eSIM adoption hits inflection point, says Counterpoint

More than 6 million devices with embedded or integrated SIM cards will be shipped over the next five years, according to a new market outlook report by Counterpoint Research.

An embedded SIM card – or eSIM – is pre-installed in a device and cannot be physically swapped. Instead, it is programmed remotely and can hold several SIMs at the same time. An integrated SIM (iSIM), meanwhile, is integrated in a device's main processor, doing away with any form of dedicated hardware.

The eSIM uptake has now reached an inflection point, according to Counterpoint, and entered a high-growth phase with adoption growing across the smartphone, IoT and automotive markets. Shipments of eSIM devices grew 11% year-over-year in 2022, reaching 424 million units, despite an overall 3% drop in cellular-connected device shipments.

By 2030, 70% of all cellular devices are expected to support eSIM technology. Adoption will reach 100% in the smartwatch and drone segments; 92% for connected cars; 82% for smartphones; and 79% for tablets. Around 40% of eSIM devices will be smartphones, while 55% of eSIM devices shipped between 2021 and 2030 will be consumer devices.

According to Light Reading's sister company Omdia, there is a compelling business case (subscription required) for eSIMs in the IoT market as they could help resolve connectivity issues plaguing enterprises. Some of the areas that could benefit include energy, healthcare and the financial sector, according to Omdia.

Integration vs adoption

Integration and adoption are, however, two very different things when it comes to eSIMs in smartphones. As Dario Talmesio, research director at Omdia, told Light Reading earlier this year, fewer than 1% of eSIM-equipped smartphones are estimated to be using the technology.

This is, however, likely to change as users become more aware of eSIMs. Apple could help speed up the process – having already removed a physical SIM slot from the iPhone 14 in the US, it may replicate the move in other markets as early as next year.

A growing number of companies are also offering dedicated eSIM offers for travellers hoping to dodge pricey roaming charges. In Europe, the low-cost airline Wizz Air has started offering eSIMs to passengers, provided by eSIM Go. And on the other side of the Atlantic, the New York Times has ruled now is the best time to switch to eSIMs (paywall applies) for cheap data abroad.

(Source: Counterpoint)

As for other eSIM-capable gadgets, the fastest-growing device categories include XR headsets, with shipments to soar by 216% between 2021 and 2030, as well as drones and cellular gateways.

The eSIM may, however, only be a technology stepping stone. Counterpoint predicts iSIM will become the predominant type of SIM post-2028, with cumulative device shipments to reach 4 billion by 2030. Initial demand will come mainly from IoT applications, it says.

According to Omdia, the iSIM can alleviate issues such as chip shortages, energy and size constraints and increased security concerns. It also notes that cellular service providers such as AT&T, Vodafone and Deutsche Telekom have shown more enthusiasm for iSIMs than eSIMs.

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— Tereza Krásová, Associate Editor, Light Reading