartphone or data center variable. It is now a defining factor shaping the economics of 5G, RedCap and advanced IoT modules. The next 18 to 24 months will determine whether this represents temporary disruption or a structural reset in module market dynamics.