6 IoT semiconductor predictions for 2026

By Satyajit Sinha, Principal Analyst at IoT Analytics.

Whereas many within the semiconductor trade are targeted on AI chip improvements for the world’s practically 12,000 information facilities, the chips powering the world’s 20+ billion IoT gadgets are present process important improvements as properly. Under, the IoT Analytics crew shares 6 predictions for the way the IoT semiconductor house is altering in 2026.

AI Abstract of the article : This text presents six main traits set to reshape the IoT semiconductor panorama in 2026. First, edge AI integration will speed up as NPUs and light-weight AI cores enter mainstream IoT chip designs, enabling extra on-device intelligence throughout sensors, modules, and gateways. Second, chiplet-based architectures and RISC-V processors will achieve traction attributable to their modularity, value effectivity, and customization advantages for low-power IoT methods.

A 3rd pattern is the incorporation of carbon-aware design practices. Semiconductor distributors and EDA suppliers are starting to embed emissions information into engineering workflows, whereas foundries standardize sustainability disclosures. The report additionally highlights rising regionalization of IoT chip manufacturing as nations increase home manufacturing capability and tighten export controls, affecting IoT-grade MCUs, connectivity ICs, and sensor chips.

AI-driven automation is predicted to remodel IoT chip design workflows, with broader adoption of AI-supported verification, format optimization, and the primary steps towards agentic design methods. Lastly, security-by-design turns into non-negotiable as world laws require {hardware} root of belief, safe boot, and lifecycle compliance instruments. These traits collectively level to a extra clever, sustainable, safe, and regionally diversified IoT semiconductor ecosystem by 2026.

Definition: IoT semiconductors

IoT semiconductors = Specialised digital parts that allow the performance and connectivity of IoT gadgets.

IoT gadgets = Bodily objects with embedded compute and community connectivity that may autonomously transmit or obtain information with out real-time human intervention. Typical gadgets embody finish gadgets and gateways equivalent to sensible meters, asset trackers, wearables, industrial sensors, constructing controllers, or sensible dwelling home equipment. Additionally contains related automotive modules equivalent to telematics items when performing as IoT endpoints or gateways. Excludes smartphones, tablets, PCs, infotainment methods, and automotive designs that don’t act as IoT endpoints or gateways. Additionally excludes gadgets with passive or non-networked connectivity, equivalent to RFID tags or QR code scanners, and gadgets related solely inside closed native networks.

IoT semiconductor performance = Any semiconductor element that has the primary function to sense/actuate, compute, join, handle energy, or safe.

Prediction 1: Edge AI integration into IoT chips to speed up

Edge AI integration into IoT gadgets will start a significant shift towards AI-capable {hardware}.

Most IoT gadgets immediately lack the built-in compute wanted to run AI workloads. Although demand for native inference has been rising to enhance latency, resiliency, bandwidth effectivity, and privateness, the vast majority of immediately’s 21 billion deployed IoT endpoints nonetheless depend on exterior processing or easy rule-based logic. This hole between demand and functionality units the stage for a shift in 2026.

NPUs and AI-capable cores getting into mainstream IoT designs

Distributors increasing edge AI throughout IoT tiers. Lately, solely a small subset of IoT merchandise (sometimes industrial gateways, superior cameras, and high-end modules) have built-in NPUs or low-power AI accelerators. Distributors at the moment are beginning to push these capabilities into broader system classes. New IoT SoCs are being designed with light-weight NPUs, vector extensions, and DSP-like AI cores to help duties equivalent to anomaly detection, small-model imaginative and prescient, native audio intelligence, and situation monitoring instantly on the system.

Prediction: IoT Analytics expects 2026 to mark the primary broad wave of IoT gadgets embedded with edge AI acceleration. Shipments of AI-enabled chipsets will increase into sensors, IoT connectivity modules, industrial PCs, and mid-tier gateways that beforehand lacked any on-device AI inference.

Extra complicated SoC designs driving demand for AI-ready tooling.

AI options affecting IoT chip design priorities. Embedding NPUs and AI blocks into IoT silicon has elevated design complexity, particularly round thermal budgets, verification, reminiscence bandwidth, and safety. In consequence, IoT chip distributors are leaning extra closely on EDA instruments optimized for AI compute evaluation, reusable IP equivalent to low-power NPUs and safe enclaves, and mature-node foundry processes tuned for combined workloads (compute + connectivity + safety). These wants are rising throughout client, industrial, automotive, and power IoT segments.

Prediction: IoT Analytics expects 2026 to carry wider adoption of AI-aware EDA flows and off-the-shelf AI IP subsystems in IoT chip growth. These instruments and IP blocks will scale back design complexity and decrease the barrier for including small-model inference to mass-market IoT gadgets.

Edge AI turning into a defining differentiator for IoT OEMs

Gadget makers linking AI to function innovation. As AI-capable {hardware} turns into extra accessible, system makers are starting to deal with native inference as a aggressive discriminator, enabling options equivalent to privacy-preserving analytics in sensible dwelling gadgets, real-time defect detection in industrial sensors, or offline wake-word detection in client electronics.

Prediction: IoT Analytics expects 2026 to be the inflection level when IoT OEMs scale from early 2025 pilots to broad portfolio refreshes, marketed as Edge AI-enabled IoT gadgets. This shift will speed up the transfer from fundamental telemetry gadgets to endpoints that help native inference for on-device decision-making.

Prediction 2: The share of chiplet-based and RISC-V-based IoT chips to extend

Modularity and RISC-V gained floor in IoT. Over the previous 2 years, rising value pressures, larger integration calls for, and the necessity for extra versatile architectures have influenced the design of IoT semiconductors. These traits have pushed distributors towards modular design approaches equivalent to chiplets and towards open ISAs like RISC-V. As these traits proceed, the foundations being laid now recommend a significant rise in each chiplet-based and RISC-V-based IoT chips in 2026.

Chiplets

Chiplets changing monolithic SoCs in new designs. Business exercise in 2024–2025 signifies a transparent transfer away from monolithic SoCs towards partitioned, modular designs. Chiplet architectures separate computing, reminiscence, and I/O features into smaller dies that may be produced on completely different course of nodes and related utilizing high-bandwidth interfaces. This has diminished masks prices, improved yields, and enabled focused upgrades with out redesigning complete SoCs. Current examples embody Tenstorrent and BOS Semiconductors introducing Eagle-N, a chiplet-based AI accelerator for automotive methods, and Intel saying a multi-node, chiplet-based SoC for software-defined automobiles.

Prediction: IoT Analytics expects chiplet adoption in IoT, automotive, and AI chipsets to increase considerably in 2026. Corporations will transfer from early customized chiplet designs to broader use of standardized compute, connectivity, and safety chiplets. This modular method will scale back engineering effort, shorten growth cycles, and decrease non-recurring engineering prices for AI, automotive, and IoT SoCs.

RISC-V structure

RISC-V enabling personalized low-power IoT chips. RISC-V has accelerated shortly in IoT as distributors sought flexibility, decrease licensing prices, and the power to customise CPUs for specialised gadgets. Its open, modular ISA has allowed corporations to construct differentiated processors with out counting on closed IP ecosystems. This has led to fast-growing experimentation and business deployments throughout wearables, microcontrollers, and low-power edge gadgets.

Prediction: IoT Analytics expects RISC-V adoption to increase additional in 2026 throughout low-power IoT edge gadgets, edge AI processors, and automotive subsystems. Progress shall be strongest in markets that prioritize supply-chain sovereignty and deeper architectural management to tailor CPU cores for specialised edge and automotive workloads.

Prediction 3: Extra IoT chips to be designed with carbon consciousness in thoughts

RISC-V adoption surging throughout IoT segments. Sustainability necessities have gotten extra concrete for semiconductor distributors as laws such because the EU’s Company Sustainability Reporting Directive (CSRD) and rising buyer expectations make carbon transparency unavoidable. Carbon monitoring is more and more handled as a core design constraint in IoT, now mentioned alongside energy, efficiency, space, and price (PPAC) moderately than as a separate reporting train.

Design workflows integrating carbon metrics

Carbon metrics a part of semiconductor design workflows. A number of developments over 2024–2025 point out that carbon information is beginning to enter day-to-day engineering workflows. Some EDA distributors are already feeding emissions information into early architectural trade-offs. For instance, in Could 2025, US-based EDA, {hardware}, and IP supplier Cadence joined Belgian-based nanoelectronics R&D hub imec’s Sustainable Semiconductor Applied sciences and Methods (SSTS) program to combine course of and supply-chain emissions information instantly into design environments, enabling engineers to match carbon impacts the identical approach they examine energy, efficiency, and space (PPA) metrics. IP suppliers are additionally increasing their deliverables to incorporate sustainability metadata and lifecycle assumptions in order that integrators can go carbon estimates by way of system-level simulations and procurement phases.

Prediction: IoT Analytics expects carbon metrics to grow to be extra broadly built-in into IoT semiconductor design workflows in 2026. EDA and IP distributors will incorporate emissions information into the identical early-stage evaluations used for PPAC, enabling engineers to incorporate carbon influence in routine architectural trade-offs.

Foundries and chip distributors standardizing disclosures

IoT chipmakers bettering carbon reporting requirements. Foundries and chip suppliers basically have been rising the granularity of their sustainability reporting, making it simpler for OEMs to include carbon influence into element choice. With IoT Analytics forecasting 39 billion related IoT gadgets by the tip of 2030, precisely capturing sustainability reporting particulars has grow to be notably necessary for your entire IoT ecosystem, and IoT semiconductor companies are already taking motion.

In June 2024, Germany-based semiconductor design and manufacturing firm Infineon expanded Product Carbon Footprint disclosures throughout MCUs and connectivity elements, overlaying supplies, manufacturing, and logistics so OEMs can benchmark embodied carbon throughout analysis, not simply power effectivity in operation. In April 2025, Taiwan-based contract chip producer TSMC dedicated to the Science Primarily based Targets initiative (or SBTi) and now offers node-level footprint information, whereas additionally pushing renewable sourcing throughout its provider base.

Prediction: IoT Analytics expects 2026 to speed up the shift towards standardized, auditable carbon disclosures from main foundries and IoT chip distributors. Chipset corporations will shift from fragmented sustainability studies to structured product-level and node-level disclosures that feed instantly into OEM sourcing instruments. This lets procurement groups examine embodied carbon alongside value, efficiency, and qualification information, making carbon-aware element choice a routine a part of IoT design.

The IoT semiconductor worth chain

IoT semiconductor design and manufacturing ecosystem

Semiconductor design and manufacturing consists of 6 important phases from conception and analysis to module meeting, as proven above. IoT Analytics teams these phases into 10 stakeholder varieties. IoT chips comply with the identical worth chain steps as different semiconductor chips. The IoT Semiconductor Design and Manufacturing Ecosystem Market Report 2025–2030 focuses on the three factors the place an IoT chip is definitely specified and produced: EDA for IoT, SIP for IoT, and foundries for IoT.

EDA for IoT. Corporations that present software program instruments to design silicon and modules for IoT endpoints and gateways. This contains register-transfer degree (RTL), simulation, verification, synthesis, designs for testing (DFTs), packaging, and printed circuit board (PCB) instruments which are used for IoT-focused microcontroller items MCUs, connectivity built-in circuits (ICs), sensors, and systems-on-chips (SoCs).

SIP for IoT. Corporations that license reusable mental property (IP) blocks for IoT chips; for instance, CPU and MCU cores, NPUs, safety components, and interconnect IP. Income in scope is generated solely from IP utilized in IoT endpoint or gateway SKUs.

Foundry for IoT. Corporations fabricating wafers and superior packaging for chips designed for IoT endpoints and gateways. This contains mature and superior nodes, embedded non-volatile reminiscence, RF and analog processes, and system-in-package (SiP) or 3D IC packages for IoT modules.

Prediction 4: Extra IoT gadgets to be produced regionally

Main investments made by nations to scale back international semiconductor dependency

International locations investing in native semiconductor manufacturing throughout the IoT worth chain. Governments have intensified efforts to localize manufacturing of semiconductors basically as a part of broader methods to safe expertise provide chains and scale back geopolitical threat. Export controls, sovereignty initiatives, and nationwide subsidy packages have made localization a precedence not just for superior computing however more and more for the lower-power, high-volume chips utilized in IoT gadgets. These level towards a 2026 setting during which a larger share of IoT chips shall be fabricated, packaged, and assembled inside regional ecosystems moderately than concentrated in a single geography.

Coverage strain increasing into IoT parts

Governments tighten management on semiconductor provides, together with IoT chips. Nationwide semiconductor insurance policies initially targeted on modern logic, however current actions point out that governments are extending oversight into microcontrollers, connectivity chipsets, safe components, and sensor-level silicon, key constructing blocks of IoT gadgets. The US, EU, China, and Japan have every up to date their export-control lists and industrial coverage frameworks to incorporate classes related to IoT (e.g., RF front-end parts, energy administration ICs [PMICs], and low-power MCUs). These strikes sign that IoT silicon is now not seen as purely commoditized however as vital to nationwide digital infrastructure.

Prediction: IoT Analytics expects 2026 to carry extra regulation that explicitly targets IoT-grade semiconductors. These measures will form each design and sourcing choices for IoT modules, gateways, and endpoint gadgets by including safety certification necessities, local-content targets, and stricter reporting obligations for deployments in vital infrastructure and industrial environments.

Investments creating regional capability for IoT-focused manufacturing

International locations investing in home IoT chip manufacturing. The final a number of years have seen large-scale industrial packages funding home manufacturing capability. Notable examples embody the next:

US – The CHIPS and Science Act allotted $52.7 billion to spice up home manufacturing and R&D. Additional, the federal government has expanded funding to semiconductor manufacturing corporations like Intel, TSMC, and Samsung.

China – China hascountered the US’s actions with a $47.5 billion “Big Fund” to spice up home chipmaking and shut its expertise hole by 2030.

Japan – The federal government of Japan has dedicated roughly $65 billion by 2030 to increase its semiconductor and AI sectors, supporting home fabs and R&D partnerships.

South Korea – Republic of Korea officers introduced a $19 billion help bundle in 2024 to strengthen its chip provide chain and SME competitiveness.

EU – The EU is channeling investments underneath the EU Chips Act to localize manufacturing, safe uncooked supplies, and set up technological sovereignty throughout member states. Main nationwide efforts embody Italy’s €10 billion funding to grow to be one of many largest microelectronics producers in Europe and the Netherlands’ €2.5 billion Brainport Eindhoven initiative, which goals to reinforce collaboration between companies, academia, and governments for technological growth, together with semiconductors.

Prediction: IoT Analytics expects that by 2026, plenty of new and expanded home and regional fabs targeted on IoT-relevant semiconductor processes (e.g., mature-node logic, analog, embedded non-volatile reminiscence, and RF) will start manufacturing or ramp towards commercially significant volumes. As this capability comes on-line within the coming years, it strengthens the power of chipset distributors and nations to construct extra self-reliant regional provide chains for core IoT parts.

Prediction 5: IoT chip design to grow to be closely AI-supported

AI turning into core a part of IoT chip design workflows. EDA distributors have spent the previous 2 years integrating AI into front-end and back-end design flows, giving semiconductor groups new methods to automate labor-intensive duties, validate constraints, and establish points earlier. These capabilities are particularly related to IoT chips, the place tight energy, space, and price envelopes depart little room for design iteration.

AI getting into mainstream EDA workflows

AI increasing into full semiconductor design flows. A number of developments throughout 2024–2025 present that AI is beginning to help with full design-flow actions moderately than remoted level instruments. In July 2025, Siemens Digital Industries Software program, a US-based enterprise unit of Germany-based industrial automation firm Siemens, unveiled an AI-enhanced toolset overlaying schematic seize by way of bodily implementation, together with options for verification automation, constraint evaluation, and early flaw detection. These instruments are being positioned to help each semiconductor and PCB design, which is instantly related to IoT distributors integrating RF, sensors, and compute into constrained type elements.

Prediction: IoT Analytics expects wider adoption of AI-assisted verification, constraint checking, and format optimization in 2026, notably inside IoT design groups constructing edge-AI chipsets, connectivity SoCs, and mixed-signal gadgets. As these AI-enabled EDA workflows mature, they assist groups shorten iteration cycles, scale back implementation errors, and handle the rising complexity of RF, sensor, and compute integration in compact IoT type elements.

Agentic AI transferring towards workflow automation

EDA companies mapping path to autonomous design brokers. Distributors are additionally outlining roadmaps for AI methods that do greater than generate code or suggest optimizations. In March 2025, US-based EDA software program firm Synopsys’ CEO Sassine Ghazi, for instance, outlined a roadmap (proven beneath) during which immediately’s generative AI design instruments will advance to completely autonomous, multi-agent design methods. These “agent engineers” are anticipated to help areas equivalent to IP integration, superior packaging, process-node choice, and lifecycle administration, domains that instantly have an effect on IoT silicon, which more and more mixes digital logic, RF, energy administration, and sensing features in a single bundle.

Prediction: IoT Analytics expects early types of agentic AI to enter IoT chip growth workflows in 2026, primarily as workflow copilots that orchestrate present EDA instruments for duties equivalent to verification, IP integration, and bodily design exploration. These methods automate routine steps, suggest constraint and floorplan options, and handle multi-tool design flows, whereas human engineers retain management over architectural decisions, sign-off choices, and safety-critical validation.

Prediction 6: IoT security-by-design to grow to be non-negotiable

IoT security-by-design turning into requirement throughout world markets. Safety-by-design has shifted from a greatest apply to a regulatory expectation, and this shift is particularly consequential for IoT. IoT gadgets function in broadly distributed, resource-constrained environments (e.g., factories, properties, automobiles, and power methods) the place they can’t depend on conventional perimeter safety. Their lengthy lifecycles, distant deployment, and fixed connectivity make hardware-level safety important for security, reliability, and compliance. These realities are pushing distributors to combine stronger silicon-level safety into the IoT worth chain.

{Hardware} safety turning into obligatory for market entry

15 key safe functionalities of hardware-based safety

Compliance mandates evolving IoT safety architectures. Regulatory frameworks such because the EU Cyber Resilience Act, the US Nationwide Institute of Requirements and Expertise’s (NIST) post-quantum roadmap, and UNECE R.155 and R.156 more and more require verifiable {hardware} protections earlier than gadgets might be offered. For IoT suppliers, because of this options equivalent to {hardware} root of belief, safe boot, and bodily unclonable operate (PUF)-based id are now not non-obligatory; they’re now conditions for certification in sectors equivalent to industrial automation, automotive, healthcare, and sensible dwelling.

Prediction: IoT Analytics expects 2026 to carry broader adoption of hardware-enforced safety baselines throughout high-end IoT MCUs, connectivity chipsets, safe components, and edge-AI processors. As regulatory necessities tighten, silicon-level protections equivalent to {hardware} root of belief, safe boot, and tamper-resistant id will grow to be commonplace entry situations for vital and premium IoT markets. In lower-cost IoT gadgets, adoption will stay targeted on lighter software-based measures equivalent to safe boot and safe working system help moderately than full hardware-backed safety.

Compliance ecosystems increasing to help IoT deployments

Distributors constructing instruments for long-term IoT compliance. As necessities tighten, distributors are redesigning chip architectures and investing in compliance tooling that helps IoT system producers meet lifecycle obligations. Corporations equivalent to UK-based IoT cybersecurity firm Crypto Quantique are automating safe provisioning, certificates lifecycle administration, and vulnerability monitoring, capabilities IoT OEMs depend on as a result of gadgets could also be deployed for 10–20 years with out bodily entry. In the meantime, US-based semiconductor design and manufacturing firm Qualcomm and others are standardizing safe boot flows, producing signed software program payments of supplies, and integrating monitoring mechanisms to assist distributors preserve long-term compliance throughout deployed fleets.

Prediction: IoT Analytics expects 2026 to see rising adoption of end-to-end compliance ecosystems that help safe provisioning, certificates administration, software program bill-of-materials repairs, and vulnerability monitoring throughout the complete system lifecycle. IoT OEMs in regulated industrial, medical, and automotive markets more and more mix inside safety capabilities with exterior compliance-as-a-service platforms to fulfill long-term regulatory obligations with out constructing all tooling in-house.

George Gray, VP software program at Qualcomm:

“Security is not a bolt-on module; it needs to be considered through the entire life-cycle of a product from initial hardware and software design to end of life.”

Put up-quantum readiness turning into a design constraint for long-lifecycle IoT

Put up-quantum cryptography transferring into IoT {hardware}. Quantum computing has elevated the urgency round post-quantum cryptography, notably for IoT gadgets that can function for many years and can’t simply get replaced. NIST’s steering on migrating to post-quantum cryptography (PQC) by 2035 has led semiconductor distributors to embed quantum-safe algorithms (such because the Module-Lattice-Primarily based Key-Encapsulation Mechanism (ML-KEM) into {hardware}. Infineon’s EAL6-certified PQC {hardware} (TEGRION safety controllers) illustrates how shortly these options are transferring from roadmap ideas to business merchandise.

Prediction: IoT Analytics expects 2026 to carry early pilots of PQC–prepared safety blocks in higher-value IoT chips, pushed by long-lifecycle necessities in sectors equivalent to power infrastructure, industrial automation, automotive gateways, and related medical gadgets. Adoption stays restricted to premium gadgets, however PQC ought to grow to be a distinguished design consideration as distributors start getting ready for NIST’s 2035 migration timeline.