Market Overview
The global eSIM market size was estimated to be at USD 8.34 billion in 2022 and is projected to reach USD 9.87 billion in 2023. It is expected to reach USD 19.35 billion by 2031, growing at an estimated CAGR of 10.5 % from 2023 to 2031.
The eSIM, also known as the embedded Subscriber Identity Module, is a digital SIM card that is seamlessly integrated into a mobile device, such as a smartphone or tablet. In contrast to conventional physical SIM cards, which possess the capability of being detached and substituted, an eSIM is seamlessly integrated into the device's hardware infrastructure and can be meticulously programmed with a multitude of mobile network profiles. This feature enables users to seamlessly transition between various carriers and effortlessly initiate or modify their mobile plans without the need for physical SIM card replacement.
The explosive growth of IoT-connected devices in consumer electronics and M2M applications drives market expansion. In 2021, eSIM technology expansion accelerated considerably. There was an increase in the frequency with which eSIM profiles were downloaded on consumer devices. At least 69 nations worldwide have established commercial eSIM services for smartphones, a threefold increase compared to 2020.eSIM holds immense potential in the automotive business and is anticipated to create profitable growth prospects.
eSIM's emergence in the automotive industry has provided great flexibility for equipping trucks and automobiles with cellular connectivity and enabling new capabilities and features. It is predicted that all cars will be provided with cellular technology in the forthcoming years, resulting in an enhanced driving experience made possible by novel linked services. Supporting the GSMA Embedded SIM Specification to improve vehicle connection, the automotive industry has just taken a significant step toward enabling the next generation of connected cars. This is intended to result in increased security for various related services.
Market Dynamics
eSIM Market Drivers
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Reliability Increases on Remote Access for M2M Systems
Industry 4.0 signifies an industrial revolution incorporating intelligent machines with an automated communication and control system. Industry 4.0 is a linked ecosystem in which actionable data and information are exchanged via the Internet of Things (IoT) enabled devices between Machine to Machine (M2M) and machine to other machines. M2M systems consist of Wi-Fi or cellular connection links, RFID, sensors, and autonomous computing software to analyze and transfer data over a network for further processing. Internet access is frequently provided through public and cellular networks for M2M systems. These factors have prompted electronic manufacturers to integrate eSIM (embedded SIM cards) with M2M systems, contributing to market expansion.
M2M systems provide advantages such as reduced maintenance costs and downtime, real-time data monitoring, identification of service timing, remote operation, and low power usage. Several industries, including manufacturing, security, telemedicine, robotics, automotive, industrial, and utilities, have implemented M2M systems due to their advantages. In addition, features such as longer life duration and remote provisioning have enhanced the usage of M2M systems in retail POS, smart meters, and linked vehicles. This, in turn, necessitates enhanced network connectivity, in which eSIM plays a crucial role by providing wireless communication across mobile networks in a connected system. By enabling M2M communication, the integration of eSIM technology with M2M systems has advanced the connected ecosystem. eSIM provides M2M applications with dependable and cost-effective cellular network connectivity. In the M2M business model, there is no significant interaction between the user and the device.
The M2M eSIM model emphasizes remote provisioning, reducing the need for direct user-device connection. The combination of eSIM and M2M systems addresses the difficulty of remotely controlling and administering multiple M2M devices when the operator is in the field. The M2M paradigm permits the deployment of several systems on a single network and remote control of each system individually. This merely involves sending the eSIM IDs for each system to the operator. Additionally, these systems can be managed and adjusted once connected to the network. Changes to the operator profile, such as activation and deactivation, are also possible remotely over the air. Due to these characteristics and functionalities, eSIM has been widely adopted by device manufacturers, consequently fostering market expansion.
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An increasing need for Innovative Consumer Electronics and the Desire to achieve Miniaturization
The demand for smart electronics such as printers, smart glasses, smartphones, tablets, laptops, and wearables is driven by customers' desire to own linked homes. Integrating eSIM into consumer electronic items enables excellent network connectivity, which is necessary for connected homes. eSIM offers simple subscription management throughout the product's lifecycle, product differentiation, remote access, monitoring, streamlined logistics, and high-quality network connectivity, boosting user experience. This has resulted in using eSIM across a wide range of applications, ultimately contributing to market expansion.
The lower footprint of eSIM affords the manufacturer space and flexibility when constructing the product. Additionally, small designs reduce expenses and waste. Mobile network operators (MNOs) may store their data on these nano-sized devices. It is impossible to tamper with these systems, as the eSIM is soldered directly to the circuit boards. This provides physical security. The user-friendliness of small devices encourages device manufacturers to incorporate consumer electronic systems with eSIM, promoting market expansion. The increasing smartphone penetration in nations such as China, India, Japan, and the US is predicted to further fuel the market's expansion. Apple, Inc. has worked with six service providers to offer eSIM service, including Ubigi, MTX Connect, GigSky, Redtea Mobile, Truphone, and Soracom Mobile. Smartphone and consumer electronics makers' increased usage of eSIM to deliver a more streamlined and secure user experience is anticipated to drive market expansion.
eSIM Market Restraints
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Lack of Technological Awareness and Reluctance of Mobile Network Carriers to Adopt the Technology
The unwillingness of network providers to adopt the technology is anticipated to impede the expansion of the market. Since the eSIM model does not attach an end-user to a single carrier, carriers risk losing customers due to the straightforward, one-click switching between networks. By moving to a native page, consumers will no longer incur roaming fees, likely harming the carriers' revenues. Network service providers must rethink and restructure their B2C business models and switch to B2B business models to sell their data by partnering with original equipment manufacturers (OEMs) and IoT enablers. Consequently, network service providers are hesitant to invest in the eSIM architecture, resulting in eSIM's delayed adoption.
The integration of eSIM requires technical support and advanced technological infrastructure for its successful execution. Each OEM has its proprietary screens and processes, and onboarding with these standards necessitates a multitude of protocol, certification, and process updates. Integration of eSIM with devices necessitates digitization and a high degree of comprehension and adaptability among operators and their partners. Furthermore, debugging eSIM-enabled devices presents obstacles. Because it is difficult for call centre agents to handle and assess the profile download issue, they cannot take proactive corrective action at this time. The ability of an eSIM provider to meet the deployment and integration needs of software suppliers and device manufacturers will contribute to the global success of implementing these systems. However, a lack of technological understanding among end-users and a lack of support from MNOs restrict the execution of eSIM technology, consequently impeding market expansion.
eSIM Market Opportunities
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Increasing IoT Adoption Combined with the Introduction of 5G Technology
The Internet of Things creates new industries and gives network service providers several options. In doing so, IoT is completely changing the ecology of the mobile sector. Demand for intelligent and automated appliances has expanded beyond consumer-oriented devices such as tablets, mobile phones, and laptops. Several industry verticals use smartphones and wearables, including household appliances, monitoring systems in healthcare, agriculture, and utilities, autonomous drones and connected vehicles, and industrial machines. Consequently, implementing the Internet of Things necessitates enhanced network connectivity, which can be achieved by incorporating eSIM into such devices, allowing them to remain connected. Implementing eSIM technology is more cost-effective than using a standard SIM card. It also occupies less space, making integrating the eSIM into the hardware easier. The eSIM technology is compatible with IoT-enabled systems for large-scale machine-to-machine activities in various industries, including oil & gas, industrial plants, power plants, and warehouses. With eSIM technology, businesses that rely on Internet of Things (IoT) technologies are anticipated to realize significant cost savings and the benefit of keeping remotely connected to the devices via mobile networks.
eSIM technology is the future of 5G since it can be readily fitted into smaller devices like fitness bands, wearables, and smartwatches. The adoption of eSIM market allows businesses utilizing IoT systems with cellular-enabled devices to modify their systems to embrace 5G and reap its benefits. With the increasing prevalence of smart devices across several corporate and consumer segments, it is anticipated that the need for mobile and wireless connectivity will also expand dramatically. This creates a new income potential for communication service providers when users purchase data-centric gadgets to broaden their data plans. With the advent of 5G, these prospects for communication service providers are anticipated to expand even further. This is projected to increase consumer and business use of eSIM technology. The technology is also anticipated to provide them with different data package options and the flexibility to switch from one operator to another, creating new opportunities for eSIM market expansion.
Regional Analysis
The market is segregated based on the region into North America, Europe, Asia Pacific, Latin America, and Middle East & Africa (MEA).
In 2022, the North American eSIM market held the most outstanding market share. It is anticipated to reach USD 6786.55 million by 2031, growing at a CAGR of 11.5% from 2023 to 2031.
The European growth of eSIM market is projected to at a CAGR of 10.1% over the forecast period. These regions are pioneers in adopting the most recent technologies. At the same time, they are home to some of the most notable market participants, like NXP Semiconductors NV, STMicroelectronics, and Giesecke+Devrient Mobile Security GmbH, among others. These regions are also experiencing an increase in the prevalence of smart linked devices and connected automobiles. Due to these variables, it is anticipated that these two regions will maintain their dominance during the projected period.
Segmental Analysis
The global eSIM market share based on component, depolyment mode, netwrok type, data plan, end-user, and region.
Based on Component
Connectivity Services: The Connectivity Services segment has emerged as the dominant market player, capturing an impressive market share of approximately 89.48% in the year 2021. The projected growth rate for this particular segment is anticipated to be 9.2% compounded annually from 2023 to 2031. This growth can be attributed primarily to the transformative influence of eSIM technology on connectivity services, which facilitates effortless device connectivity on mobile networks and enhances digital interactions.
The hardware segment is expected to experience a CAGR of 16.5% throughout the projected period. This growth rate highlights the increasing importance of the Hardware segment within the eSIM market.
Based on Network Type:
Public networks have exhibited a higher level of prominence, particularly in consumer-centric sectors such as mobile phones and consumer electronics. These networks are commonly linked with commercial mobile network operators (MNOs).
Public networks possess greater accessibility and provide enhanced convenience for individual consumers. Mobile phone users, such as ourselves, predominantly rely on public networks offered by prominent carriers to establish and maintain their connectivity.
Based on End-User
Consumer Electronics: The consumer electronics segment is anticipated to develop at a CAGR of 11.8 % throughout the projection period due to the adoption of eSIM technology is being propelled by a diverse range of devices including mobile phones, tablets, laptops, wearables, and smart meters.
Automotive Sector: The utilization of eSIM technology is of utmost importance in the automotive industry as it facilitates the connectivity of vehicles and enhances production procedures. The upward trajectory of the automotive segment can be attributed to its utilization in connected vehicles and their associated applications.
Impact of covid-19
Throughout the first half of 2020, COVID-19 devastated the global electronics industry, causing massive disruptions in supply chains, production lines, inactive logistics, and labour shortages, delaying shipments and halting the development of next-generation technologies. The COVID-19 epidemic has completely transformed how people shop, work, socialize and operate businesses, compelling hundreds of millions of companies and individuals throughout the globe to "go digital" to continue living. While the pandemic has generated a severe economic and societal crisis, it has increased the importance of connectedness as a prerequisite for a functioning society and daily living. The rapid and extensive shift to virtual models, from the world of work to the next generation's education, has created an unprecedented demand for connectivity services.
eSIM has benefited from rising market demand and active backing from several industry players over the past few years. During the framework of the COVID-19 epidemic, its actual benefits have been more apparent, especially in the context of mobile operators' initiatives to digitalize their services. In addition, consumers were receptive to initiating cell service using eSIMs instead of visiting a retailer to activate the traditional SIM card. The COVID-19 epidemic slowed eSIM releases in the second half of 2020; some operators may have elected to delay their eSIM deployment plans to concentrate on essential concerns, such as mobile network resilience. The accelerated expansion of eSIM shipments and activations is a significant milestone for the eSIM ecosystem, particularly in the dawn of the COVID-19 pandemic, which is pushing the transition to online sales and the usage of digital distribution channels. As the proportion of eSIM-enabled consumer device shipments increases, eSIM activations are anticipated to gain traction soon, creating potential opportunities for the eSIM market.
Top Key Players
Kigen
Deutsche Telekom AG
Giesecke+Devrient Mobile Security GmbH
Infineon Technologies AG
KORE Wireless
NXP Semiconductors N.V.
Sierra Wireless
STMicroelectronics
Thales Group
Workz Group
Telefónica, Semtech Corporation
AT&T, Orange
Arm Limited
Vodafone Group
Others
