Recently, U.S. semiconductor company Semtech announced an agreement with Compal Electronics, a company based in Taiwan, China, to sell its cellular IoT (Internet of Things) module business for $62 million in cash. The transaction includes related assets, intellectual property, customer relationships, and personnel, and is expected to close in the fourth quarter of its fiscal year 2027.
IoT (Internet of Things) practitioners are well acquainted with Semtech, a company that successfully propelled LoRa technology into one of the de facto global standards for low-power wide-area IoT. Semtech's foray into cellular IoT primarily stemmed from its largest acquisition in history. In August 2022, Semtech acquired the Canadian IoT module giant Sierra Wireless for approximately $1.2 billion, with cellular IoT modules being the core assets of that deal. Although the details of the current transaction have not been disclosed, to the public, the fact that it took only four years to go from a $1.2 billion purchase to a $62 million sale seems to validate the industry's initial skepticism regarding its decision to enter the cellular IoT module market. Meanwhile, amid the current global surge in AI (Artificial Intelligence) development, Semtech's decision to divest low-margin businesses and focus more on high-margin operations is also a crucial move in its strategic adjustment.
Shift in Strategic Focus: The "LoRa + Cellular" Vision Gives Way to AI Infrastructure
When Semtech acquired Sierra Wireless in 2022, revenue from its wireless and sensing product line had already reached $246 million, accounting for 33%. Both the total revenue and its share achieved rapid growth, with LoRa making the greatest contribution. This achievement stemmed from a successful acquisition. In March 2012, Semtech announced the acquisition of a French startup named Cycleo, ushering in a new era for Semtech in the IoT field. The subsequent story of LoRa's development proved the importance of this acquisition. According to data from the first quarter of 2022, Semtech's acquisition of Sierra Wireless was expected to bring about an approximately twofold increase in revenue, while also propelling IoT-related businesses to become Semtech's largest product line.
The author previously pointed out in an article that Semtech's acquisition of Sierra Wireless brought a rich portfolio of IoT product lines, painting a picture of a dual-engine drive of "LoRa + Cellular" that covers the complete chain from chips to the cloud. At that time, the concept of IoT was at the peak of its popularity, and the capital market bought into this narrative. However, it has always been difficult to establish a significant advantage in the cellular IoT field, making this vision hard to realize.
More importantly, as technology and the market evolve, the company's strategic focus has undergone a major shift. Regarding the sale of the cellular IoT business, Semtech's CEO stated that divesting the cellular IoT business is to concentrate resources on the company's fastest-growing areas—data center connectivity and LoRa.
Driven by current technological advancements, what the capital market values most is no longer IoT, but AI infrastructure. As a major global supplier of signal integrity chips, Semtech's high-speed interconnect products for data centers are deeply benefiting from the wave of AI computing power construction. Data shows that Semtech's stock price has risen by approximately 90% year-to-date, and nearly tripled over the past year. The valuation premium the market is willing to give Semtech stems more from its position in AI infrastructure.
Against this backdrop, the IoT business faces immense challenges. However, the roles of LoRa and cellular businesses within Semtech are not the same. LoRa is the core "weapon" Semtech has used to build its global IoT discourse power over the past decade, and it is a vital manifestation of the company's current ecological capabilities in the global IoT field. In contrast, the situation of the cellular IoT module business has become rather awkward. Modules are typically a low-margin, operation-heavy business (with a gross margin of around 20%), requiring continuous investment in supply chain management and customer support. Revenue growth is slow, and Semtech does not possess ecological advantages and discourse power in the cellular IoT module field comparable to those of LoRa.
For a company with a market capitalization of approximately $13 billion, a transaction volume of $62 million may be financially insignificant. However, the true value of the transaction lies in sending a "signal" to the outside world, indicating to the market that the company will shed its burdens, bet more chips on its main track, and secure a place in the current AI wave.
IoT Business: Cellular Modules and LoRa Face Different Environments
If the sale of the cellular IoT module business is an individual choice by Semtech, then viewed from an industry perspective, it is more a result of the shifting landscape of global cellular modules.
As is well known, over the past decade, the global cellular IoT module field has experienced a significant shift in market concentration. Chinese manufacturers such as Quectel and Fibocom have long occupied the majority of the global market share, relying on ultimate supply chain efficiency, rapid response capabilities, and cost advantages. The cellular IoT module field, which has a relatively limited technical threshold, requires a high degree of cost control and economies of scale, which are precisely the strengths of Chinese enterprises. In global market competition, overseas manufacturers have been in continuous retreat, with contraction, sale, and integration becoming the norm. Semtech's acquisition of Sierra Wireless did not bring advantages in cost or supply chain. Relevant data shows that Sierra Wireless's market share is only around 2%, which has not seen much improvement over the past few years. Therefore, selling the related business is also a continuation of the development trend of global cellular IoT modules.
The buyer, Compal Electronics, is one of the world's largest notebook computer ODMs (Original Design Manufacturers), possessing rich manufacturing experience and supply chain management capabilities, with IoT also being a key business for the company. Acquiring a mature set of cellular module IP, customer relationships, and professional teams for $62 million is a shortcut for Compal to enter this track at a low cost.
After divesting the cellular IoT business, LoRa once again becomes the most core business in Semtech's IoT segment. In the non-cellular low-power wide-area IoT market, especially in overseas markets, LoRa remains one of the technology routes with the largest ecological scale, with a solid foundation in scenarios such as smart metering, smart cities, and asset tracking. Public data shows that in overseas markets, the connection scale of LoRa exceeds that of cellular-based low-power wide-area IoT connections. According to the LoRa Alliance's 2025 report, the number of globally deployed LoRaWAN devices has reached 125 million, with a compound annual growth rate of approximately 25%. Meanwhile, LoRa IP has evolved to its fourth generation, forming new business models such as Sidewalk and satellite IoT. For Semtech, if the company still needs to maintain IoT as another core business, LoRa remains its indispensable asset.
From $1.2 billion to $62 million, this transaction clearly outlines the laws of industrial development. AI has become the mainstream of global technological development, and focusing on AI infrastructure has become an inevitable choice for enterprises, while the low-margin cellular IoT module business has become an "abandoned pawn." At the same time, the value highland of cellular modules has shifted, and readjustment is just a matter of time.