The Consumer eSIM 3 in 1 Market—Where the Market Is Heading and What You Need to Know

By Phil Sealy | 3Q 2024 | IN-7363

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3-in-1 Embedded Subscriber Identity Module (eSIM) solutions, singular chipsets that combine the functionality of Near Field Communication (NFC) controller, Embedded Secure Element (eSE), and eSIM, have been in the market since 2018. To date, the market has grown steadily, but expectations are that 3-in-1 eSIMs will eventually overtake that of standalone as Original Equipment Manufacturers (OEMs) look to further streamline supply chains, simplify sourcing, and benefit from economies of scale.

Samsung is leading the way, integrating 3-in-1 solutions within the Galaxy S range of devices. Google's Series 7 and 8 smartphones also utilize a 3-in-1 eSIM, and Xiaomi and HONOR both have flagship smartphone devices using 3-in-1 eSIMs.

Now the market is looking toward other OEMS, notably Apple, from a volume perspective, and other Chinese OEMs, which initially may use 3-in-1 solutions to appeal to Western markets, where eSIM readiness is mature and secure transaction applications, such as mobile payments, are commonplace, before expanding into China, with an expectation that Chinese Mobile Network Operators (MNOs) will begin to support smartphone eSIM in the next few years.

The market for 3-in-1 eSIM solutions is forecast to grow from 67 million in 2023 to 458 million in 2028. The year 2026 is forecast to be the tipping point, when eSIM 3-in-1 shipments exceed that of standalone. To view more detailed forecasts and qualitative analysis, please reference ABI Research's Evolution to 3-in-1 eSIM in Consumer Devices - Device Timelines and Market Inflection Points report (PT-3046).

3-in-1 eSIM solutions combining NFC, eSE, and eSIM create an all-in-one package converging connectivity and security functionality, combining performance, compliance, and security into a singular chipset, as well as helping OEMs benefit from economies of scale, supply chain, and sourcing simplification. It is also aligned with the growing trend of connectivity and security convergence; placing multiple functionalities onto a single chipset is a natural evolutionary market step.

Overall, eSIM is transforming the cellular connectivity journey, while secure transactions continue to grow, not just in terms of mobile payments, which could be considered very mature in markets including Western Europe and North America, but in additional use cases including secure access and transit. OEMs and service providers are looking toward mobile wallet service expansion to improve consumer device stickiness and daily reliance.

In terms of stakeholders, growing realization remains about the link between cellular connectivity and secure service access. Users demand anytime/anywhere access to their favorite apps, which has not gone unnoticed by Uber and Revolut, both of which have announced eSIM services, linked to roaming, to help users avoid unexpected roaming charges. The ability to offer anytime/anywhere access to services at a local price point thanks to digital profile delivery, paired with secure tamper-resistant hardware for secure transactions is driving a number of app service providers to explore their ability to offer eSIM services.

The market from a component's perspective is currently dominated by NXP and STMicroelectronics, both of which have 3-in-1 eSIM solutions that are market ready. In addition, these vendors have extremely strong market presences in NFC and eSIM, respectively. Although two are currently commanding the 3-in1 eSIM market, this will change as more silicon vendors develop and launch their own competing solutions. Technology innovators should consider the following recommendations:

• Expand, if not already doing so, to include support for multiple certifications and protocols, including but not limited to Europay, Mastercard, Visa (EMV), and popular local payment networks such as RuPay, PBOC, or Elo, and MIFARE, iCLASS, or FeliCa to address other applications such as ticketing and access control.
• Consider the 3-in-1 product a key solution for those looking to expand overseas into European and North America markets where secure transactions such as mobile NFC payments are commonplace and eSIM MNO support is more mature and expanding.
• Aggressively target OEM partnerships to expand a good foothold in either the supply of NFC or eSIM components and use that as an opportunity to increase market share in either the eSIM or NFC market (whichever is the weakest).

Samsung, Google, HONOR, and Xiaomi are all currently making use of 3-in-1 eSIM chipsets, with many others currently utilizing a standalone eSIM with a separate chipset to address NFC functionality. If looking to implement eSIM technology onto a new consumer device or launching a new range of cellular Consumer Electronics (CE) devices, technology implementers should take the following steps:

• Look toward 3-in-1 eSIM solutions to simplify sourcing, supply chain mechanisms, and use across different device types including smartphones, wearables, smartwatches, laptops, and tablets.
• 3-in-1 solutions are considered a good fit for small/constrained devices, but should also be considered for higher compute devices such as smartphones.
• Build out additional functionality and services related to secure transactions and do not limit contactless services to payments only.
• Offer like for like digital cellular enablement and secure transaction services across smartphone and wearable form factors to increase consumer device reliance and brand stickiness.