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A recent study conducted by GSMA Intelligence indicated that the automotive sector is leading the way in the adoption of embedded SIM (eSIM) technology for Internet of Things (IoT) applications.

As eSIM technology becomes increasingly accessible in newly connected vehicles, collaboration among operators, eSIM vendors, and car manufacturers is gaining momentum. Furthermore, regulatory requirements for emergency call (eCall) capabilities are driving eSIM deployment in the automotive industry.

Factors Driving eSIM Adoption

Despite eSIM's widespread acceptance in connected vehicles, its adoption in other sectors has not yet reached a critical mass. However, several emerging trends are expected to accelerate eSIM adoption in IoT markets starting in 2024. These include ongoing efforts across the industry to enhance eSIM specifications for IoT applications, such as the GSMA's SGP.32 eSIM IoT technical specification and SGP.33 eSIM IoT test specification.

Additionally, the introduction of new IoT technologies like 5G RedCap and satellite integration, with trials already underway in various regions, is set to drive adoption. Moreover, the launch of new eSIM products and solutions by SIM vendors aiming for global coverage and capabilities, along with the increased deployment of private wireless networks offering additional use cases for eSIM technology, will further contribute to its adoption in diverse IoT applications.

According to surveys conducted by operators, security and scalability have been identified as the main benefits of eSIM technology for enterprise customers. Operators are leveraging these advantages to stimulate interest in eSIM deployments, taking advantage of the technology's reputation for secure authentication and data protection. Additionally, the ability to remotely update large numbers of devices simultaneously is seen as a significant advantage of eSIM technology, enhancing scalability.

Current eSIM Market Breakdown

The potential growth of eSIM technology in IoT markets is considerable. While a majority of cellular IoT devices currently rely on traditional removable SIMs, it is projected that eSIMs will gain an increasing share of the market. By 2030, operators anticipate eSIMs to account for 37% of total cellular IoT connections, followed by integrated SIMs (iSIM) at 34%, and traditional removable SIMs at 29%.

Vertical sectors are driving the growth of eSIM adoption, with smart cities leading expectations for demand. Operators foresee increased demand for eSIM-enabled solutions across various industries, with smart cities identified as the vertical industry with the highest anticipated demand for eSIM technology during 2024–2025.

Despite significant progress in eSIM adoption in IoT markets, there is still room for growth. The survey underscored the importance of addressing key challenges faced by enterprises when deploying IoT solutions, including integration with legacy technology, security concerns, and implementation costs. Global standards and specifications for eSIMs are seen as essential for overcoming integration and interoperability challenges.

Enterprises view eSIM technology as critical for the success of their future IoT deployments, particularly due to its security and scalability benefits. Operators should align their offerings with enterprise expectations and collaborate on global security initiatives.

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