As Device OEMs Migrate from LTE and 5G RedCap ASPs Halve Over the Next 5 Years, RedCap IoT Module Revenue Will Hit US$1.2 Billion

5G RedCap is a simplified version of 5G, providing IoT device OEMs with an affordable migration pathway from LTE. As a natural replacement for LTE Cat-4 and Cat-6, 5G RedCap targets mid-range IoT devices that do not necessitate the full power of 5G. ABI Research, a global technology intelligence firm, forecasts IoT RedCap module revenues to reach US$1.2 billion from 2024 to 2029.

“While device OEMs are showing a keen interest in 5G RedCap, IoT revenues will likely remain limited in the short term due to excessive module pricing. In 2024, 5G RedCap modules are expected to sell at around the US$50 mark, equating in some cases to a three-fold price premium on LTE Cat-4 modules,” explains Jonathan Budd, Industry Analyst at ABI Research. “Without the immediate threat of LTE network shutdowns, device OEMs are unlikely to upgrade, except for devices with longer lifecycles. Most IoT OEMs will not pay for a technology they do not yet need; as a replacement technology for LTE, 5G RedCap module ASPs must be driven down by at least 50% to make RedCap economically viable for manufacturers.”

In comparison, the first eRedCap modules will arrive on the market in 2026 and are projected to be only 25% more expensive than Cat-1 modules, ranging from US$10 to US$15 per unit. With more widespread 5G Standalone coverage expected by this time, eRedCap migration is projected to take off more immediately than 5G RedCap; from 2026 to 2029, we expect a cumulative US$615 million in eRedCap sales, mostly going into security, telehealth, POS, and remote monitoring devices.

“5G RedCap revenues are only expected to surge following the release of optimized second-generation chipsets in 2026. Coupled with greater manufacturing volumes, we should see 5G RedCap module ASPs halving by 2027, driving an additional wave of migration from LTE,” concludes Budd.

These findings are from ABI Research’s  RedCap for the IoT: Milestones and Obstacles application analysis report. This report is part of the company’s IoT Hardware research service, which includes research, data, and ABI Insights. Based on extensive primary interviews,  Application Analysis reports present an in-depth analysis of key market trends and factors for a specific technology.