Chip shortages continue to slow the recovery of the Internet of Things (IoT) market, according to our latest State of the IoT report for winter 2022. The number of global IoT connections grew 8% to 12.2 billion active endpoints in 2021, significantly less growth than in previous years.

IoT market forecast

Despite the growing demand for IoT solutions like smart switches, plugs, locks, etc. for home automation and positive sentiment in the IoT community and most IoT end markets, IoT Analytics predicts that the impact of the chip shortage on the number of connected IoT devices will last well beyond 2023. Other obstacles for IoT markets include the COVID-19 pandemic and general supply chain disruptions. By 2023, the Internet of Things market is expected to grow 18% to 14.4 billion active connections. It is projected that by 2025, as supply constraints loosen and growth accelerates further, there will be around 27 billion connected IoT devices.

The current data for 2021 and the forecast for 2025 for IoT devices are lower than previously estimated. (The previous estimate for 2021 was 12.3 billion connected IoT devices; the previous forecast for 2025 was 27.1 billion connected IoT devices.) Let's take a look at what impacted IoT connectivity in 2021, where we are in 2022, and where we might be heading after 2022.

Users are switching from legacy 2G / 3G to 4G / 5G IoT: 4G IoT connections have grown by 24% thanks to the increased adoption of LTE-based Cat 1, Cat 4, and Cat 6 chipsets. For many implementations, LTE Cat 1a becomes an alternative to the above LPWA technologies.

COVID-19 continued to affect products and supply chains: In 2021, ongoing (local) restrictions for COVID-19 resulted in many new and serious problems in the supply chain, such as shortages of ships, trucks and shipping containers and port congestion.

IoT beyond 2022: macro key themes

While the state of the IoT is critical in 2022, our research goes further this year. In our most recent research, we highlight and discuss eight key macro themes for review, many of which are

Inflation: Global growth forecasts are down as inflation rises to over 5% per year. in most of the world's major economies, raising expectations of interest rate hikes and subsequent cooling of the economy.

The ongoing war in Ukraine: The war in Ukraine adds to supply disruptions and inflation problems. For example, India's Minister of State for Electronics and Information Technology Rajeev Chandrasekhar said: “The conflict between Russia and Ukraine has impacted supply chains in many sectors, including the semiconductor industry. The conflict could have a particular impact on the supply of neon gas and hexafluorobutadiene, which are essential elements for the production of semiconductor chips as they are used in lithographic processes for production of chips. "

The battle for digital talent: Many companies face a huge challenge in finding a skilled workforce to drive digital transformation, AI, IoT and cloud projects at full speed. IoT Analytics continuously monitors online job postings. The number of " IoT " vacancies increased by + 32% between July 2021 and April 2022. Ads including "AI" (+ 48%), "Edge Computing" (+ 53%) and "5G" ( + 52%) were even more in demand. Some macro factors, including inflation, force organizations to focus more on operational efficiency to counteract cost pressures and maintain customer supply.