Swiss IoT module maker u-blox has announced its decision to exit the cellular IoT sector due to persistent losses. With over 200 employees, this division generated CHF 27 million in revenue during the first half of 2024. However, it reported losses of over CHF 15 million in the same period. The strategic move aims to halt annual EBIT losses of at least CHF 30 million. u-blox will now focus on its more profitable GNSS satellite positioning and short-range IoT connectivity segments.
This decision is driven by several challenges. Price competition from Chinese vendors and the lengthy development cycle for 5G-based IoT have impacted the cellular IoT industry. Additionally, u-blox’s venture to develop its cellular IoT chipset to increase margins did not succeed.
Stephan Zizala, CEO of u-blox, stated, “Our efforts to find a viable path forward for the cellular business did not pan out, including exploring a potential sale, leading us to the decision to phase out this business. We will do our utmost to support our employees, customers and partners impacted by this decision.”
Matt Hatton from Transforma Insights noted the slim margins and reduced scale compared to peers pointed to an inevitable conclusion. He commented on the surprising lack of interest from potential buyers, suggesting limited opportunities or cash for a smooth transition. The timing of u-blox’s exit appears untimely as some western vendors might enjoy improved market conditions amid geopolitical shifts affecting Chinese competition.
Jamie Moss of ABI Research highlighted three main challenges faced by u-blox: price pressure, overordering by customers post-Covid, and a confined customer base. He emphasized the failed gamble of developing in-house chipsets. u-blox’s attempt to capture market value from their LPWA chipset development proved costly, especially with the narrower market for NB-IoT outside of China.
Furthermore, Fredrik Stålbrand, principal analyst at Berg Insight, addressed the strategic bets made by u-blox which yielded limited returns. As a strong GNSS provider, backward integration was intended to enhance margins. However, the anticipated growth in cellular IoT did not materialize as expected, leading to u-blox reducing its involvement.
The dominance of Chinese vendors in the global market, primarily their home-ground advantage, places them in a position to undercut international competitors. This dynamic challenges Western suppliers, including u-blox, discouraging competitive scale and costs.
