A cipher can be mathematically sound and still leak its key. When a microcontroller performs AES, its power draw varies slightly with the bits being processed; an attacker with physical access, an oscilloscope and some statistics can recover the key from many traces. Timing differences in a comparison routine, electromagnetic emissions and deliberately injected faults such as voltage glitches are other channels. The attack surface here is the physics of the chip itself.
IoT devices are exposed because they sit in public places and are cheap to buy for study. Countermeasures include constant-time code, randomized operations, and above all keeping keys in a secure element designed and certified to resist these techniques. A penetration test of a high-value product should include at least basic side-channel and fault-injection checks.
Part of the IoT Glossary. Spotted an error or a missing term? Tell us.