2025 China’s Internet of Things integrates AI Technology

In 2025, the integration of China’s Internet of Things (IoT) and artificial intelligence (AI) has entered the deep practice stage.

Technological breakthroughs, application scenario expansion and industrial ecological reconstruction form a triple driving force to promote the industry from “Internet of Everything” to “Intelligent Internet of Everything”.

The following is a detailed analysis from four dimensions: technology integration, application scenarios, industrial ecology, market size and trends:

I. Technology Integration: AI drives the upgrade of the Internet of Things architecture

• Edge Intelligence and Localized Reasoning

• Model Lightweight Technology: The open source reasoning model DeepSeek-R1 released in January 2025, through dynamic weight allocation, feature alignment enhancement and other technologies, the model size is compressed from 700GB to 7GB, which can be directly deployed on edge devices (such as mobile phones, IoT terminals) to achieve localized reasoning with millisecond latency.
• Computing module innovation: High computing modules have become mainstream, such as Quectel SG885G-WF module equipped with Qualcomm QCS8550 platform, with a computing power of 48TOPS; MeiG Smart SNM980 module supports Wi-Fi 7 and Snapdragon 8 Extreme Edition, with significantly improved computing power and multimedia performance.
• Data governance optimization: Large models achieve deep data cleaning and semantic understanding through multimodal fusion capabilities (comprehensive analysis of text, images, and voice), and data governance becomes a core link. High-quality data must have characteristics such as wide coverage, strong timeliness, and good compliance. For example, unstructured data such as sensor data and video streams generated by IoT devices can be efficiently processed through AI models.

• 5G-A and AI collaboration

• Network performance improvement: More than 10 operators in the world have deployed 5G-A on a large scale, and China’s three major operators have achieved coverage of more than 300 cities, with the number of users exceeding 10 million. 5G-A’s great uplink experience and low latency (20 milliseconds) provide guarantees for AI-driven real-time interactions (such as unmanned mining truck collaboration and remote surgery).
• Terminal intelligent upgrade: It is expected that more than 100 mobile phones and CPE terminals will support 5G-A by the end of 2025, and 70% of terminals will integrate AI capabilities by 2030, pushing mobile AI from conceptual exploration to the commercial stage.

• Spatial intelligence and multimodal interaction

• Technical breakthrough: Spatial intelligence is implemented through scenarios such as 3D content generation, metaverse games, and AR/VR interaction. For example, the spatial intelligence Avatar launched by Baidu Smart Cloud can create highly realistic virtual avatars and support multimodal interactions from 2D to 5D.
• Ecosystem construction: Baidu Smart Cloud has jointly launched the “Spatial Intelligence Industry Alliance” with upstream and downstream of the industry chain, and cooperated with DPVR, Li Weike Technology and other companies to launch innovative products such as AI glasses and smart toys, achieving millisecond-level response of multimodal data such as images and voice.

Internet of Things in China

II. Application scenarios: Comprehensive penetration from consumer to industrial level

• Consumer market

• Smart home: Xiaomi AIoT platform has connected more than 500 million devices, and the penetration rate of smart speakers has reached 40%; Huawei Watch 6 supports independent eSIM networking, driving a 58% year-on-year increase in shipments of health monitoring devices.
• Wearable devices: AI technology enables devices to realize functions such as emotion recognition and real-time translation. For example, Li Weike View AI glasses support AI portable notes and travel anywhere, which are highly sought after by young consumers.

• Industrial market

• Industrial Internet of Things (IIoT): In 2025, the scale of China’s industrial Internet of Things market will exceed 1.5 trillion yuan, with an annual compound growth rate of more than 25%. The deep integration of 5G+ industrial Internet, AIoT chips, digital twins and other technologies will promote the intelligent upgrading of the manufacturing industry. For example:
• Huawei’s FusionPlant platform connects more than 10 million devices, empowering the automotive, steel and other industries;
• Cambrian MLU220 chip supports real-time data analysis on the terminal side, reducing latency to less than 10ms, promoting the implementation of scenarios such as predictive maintenance of industrial robots and intelligent security.
• Energy management: The combination of industrial Internet of Things and the dual-carbon strategy will promote the market space of solutions such as energy management and virtual power plants to exceed 500 billion yuan in 2028. For example, Haier Sino-German Eco-Park has reduced energy consumption per unit of output value by 23% through the transformation of the energy Internet of Things.

• Smart city and public service

• Smart rail transit: Shanghai Shentong Metro achieves “full signal” through 5G-A network to support smart rail transit operation;
• Smart water service: Shenzhen’s smart water meter coverage rate reaches 90%, saving more than 100 million cubic meters of water annually;
• Medical Internet of Things: The market size of remote surgery and health monitoring is expected to increase by 30% annually. The application of Huawei Pangu big model in the steel industry has increased the efficiency of quality judgment by 30 times. The migration of technology to the medical field can significantly improve the efficiency of diagnosis.

III. Industrial ecology: from fragmentation to collaboration

• Head enterprises lead the construction of ecology

• Baidu Smart Cloud: Through the Qianfan big model platform, a one-stop space intelligent development ecology is built, providing application development tools, big model libraries and tool chains from 2D to 3D, covering core industry scenarios such as games, e-commerce, and education.
• China Mobile: Released the “AI+IoT” series of products, including 351A/373Q AI modules, IoT AIoT platform and “Zhongzhi” ecological cooperation plan, promoted more than 200 cooperation projects, and realized capability opening and platform sharing.
• Huawei: The FusionPlant platform connects more than 10 million devices, promotes the 5G+Industrial Internet special project, and makes the number of 5G factories exceed 1,000.

• Open source and collaborative model emerge

• Open GenAI model: Since DeepSeek was open sourced in January 2025, China’s hyperscale cloud and AI providers have generally adopted open source strategies to promote cooperation and innovation. Gartner predicts that by 2026, 50% of China’s AI industry ecosystem will be built on the open GenAI model.
• Standard unification: Huawei, Alibaba Cloud and other companies jointly formulated the “Trusted IoT Device Certification Standard”, covering 80% of mainstream devices and reducing ecological collaboration costs.

• Regional and industry collaboration

• Regional layout: Guangdong, Jiangsu, Zhejiang and other regions rely on a complete IoT industry chain to form an industrial cluster effect. For example, the number of enterprises in Guangdong accounts for 36% of the country, and Jiangsu accounts for 13%.
• Industry integration: IoT and AI technologies penetrate into agriculture, logistics, retail and other fields. For example, rural water source protection uses IoT technology to achieve real-time monitoring of 132 water sources, and the water quality compliance rate has increased to 98%.

IV. Market size and trend: Trillion-level market accelerates expansion

• Market size

• Overall IoT market: In 2024, the scale of China’s IoT market will reach 4.01 trillion yuan, and it is expected to exceed 4.55 trillion yuan in 2025, and increase to 3.26 trillion yuan in 2028 (hardware and services account for the majority of the share).
• AI chip market: In 2025, the scale of China’s AI chip market will reach 153 billion yuan, with a 5-year CAGR of 52.75%. The driving factors include large model training needs and accelerated AI deployment on the edge.
• Cellular IoT module: In 2025, the Chinese market will reach RMB 28.2 billion, with leading enterprises such as Quectel Communications and Fibocom occupying a dominant position.

• Future trends

• Deepening of technology integration: AIoT technology integration will increase the autonomous decision-making rate of industrial equipment to 85%, the penetration rate of digital twin technology to over 35%, and the coverage rate of smart factories with self-repair capabilities to 30% in 2030.
• Application scenario expansion: Emerging fields such as spatial intelligence, embodied intelligence, and low-altitude economy have become growth poles. For example, China Telecom launched the “Tianyi Low-altitude Card” for the first time, providing intelligent network support for drone supervision and enterprise operations.
• Globalization and ecological competition: The industrial IoT standards formulated by China are expected to be adopted by ISO. Leading enterprises will build a full-chain ecological model through mergers and acquisitions and strategic cooperation. For example, Haier CoaXus links 15 industries and 80,000 enterprises.

Conclusion

In 2025, the integration of China’s Internet of Things and AI has entered the stage of large-scale implementation from technical exploration, forming a closed loop of “technology-driven-scenario implementation-ecological reconstruction”. Driven by policy support, technological breakthroughs and market demand, the industry will usher in a golden period of development. It is estimated that by 2030, the scale of China’s Internet of Things market will exceed 3.5 trillion yuan, becoming the core engine of global digital transformation.

Chinese companies need to focus on core technologies such as AIoT chips, edge computing, and spatial intelligence, while strengthening ecological collaboration and standard unification to seize the initiative in the trillion-level market.