The ALICE experiment will undergo a major upgrade during the second long shutdown of the CERN LHC. As part of this program, the present Inner Tracking System (ITS), which employs different layers of hybrid pixels, silicon drift and strip detectors, will be replaced by a completely new tracker composed of seven layers of monolithic active pixel sensors. The upgraded ITS will have more than twelve billion pixels in total, producing 300Gbit/s of data when tracking 50kHz Pb–Pb events. Two families of pixel chips realized with the TowerJazz CMOS imaging process have been developed as candidate sensors: the ALPIDE, which uses a proprietary readout and sparsification mechanism and the MISTRAL-O, based on a proven rolling shutter architecture. Both chips can operate in continuous mode, with the ALPIDE also supporting triggered operations. As the communication IP blocks are shared among the two chip families, it has been possible to develop a common Readout Electronics. All the sensor components (analog stages, state machines, buffers, FIFOs, etc.) have been modelled in a system level simulation, which has been extensively used to optimize both the sensor and the whole readout chain design in an iterative process. This contribution covers the progress of the R&D efforts and the overall expected performance of the ALICE-ITS readout system.