Hardware Encryption Market

The global hardware encryption market achieved a value of USD 271 million in 2022 and is projected to grow at a CAGR of 4.8% from 2023 to reach USD 357 million by 2030. The market's growth is primarily fueled by factors such as compliance with data privacy security regulations and standards, increasing concerns regarding data security and confidentiality, and the development of digital content.

Market Dynamics of the Hardware Encryption Market

Drivers: Development of digital content

The rise of smart cities worldwide has led to the digitalization of information and communications, resulting in the growth of digital content. Smart cities encompass various sectors such as transportation, energy, water, and healthcare, utilizing technologies like RFID sensors, cloud computing, and wireless networks to gather and analyze data for improving the quality of life. As smart cities emerge, there is an increasing focus on secure data exchange, storage, and protection. The global expansion of digital content, driven by cloud computing, IoT, big data analytics, and other advancements, further contributes to the need for hardware encryption. The increasing adoption of smartphones, e-commerce, video surveillance, and digital marketing also fuels the expansion of digital content. With data becoming a valuable asset, the demand for secure storage and hardware encryption to safeguard against cyber threats and security breaches is rising. Consequently, the growth and management of digital content drive the hardware encryption market.

Restraints: Heavy capital investments by stakeholders

Implementing hardware-based encryption technology requires significant capital investments. This type of encryption involves the installation of encryption under hard disk drives (HDDs) to ensure high-level protection. It also includes the installation of firmware, cryptographic processors, algorithms, standards, and architectures. The total installation cost includes licensing fees, annual maintenance costs, OPAL fees, pre-provisioning costs, staging costs, technical costs for password resets, idle time costs for encryption, excess operating costs for users, and technical costs for expert administration of encrypted drives. However, the hardware-based encryption market is witnessing traction due to growing concerns over secure data storage. Market players are introducing cost-effective products, leading to a decline in the average cost of a single hardware-encrypted device. Technological innovations are also contributing to cost reductions. Although high capital investments remain a challenge, their impact is diminishing as advancements continue.

Opportunities: Substantial development and growth of IoT in various industries

The Internet of Things (IoT) has witnessed significant technological advancements and commercialization across industries such as agriculture, consumer electronics, transportation, defense, telecommunications, healthcare, energy, finance, and aerospace. IoT is integral to emerging concepts like smart cities and digital marketing. Managing and protecting digital certificates, underlying keys, and supporting public-key algorithms are crucial for IoT applications. The adoption of hardware security modules (HSMs) is considered a best practice for securing sensitive keys and business processes. IoT devices monitor machinery, employees, and environmental conditions in various settings, generating data that aids in analysis, risk prevention, and decision-making. However, the widespread use of IoT exposes it to security threats and unauthorized data access. Therefore, ensuring data protection and end-to-end encryption is essential. The commercialization of IoT presents significant growth opportunities for the hardware encryption market.

Challenges: Adoption of SED and TPM in current processors

Ensuring strong user authentication is crucial for achieving better security. Software Encryption Drives (SEDs) provide secure authorization for platform access, preventing unauthorized data access by bypassing potentially vulnerable software. The combination of hardware-based encryption with Trusted Platform Modules (TPMs) offers even greater security advantages. By integrating technologies like SEDs and TPMs, enterprises add an extra layer of protection to their systems, significantly reducing the risk of data loss. Clients prefer SEDs and TPMs over hardware encryption due to the security benefits they provide and the reduced need for additional hardware equipment, resulting in space optimization.

Consumer Electronics expected to dominate the hardware encryption market

The consumer electronics segment is projected to hold the largest share of the hardware encryption market during the forecast period. In 2021, it accounted for approximately 41% of the market and is expected to maintain its leading position from 2023 to 2030. Hardware encryption is utilized in various electronic devices such as desktops, smartphones, notebooks, laptops, and tablets. Virtually all electronic devices with digital storage, whether magnetic or solid-state, can be equipped with hardware encryption. This trend is driven by the growing adoption of bring-your-own-devices (BYOD) in organizations and the increasing demand for hardware-encrypted security in consumer electronic devices like laptops, tablets, and smartphones. Key products used for hardware encryption in consumer electronics include solid-state drives (SSDs) and hard disk drives (HDDs).

Asia Pacific to dominate the hardware encryption market in 2023

The Asia Pacific region currently holds the largest market share in the hardware encryption market and is expected to maintain its leading position throughout the forecast period, growing at the highest compound annual growth rate (CAGR) of 5.5% from 2023 to 2030. The market growth in this region can be attributed to the presence of numerous electronic device manufacturers and the expansion of information technology (IT) and telecommunications networks in countries like China, South Korea, India, and other emerging economies in the region.

Asia Pacific serves as a hub for many companies involved in manufacturing consumer electronics, particularly smartphones, as well as providers of advanced information and communication technology (ICT) solutions. These companies in the region are increasingly adopting hardware encryption technology to ensure data security and protection. Additionally, the ongoing implementation of smart city projects across various countries in the region is expected to further drive the growth of the hardware encryption market in Asia Pacific during the forecast period.

Key Players in the Hardware Encryption Industry

Prominent companies in the hardware encryption industry include Western Digital Technologies, Inc. (US), Samsung Electronics Co., Ltd. (South Korea), Micron Technology, Inc. (US), Kingston Technology Corporation (US), Seagate Technology Holdings PLC (US), NetApp, Inc. (US), KIOXIA Holdings Corporation (Japan), Kanguru Solutions (US), Intel Corporation (US), WinMagic Inc. (Canada), Maxim Integrated Products, Inc. (US), Thales e-Security, Inc. (US), McAfee, LLC (US), and others.

Hardware Encryption Market Highlights

In this research report, the market has been segmented based on Architecture, Product, Application, and Geography.

By Architecture:

• Field-Programmable Gate Arrays
• Application-Specific Integrated Circuits

By Product:

• External Hard Disk Drive
• Internal Hard Disk Drive
• Solid-State Drive
• Inline Network Encryptor
• USD Flash Drive

By Application:

• Consumer Electronics
• IT & Telecom
• Transportation
• Aerospace & Defense
• Healthcare
• Others (Other applications include retail, education, BFSI, manufacturing, and consulting)

Geographic Analysis:

• North America
  • US
  • Canada
  • Mexico
• Europe
  • Germany
  • Italy
  • Netherlands
  • France
  • UK
  • Rest of Europe
• Asia Pacific
  • China
  • South Korea
  • Japan
  • India
  • Rest of APAC
• RoW
  • Middle East & Africa
  • South Americ

Recent Developments in the Hardware Encryption Industry

• In May 2023, Western Digital Technologies, Inc. (US) and Kioxia Holdings Corporation (Japan) announced a joint investment in the initial phase of Fab7 (Y7) factory at Kioxia's Yokkaichi Plant campus in Japan's Mie Prefecture. The Y7 facility, the sixth flash memory factory at the Yokkaichi Plant, is one of the largest flash memory manufacturing sites globally. It will produce 3D flash memory devices, including 112- and 162-layer nodes.
• In May 2023, Micron Technology, Inc. revealed the upcoming availability of two new consumer storage products, namely the Crucial P3 Plus Gen4 NVMe and Crucial P3 NVMe solid-state drives (SSDs), expanding their Crucial NVMe SSD product portfolio. The Crucial P3 Plus SSD line will provide sequential read/write speeds of up to 5000/4200 MB/s1, while the next-generation Crucial P3 SSDs will offer read/write speeds of up to 3500/3000 MB/s1.
• In March 2021, Samsung Electronics Co., Ltd. (South Korea) introduced the 980NVMe, a new addition to their SSD portfolio. This drive is Samsung's first consumer SSD without DRAM, offering increased speed and accessibility to a broader range of users.