The embedded SIM market is entering a much bigger phase. What began as a convenient way to activate a smartphone without a plastic card is becoming a core connectivity layer for vehicles, industrial equipment, wearables and devices expected to remain online for years.

Mordor Intelligence expects annual shipments to rise from 480 million units in 2025 to 650 million in 2026, reaching 2.12 billion by 2031. That equals a 26.67% compound annual growth rate from 2026 to 2031. These are forecasts, not guaranteed outcomes, but the direction is clear: eSIM is shifting from a premium-device feature into infrastructure.

5G changes the economics

Standalone 5G is giving eSIM a more practical role. Remote provisioning already removes the need to replace a physical SIM; 5G adds network slicing, lower latency and more flexible management across public and private networks. For enterprises operating thousands of gateways, vehicles or sensors, that can mean fewer site visits and greater control.

This will not become a 5G-only market overnight. 4G/LTE still represented 52.11% of eSIM shipments in 2025, while the 5G segment is forecast to grow at 26.89% annually through 2031. NB-IoT and LTE-M will remain useful for meters and trackers that need long battery life more than high speeds.

READ MORE: Remote SIM Provisioning: How eSIM Activation Works

Network availability is nevertheless removing a barrier. European Commission data put EU household 5G coverage at 94.3% at the end of 2024. China’s three largest operators received approval to begin trial consumer eSIM services in October 2025, while Japan reported 98.4% population coverage for 5G in fiscal 2024. Coverage alone does not create an eSIM market, but it gives manufacturers a stronger base.

Cars become connected endpoints

Automotive and transportation could prove more consequential than smartphones over time. Mordor forecasts this segment to grow at a 27.11% CAGR through 2031, driven by connected services, software-defined vehicles and regulation.

The timing of UN Regulation No. 155 is often misstated. Its cybersecurity rules became mandatory for new vehicle types in July 2022 and for all newly produced vehicles in July 2024 in participating markets. The EU’s 112-based eCall rules have separately required the system in new types of cars and light vans approved since 31 March 2018.

READ MORE: How eSIM Provisioning Works: From SM-DP+ to SGP.32

Neither regulation explicitly mandates eSIM. However, secure connectivity and remote profile management fit vehicles that need emergency calling, diagnostics, certificate management and software updates across borders. This is why providers such as Thales, Giesecke+Devrient and IDEMIA increasingly compete on provisioning, security and lifecycle management—not simply the embedded chip.

Smartphones lead, wearables accelerate

Smartphones accounted for 60.29% of unit shipments in 2025, helped by eSIM-only handset designs and wider operator support. Wearables are expected to expand faster, at a forecast 26.76% CAGR through 2031.

Removing a SIM tray helps designers seal devices against dust and moisture and use limited internal space more efficiently. That matters for fitness watches, fall-detection products and health monitors, where battery life and reliability are critical.

Tablets and laptops offer another opportunity when connectivity is bundled at checkout. Asset trackers, smart meters and industrial monitors make an even stronger case: sending technicians to exchange SIMs across a large fleet is slow and expensive. The next evolution is iSIM, which integrates SIM functionality into the main chipset and reduces component count, although it still depends on the wider remote-provisioning ecosystem.

READ MORE: T2 and Atom EV Launch Always-On eSIM Car Platform

Key factors shaping adoption include:

• eSIM-only smartphones moving beyond premium markets
• Private 5G and industrial IoT expansion
• Connected vehicles and remote healthcare
• Limited awareness among mainstream consumers
• The cost of supporting old and new provisioning systems together

The migration problem

The biggest constraint is not demand but operational complexity. Many utilities, transport groups and manufacturers run long-life devices using the older SGP.02 machine-to-machine architecture. The newer SGP.32 IoT specification offers more flexible remote management for constrained devices, but migration requires integration, certification and security work.

Mordor estimates that SGP.02 represented 67.22% of shipments in 2025, even as SGP.32 is forecast to grow at 28.12% annually. For enterprises whose equipment may remain deployed for 15 years, immediate replacement may make little economic sense. A removable SIM, an established managed-M2M arrangement or a retrofit module can remain the better choice until the next hardware cycle.

What must improve is less glamorous than another chip launch: simpler onboarding, clearer commercial terms, genuine interoperability and tools that manage legacy and new architectures together. Otherwise, eSIM merely moves complexity from the device into the platform.

Growth will remain uneven

North America held 39.39% of 2025 shipment volume, supported by eSIM-only phones and enterprise IoT. Asia-Pacific is forecast to grow fastest, at 27.36% annually through 2031, as China, India, Japan and South Korea contribute different combinations of consumer, automotive and industrial demand.

READ MORE: Mapping the Global eSIM Ecosystem: From Devices to Regulation

Europe benefits from vehicle regulation and extensive 5G coverage. The Middle East is advancing through operator-led platforms, while Africa remains earlier in adoption. Latin America is progressing steadily: GSMA research counted 30 operators across 14 countries offering smartphone eSIM services by mid-2024.

Conclusion

The shipment forecast is impressive, but volume alone will not decide the winners. Juniper Research separately expects 4.9 billion cellular connections to use eSIM by 2030, up from 1.2 billion in 2025. That is not directly comparable with Mordor’s hardware-shipment forecast, and the difference is instructive: industry forecasts measure different parts of the ecosystem.

Competition is moving up the stack. Chip and eUICC suppliers remain essential, but more value will go to providers that can orchestrate profiles, prove security, support several standards and maintain connectivity across borders for a decade. GSMA’s SGP.32 provides a stronger common foundation; it does not remove the work of integration.

For smartphones, eSIM will increasingly feel invisible. In automotive and industrial IoT, it will be judged on whether it reduces lifetime cost, avoids lock-in and recovers cleanly when a network or provisioning workflow fails. That—not simply removing the plastic SIM tray—is the market’s real test.