5G RedCap technology gives IoT device makers a cost-effective way to move from LTE, but getting widespread use might be a bit tricky, according to ABI Research, a global tech intelligence firm.
5G RedCap is designed to take over from LTE Cat-4 and Cat-6. It’s meant for mid-range IoT devices that don’t need everything 5G offers. ABI Research forecasts that by 2029, revenue from IoT RedCap modules could hit $1.2 billion.
Still, despite the bright future, there are some short-term hurdles.
Jonathan Budd, an industry analyst at ABI Research, said:
“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 $50 mark, equating in some cases to a three-fold price premium on LTE Cat-4 modules.”
This big price difference is a serious challenge for manufacturers.
“Without the immediate threat of LTE network shutdowns, device OEMs are unlikely to upgrade, except for devices with longer lifecycles,”
Budd adds. “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.”
The story gets more interesting with the arrival of eRedCap modules in 2026. These will only cost about 25% more than Cat-1 modules, somewhere between $10 and $15 each.
As 5G Standalone networks spread by 2026, eRedCap is expected to pick up speed quicker than 5G RedCap. ABI Research projects eRedCap sales will reach $615 million from 2026 to 2029, with applications in security, telehealth, point-of-sale systems, and remote monitoring.
But 5G RedCap still has hope.
“5G RedCap revenues are only expected to surge following the release of optimised 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,” Budd concludes.
💡 What is 5G RedCap?
When rolling out 5G devices, it’s crucial to balance features, market readiness, and cost—especially for IoT devices like smart cameras, wearables, and industrial sensors. 5G Release 17 was developed with this balance in mind.
5G Reduced Capability (or 5G RedCap, also known as 5G NR-light) was introduced in 5G Release 17 to improve IoT applications by supporting a variety of devices at different price points.
5G RedCap is focused on two key markets:
Consumer IoT, which includes wearables, extended reality, and health monitoring.
Industrial IoT, powering smart factories with devices like surveillance cameras and robots.
RedCap devices have fewer features but run on 5G standalone networks, which improves reliability, reduces latency, and boosts performance.
Countries in Asia, especially China, along with North America, are already making big strides in adopting RedCap devices for many use cases. The global number of cellular IoT connections is expected to grow significantly in the coming years.