iSIM is coming even eSIM has not widely adopted

From the earliest Full Size SIM cards that were the size of a credit card, to the nano SIM cards that are now used by almost all mainstream smartphones, the physical form of SIM cards as the “basic identity credentials” of mobile phones has undergone continuous shrinking and evolution.

The story took a new turning point after Apple released eSIM-only iPhone 14 models in the US market in 2022. Some industry experts predict that traditional physical SIM cards will eventually disappear.

With the iSIM technology now commercially available, this seems to be a more credible outcome.

However, for now, everything is still premature. Whether it’s the improvement of market acceptance, the adjustment of the industry chain, or the change of government regulatory policies, everything is not a small matter.

iSIM is a different form of eSIM

At MWC2023 held in Barcelona at the end of February 2023, Qualcomm and Thales announced that the world’s first commercially deployable iSIM integrated into the second-generation Snapdragon 8 mobile platform has obtained GSMA security certification and can achieve SIM card functionality in the smartphone’s main processor.

In fact, iSIM can be roughly classified as eUICC (eSIM), but it is an integrated eUICC.

Peter Jarich, head of the GSMA Intelligence, told C114 that this integrated eUICC (i.e., iSIM) consists of two main parts:

Integrated TRE (tamper-resistant element), which is a hardware subsystem in the system-on-chip (SoC) – the chip from Qualcomm, has been certified according to the common standard EAL-4+ security certification;
eUICC operating system software executed inside the TRE hardware, securely stored in its internal memory and/or remote memory certified on the chip – Thales provides remote SIM configuration (Remote SIM Provisioning, RSP) and eUICC operating system security.

The GSMA expert further explained that the GSMA eSIM standard defines two forms that comply with GSMA RSP technology, namely, discrete form and integrated form.

At the same time, GSMA pointed out that the two technologies have the same implementation method, which means that there is no technical advantage difference between the two.

In this context, the iPhone 14 models from Apple, which also eliminates the physical SIM card slot, use a discrete eSIM, which is a separate physical SIM card chip soldered onto the device’s motherboard. The iSIM released by Qualcomm and Thales, on the other hand, eliminates the eSIM component and integrates the SIM card function directly into the device’s processor.

Thales writes on its official website that iSIM is the next revolution in the eSIM world.

Regarding technical advantages, which devices will adopt them first?

In response to C114’s inquiries, Qualcomm stated that “The second-generation Snapdragon 8 certified by ieUICC is ready for commercial use.

Compared with eSIM, iSIM is advantageous for improving memory capacity and terminal performance, reducing material lists to save costs, and providing stronger resources.

These can all translate into benefits for OEM manufacturers and users.

“Thales also mentioned in its press release that “iSIM technology eliminates the need for physical SIM cards or additional soldered eSIM components, reduces hardware costs, enhances security, supports wireless configuration, increases flexibility, and provides opportunities for the design of small-sized terminal devices.”

In fact, whether it is eSIM or iSIM, abandoning traditional SIM cards can increase the space available for other uses for smartphone manufacturers. For ordinary consumers, eSIM/iSIM may make it more convenient for them to choose network operators.

“Peter Jarich mentioned that there are several main benefits of iSIM for device manufacturers.

Firstly, the integrated eUICC chip consumes less power, which will have a positive impact on device battery life. Secondly, the integrated eUICC reduces integration time and allows for personalized settings based on product needs using an operating system on the same platform (chip).

Additionally, the smaller size of the integrated eUICC provides more opportunities for compact and cost-effective devices.

From the perspective of the GSMA, iSIM and eSIM represent two product types that offer the same functionality and security.

Based on the customization required by IoT devices and operators to adapt to such markets, this new form factor may diversify the market and have a positive impact on the adoption of remote SIM technology.

Qualcomm told C114, “We believe iSIM is extremely advantageous in numerous product hierarchies and segmented markets. Ultimately, iSIM will replace discrete eSIM hardware.”

However, the reality is that there may still be a long way to go before the industry begins to adopt iSIM technology on a large scale.”

Is it possible for smartphone manufacturers to become virtual network operators in the future?

Currently, the entire market’s understanding and acceptance of eSIM is still in the initial stage, and the situation for iSIM goes without saying.

As a reference, statistics from market research firm Omdia show that as of the end of 2022, 32.2% of existing smartphones support eSIM.

However, in reality, users rarely use eSIM because these phones support both eSIM and traditional SIM card slots, and most people don’t even know that their phone supports eSIM.

According to Omdia’s estimate, less than 1% of these phones use eSIM.

A GSMA survey found that only 20% of consumers aged 25-34 know about eSIM.

This doesn’t seem to be due to a lack of support from telecommunications companies.

Recently, the EU cybersecurity agency Enisa stated in a report that “at least 232 mobile service providers (have already) launched eSIM services in almost all European countries and a total of 82 countries worldwide.”

However, most telecommunications operators still default to signing up for mobile service provider physical SIM cards on smartphones.

In fact, with Apple’s actions, some operators have already started adapting eSIM services in smartphones (eSIM support in wearable devices such as smartwatches is actually earlier and more widespread).

In the United States, T-Mobile and Verizon both offer trial services for eSIM and believe that this can help them acquire new customers.

Some analysts believe that easier customer switching may be more advantageous for small operators and mobile network virtual operators (MVNOs) and help them increase their market share.

Omdia’s Research Director Dario Talmesio points out that remote sales (eSIM remote provisioning) enable telecom operators to fundamentally change their sales organization and retail business footprint. However, this also exposes them to more competition.

Through eSIM or iSIM, mobile devices themselves become a store, and domestic or international operators can directly target customers without attracting them to physical stores or websites.

Increased competition for services typically translates into customer churn, ultimately putting downward pressure on prices.

Undoubtedly, telecom operators are concerned about losing direct contact with consumers.

By adopting eSIM/iSIM, consumers will have a more flexible way to manage configuration profiles of different mobile network operators on the same device, breaking the existing locking effect – that is, a single SIM card bound to a single mobile network operator – and redefining the competitive market of mobile network operators.

CCS Insight analyst Kester Mann frankly stated that the most extreme scenario is that eSIM/iSIM could encourage terminal device manufacturers to become their own MVNOs.

In this way, consumers will be able to purchase terminal devices and network service plans from the same company, and the interaction between traditional telecom operators and users will be cut off.

This is naturally not a situation that telecom operators want to see.

Regarding security and government regulation, new security challenges brought about by eSIM have also been a concern for the industry.

The China Academy of Information and Communications Technology has analyzed that compared with traditional SIM cards, eSIM faces a greater range of security risks and pointed out that eSIM cards are vulnerable to cloning, identity tampering, logical attacks, physical attacks, and other attacks, allowing attackers to illegally replicate cards using the obtained data.

Enisa also wrote in its report that eSIM has brought new security challenges and risks. For example, the security of eSIM configuration files must be ensured.

End-users can directly download configuration files to their devices, which may become targets of attackers who can push new configuration files to devices and take control of them.

The agency also pointed out that since eSIM is integrated into devices, faults may affect not only the devices themselves but also any directly connected components. eSIM will become the de facto trust root (RoT) for the Internet of Things.

Of course, all of these risks also apply to the fledgling iSIM technology.

Enisa states that in the face of eSIM (iSIM) technology, regulatory agencies should play a role in two aspects: allowing the adoption and introduction of more secure technologies that support consumer interests while maintaining and reviewing the integrity of support processes.

The Chinese Ministry of Industry and Information Technology replied to relevant questions from netizens last year, stating that it is studying the promotion of eSIM technology on tablet computers, laptops, and smartphones and will expand the application scope of eSIM technology when conditions are ripe.

According to C114, as early as 2019, the China Academy of Information and Communications Technology, in collaboration with China’s three major domestic operators, established an eSIM management working committee to discuss EID number issuance, eSIM certificate issuance, and eUICC security certification.

The Ministry of Industry and Information Technology also indicated in its previous reply that the two prerequisites for promoting eSIM are user legal rights and information security, saying, “Our department attaches great importance to protecting consumer legal rights, adheres to the basis of ensuring user legal rights and information security, and actively promotes the application and promotion of new technologies and devices.”

iSIM may be more popular in the IoT market

According to research data from Kaleido Intelligence, the shipment volume of iSIM devices will grow to 300 million by 2027, accounting for 19% of all eSIM device shipments.

However, in fact, Vodafone, Qualcomm, and Thales only successfully demonstrated the first smartphones using iSIM technology last year, which are the Samsung Galaxy flagship models.

Thales predicts that iSIM will first be used in high-end innovative smartphones in the consumer electronics field. When entry-level/mid-range smartphones and wearable devices also adopt this technology, the technical promise of iSIM will be fully realized.

Considering the reduction in size, iSIM is likely to become the preferred choice for smaller and more compact devices. Thales’ official website also states: “As global enterprises embrace the IoT revolution, the adoption of iSIM will become more and more widespread.

iSIM will make it easier and more cost-effective for enterprises to implement the deployment of 5G private networks, which is crucial for supporting the connectivity needs of massive machine-type communication.

For IoT device manufacturers, integrating SIM cards directly into devices may shorten product development time.” The company said it expects iSIM to be widely deployed by 2024, thus changing the way enterprises connect devices and deploy IoT solutions.

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It is not difficult to speculate that eSIM can allow telecom operators to more easily enter adjacent markets, including wearable devices, consumer electronics, and automotive industries.

In addition, if operators do not need to purchase SIM cards, this is likely to reduce costs and make them less vulnerable to events such as chip shortages.

In the European market, Swisscom has already installed eSIM on the BMW iX model to provide 5G connectivity for cars, and BICS under Proximus has cooperated with Thales to make it easier for enterprises to use eSIM in IoT devices such as smart meters and smart home appliances. In addition, Telenor has been approved to install eSIM in smart meters.

Therefore, although it is not known when consumers will be able to use eSIM or iSIM universally, it is evident that the development of eSIM and iSIM is likely to play a driving role in the rapid expansion of the IoT industry in the coming years.

iSIM is coming even eSIM has not widely adopted