Smart Cities and IoT: Growth, Opportunities and Challenges

­According to a recent research report published by MarketsandMarkets, the U.S. smart cities market is expected to reach $260.9 billion in 2028, up from $152.8 billion in 2024, with a CAGR of 11.2% during the forecast period. A significant part of this surge is driven by government initiatives focused on managing urban population growth, optimizing resources, and promoting sustainability. Recent M&A activity reflects the market’s momentum for major industrial companies that want a piece of this growth.

The following sections list the common components of a smart city. At its foundation, it integrates digital technology and IoT functionality to improve the quality of life for its citizens. The electronics powering smart city systems are essential for everything from energy management to transportation—and from energy harvesting to server farms and data storage.

Smart infrastructure, the backbone of a smart city, includes advanced building management systems and smart grids with intelligent metering. Sensor-equipped transportation networks are key, such as strain sensors embedded in bridges and cameras with sensors that monitor traffic flow, crowd volume, and facial or license plate recognition.

IoT and connectivity, acting as the smart city’s nervous system, is achieved by using billions of sensors and connected devices collecting real-time data on city services like traffic, waste, and utility management. Power electronics span the spectrum in these systems, from ultra-low-power IoT devices to line-powered data acquisition. Once gathered, this data is analyzed using advanced analytics and AI for predictive maintenance, improved decision-making, and resource optimization.

Sustainability, the lifeblood of smart cities, reduces energy use, manages scarce resources, and minimizes waste, all while lowering emissions. Solar panels, energy-efficient lighting, green building technologies, etc., are essential, and all have integrated monitoring and control.

Smart transportation spurs the growth of smart cities with the proliferation of connected and autonomous vehicles, adaptive traffic lights, and real-time transit data. Many systems are connected to mobile apps and consumer platforms that instantly report outages, leaks, and malfunctions, and provide easier access to city services.

Yet challenges remain. Smart city systems can become playgrounds for hackers when privacy breaches occur. But despite data protection and cybersecurity hurdles, governments and private organizations continue to invest heavily in this sector.

Smart cities are no longer futuristic; they are rapidly reshaping urban life on a global scale. Meanwhile, their need for power in this market is endless, spanning microwatts in IoT sensors to megawatts for AI-driven data centers. The opportunities for power electronics engineers are vast. They can harness the need for endless smart sensors and metering systems, along with the demand for a myriad of IoT products. The challenge is designing systems that enhance the quality of life while safeguarding security.