The global Hardware Security Module (HSM) Market revenue totaled USD 1.3 billion in 2022. The market is expected to reach USD 5.9 billion by 2033, exhibiting growth at a 16.5% CAGR between 2023 and 2033. The hardware security module is estimated to value USD 1.5 billion in 2023.
Hardware security modules perform decryption and encryption functions for digital signatures, authentication, and other cryptographic operations. They are particularly designed to secure crypto keys for a long period.
Hardware security modules can establish a secure environment in which cryptographic processes such as key management, key exchange, and encryption can be carried out. On account of this, the hardware security module market currently holds nearly 5% of the global hardware encryption market.
| Attributes | Details |
|---|---|
| Hardware Security Module Estimated Size (2023E) | USD 1.5 billion |
| Projected Market Valuation (2033F) | USD 5.9 billion |
| Value-based CAGR (2023 to 2033) | 16.5% |
| Collective Value Share: Top 5 Vendors | 55% |
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| Market Statistics | Details |
|---|---|
| H1,2021 (A) | 12.7% |
| H1,2022 Projected (P) | 12.0% |
| H1,2022 Outlook (O) | 12.4% |
| BPS Change : H1,2022 (O) - H1,2022 (P) | (+) 40 ↑ |
| BPS Change : H1,2022 (O) - H1,2021 (A) | (-) 30 ↓ |
Comprehensive data protection will lead to increased demand for hardware security modules shortly, resulting in market development. To protect private and sensitive data from cyber assaults, hacking, and data breaches, the need for hardware security modules is growing across all industries.
According to the FMI assessment, the difference in BPS values seen for the market in H1, 2022 - Outlook (O) against H1, 2022 Projected (P) represents a 40-unit increase. The increasing usage of HSM in defense and government sectors has recently been identified as a critical reason for industry growth.
Comparing H1 2022 (O) to H1 2021 Actual (A), there is a 30-unit decrease. The main cause for the fall is the reduction of HSM reliance in the payments industry using Proxy Re-Encryption (PRE) technology. PRE is a cryptographic primitive that allows one to re-encrypt without revealing sensitive data.
The hardware security module market is predicted to expand at 16.5% CAGR between 2023 and 2033 in comparison with 17.5% CAGR registered from 2018 to 2022.
A hardware security module (HSM) is a secure cryptoprocessor created solely to safeguard the lifecycle of crypto keys. HSMs function as trust anchors, assisting security-conscious companies around the world in protecting their cryptographic infrastructure by maintaining, rectifying, and keeping cryptographic keys in a tamper-proof device.
These modules are fast, highly secure, and used for protecting identities, transactions, and applications.
Many businesses use hardware security modules to preserve data security and compliance, as well as to establish and maintain authentic key management practices. The global hardware security module market is anticipated to witness a surge in terms of revenue from USD 1.5 billion in 2023 to USD 5.9 billion by 2033.
Principal Consultant
Increasing adoption of remote work policies across the globe is set to push the use of digital technologies and online data-sharing applications. This might further result in an exponential rise in the digital transition process, especially across financial institutions.
High online purchases and increased usage of e-banking are also expected to drive the market. In addition, the adoption of mobile banking and third-party payment applications that are linked to open banking platforms such as Google or Amazon, has resulted in an increasing number of digital transactions and payments.
Financial institutions have started deploying payment hardware security modules to simplify cryptographic operations. They are persistently utilizing a single HSM to handle dozens of security applications and protect critical payment data and transactions.
Thus, the adoption of HSMs to protect sensitive data and associated keys for non-cash retail payment transactions is likely to propel the demand for hardware security modules.
Hardware security modules can provide very high security and are extensively used to protect an organization’s most valuable cryptographic keys. A lack of transparency from vendors may hamper sales of HSMs in the upcoming decade. Also, commercial hardware is used to develop HSMs, which has a high initial purchasing cost.
Hardware security modules are comparatively expensive compared to their software-based counterparts. Further, the complexities of HSMs and their high installation costs are set to create challenges for small- and medium-sized enterprises due to their lack of significant IT budgets. Thus, owing to the high cost of HSMs, their adoption may decline in emerging economies.
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Rising Adoption of Encryption Technologies among Organizations to Drive Growth
Japan is expected to showcase high demand for hardware security modules due to the urgent need for data protection. Further, the increasing use of HSMs by organizations across the country for encryption, decryption, and key management applications is also set to drive growth.
The majority of mid-and small-sized businesses in Japan are moving toward cloud-based hardware security modules as the deployment of these modules is considered to be realistic and cost-effective. As a result of the above-mentioned factors, sales in Japan are estimated to expand at a CAGR of 22% in East Asia during the forecast period.
Pharmaceutical Companies to Benefit from Code and Document Signing Feature
Demand for hardware security modules in the United States is expected to thrive at a CAGR of 15.8% during the forecast period of 2023 to 2033. This growth is attributed to the presence of a large number of key hardware security module manufacturers such as Entrust Corporation and IBM in the country.
Key players are focusing on new product developments and business expansions to gain a competitive edge in the United States Further, deployment of HSM solutions is expected to surge among pharmaceutical companies as the code and document signing feature helps them to save shipping charges and boost new drug development.
For instance
Retail Banking Industry to Push the Adoption of Encryption Technologies
Businesses in the United Kingdom are moving toward digital transformation as strong levels of security and advanced fraud protection systems are becoming increasingly important.
Further, the retail banking industry is in charge of vast amounts of data, including personal details and banking information of customers. Thus, sophisticated security measures are required to protect sensitive data.
As per FMI, in 2022, the United Kingdom accounted for nearly 20% of the hardware security module market share in Europe. Moreover, retail banks in the country are increasing their investments in hardware security modules to cryptographically protect confidential information.
These modules allow customers to conduct transactions safely by using their preferred payment method while also protecting businesses from security breaches. Hence, rising demand for hardware security modules in retail banking is set to boost growth in the United Kingdom
HSM-based Code Signing Solutions to Gain Impetus in Future
As businesses are becoming increasingly vulnerable to cyber-attacks, vendors are enhancing their in-house HSM-based code-signing solutions. Also, the rising integration of public key infrastructure (PKI) into HSMs for cryptographic key storage is expected to drive the code and document signing segment. It is considered to be the safest technique to physically and digitally secure codes.
Increasing preference for code-signing solutions among industries to safeguard their image and intellectual property is also anticipated to augment growth. Additionally, hardware security modules offer tamper-proof, certified protection for private code signing keys.
They are also used as a secure platform for performing crucial digital signature activities. As a result, the code and document signing application segment accounted for the highest market share of nearly 22% in 2022.
Automotive Manufacturers to Bolster Usage of Hardware Encryption Solutions
The automobile sector worldwide is transforming with the growing connectivity of industrial systems, cars, and subsystems such as advanced driver assistance systems (ADAS) and autonomous driving solutions. With improved connectivity and capabilities, vehicles are becoming smarter, providing a better user experience.
An electronic control unit (ECU) is an embedded system in automotive that helps in controlling various electrical systems or subsystems. These ECUs require effective, automotive-capable security measures that can protect them, as well as their communications efficiently.
HSMs provide holistic protection of in-vehicle ECUs and their communications, thereby preventing unauthorized access to vehicle control. Thus, the growing demand for hardware security modules in the automotive manufacturing industry is expected to augment growth.
Owing to the aforementioned factors, the manufacturing segment is anticipated to expand at a considerable CAGR of 18.5% from 2023 to 2033.
PCIe Hardware Security Modules to Simplify Complex Cryptographic Tasks
High demand for new-generation PCIe hardware security modules in enterprises to ensure the integrity and security of encryption keys is projected to accelerate the PCIe-based/embedded plugin HSMs segment.
These HSMs are specially designed to deliver high throughput for cryptographic tasks, as well as for improving the performance and security of sensitive workloads.
HSMs can be directly embedded in an appliance with the help of a simple and cost-effective cryptographic acceleration and security solution.
Therefore, high demand from end users is encouraging vendors to develop upgraded PCIe HSMs. As per FMI, by type, the PCIe-based/embedded plugin HSMs segment is predicted to expand at a CAGR of 17% between 2023 and 2033.
Key players are focusing on adopting various organic and inorganic strategies to establish a strong foothold in the notable hardware security module market.
Further, they are mainly engaging in collaborations with local companies, new product launches, acquisitions, and partnerships, as well as expansion of regional and global distribution networks to compete with their rivals.
| Attribute | Details |
|---|---|
| Estimated Market Size (2023) | USD 1.5 billion |
| Projected Market Valuation (2033) | USD 5.9 billion |
| Value-based CAGR (2023 to 2033) | 16.5% |
| Forecast Period | 2023 to 2033 |
| Historical Data Available for | 2018 to 2022 |
| Market Analysis | USD billion for Value |
| Key Regions Covered | North America; Latin America; Western Europe; Eastern Europe; South Asia and Pacific; East Asia; The Middle East and Africa |
| Key Countries Covered | The United States, Canada, Brazil, Mexico, Germany, The United Kingdom, France, Spain, Italy, Poland, Russia, Czech Republic, India, Bangladesh, Australia, New Zealand, China, Japan, South Korea, GCC Countries, South Africa, Israel |
| Key Segments Covered | Type, Application, Sales Channel, Industry, and Region |
| Key Companies Profiled | Thales Group (Gemalto); Utimaco GmbH; Futurex; Adweb Technologies; Yubico; Atos; Ultra Electronics; SPYRUS, Inc.; Securosys; Entrust Corporation; Nitrokey; Kryptoagile; IBM Corporation |
| Report Coverage | Market forecast, company share analysis, competition intelligence, DROT analysis, market dynamics and challenges, and strategic growth initiatives |
Through 2033, the market is going to develop at a 16.5% CAGR.
The market is projected to achieve USD 5.9 billion by 2033.
The global market advanced at a HCAGR of 17.5% from 2018 to 2022.
The market in the United States is expected to maintain a 15.8% CAGR.
Through 2033, sales in Japan to accelerate at a CAGR of 22% in East Asia.
The code and document signing segment accounted for 22% of share.
1. Executive Summary 2. Market Overview 3. Market Background 4. Global Market Analysis 2018 to 2022 and Forecast, 2023 to 2033 5. Global Market Analysis 2018 to 2022 and Forecast 2023 to 2033, By Type 5.1. LAN-based HSMs/Network-attached HSMs 5.2. PCIe-based/Embedded Plugin HSMs 5.3. USB-based/Portable HSMs 6. Global Market Analysis 2018 to 2022 and Forecast 2023 to 2033, By Application 6.1. Payment Processing 6.2. Code and Document Signing 6.3. SSL and TLS 6.4. Authentication 6.5. Database Encryption 6.6. PKI or Credential Management 6.7. Application-Level Encryption 7. Global Market Analysis 2018 to 2022 and Forecast 2023 to 2033, By Sales Channel 7.1. Direct Sales 7.2. Distribution Channel 8. Global Market Analysis 2018 to 2022 and Forecast 2023 to 2033, By Industry 8.1. BFSI 8.2. Healthcare & Life Sciences 8.3. Manufacturing 8.4. Retail & CPG 8.5. Government & Defense 8.6. Energy & Utilities 8.7. Others 9. Global Market Analysis 2018 to 2022 and Forecast 2023 to 2033, By Region 9.1. North America 9.2. Latin America 9.3. Western Europe 9.4. Eastern Europe 9.5. South Asia and Pacific 9.6. East Asia 9.7. Middle East and Africa 10. North America Market Analysis 2018 to 2022 and Forecast 2023 to 2033, By Country 11. Latin America Market Analysis 2018 to 2022 and Forecast 2023 to 2033, By Country 12. Western Europe Market Analysis 2018 to 2022 and Forecast 2023 to 2033, By Country 13. Eastern Europe Market Analysis 2018 to 2022 and Forecast 2023 to 2033, By Country 14. South Asia and Pacific Market Analysis 2018 to 2022 and Forecast 2023 to 2033, By Country 15. East Asia Market Analysis 2018 to 2022 and Forecast 2023 to 2033, By Country 16. Middle East and Africa Market Analysis 2018 to 2022 and Forecast 2023 to 2033, By Country 17. Key Countries Market Analysis 18. Market Structure Analysis 19. Competition Analysis 19.1. Thales Group (Gemalto) 19.2. Utimaco GmbH 19.3. Futurex 19.4. Adweb Technologies 19.5. Yubico 19.6. Atos 19.7. Ultra Electronics 19.8. SPYRUS, Inc. 19.9. Securosys 19.10. Entrust Corporation 19.11. Nitrokey 19.12. Kryptoagile 19.13. IBM Corporation 20. Assumptions & Acronyms Used 21. Research Methodology
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Hardware Security Module Market
