Hardware Security Module Market Assessment, By Type [LAN Based, PCIE Based, USB Based], By Deployment [On-Premises, Cloud], By Application [Payment Processing, Code and Document Signing, Authentication, Database Encryption, PKI and Credential Management,

Hardware Security Module Market Assessment, By Type [LAN Based, PCIE Based, USB Based], By Deployment [On-Premises, Cloud], By Application [Payment Processing, Code and Document Signing, Authentication, Database Encryption, PKI and Credential Management, Application-level Encryption], By End-user [BFSI, Technology and Communication, Industrial and Manufacturing, Energy and Utility, Retail and Consumer Products, Healthcare and Life Sciences, Entertainment and Media, Automotive and Transportation, Others], By Region, Opportunities and Forecast, 2017-2031F

Global hardware security module market has experienced significant growth in recent years and is expected to maintain a strong pace of expansion in the coming years. With projected revenue of approximately USD 1.73 billion in 2023, the market will reach a value of USD 4.22 billion by 2031, displaying a robust CAGR of 11.8% from 2024 to 2031.

The security module keeps the confidentiality of trade business data in such a way that only authorized persons can have access to use the data points to complete cryptography transactions. The hardware security module market is rising due to data security and compliance and data regulatory protection, including GDPR, HIPAA, etc. In today’s age of the cloud, cloud-based HSM is continuously gaining traction as most organizations operate on cloud-based security solutions that integrate into their hardware system for smooth operational efficiency without any error and privacy concerns. Also, integrating emerging technologies, such as blockchain and IoT, makes the security of hardware modules more robust and solid, driving the market significantly.

According to Upstream's 2024 global automotive cybersecurity report, the leading cyberattack vectors in 2022 encompassed various areas, with telematics and application servers at the forefront, accounting for 35% of attacks. Following closely remote keyless entry systems encountering 18%, electronic control units at 14%, automotive and smart mobility APIs at 12%, infotainment systems at 8%, mobile applications at 6%, and EV charging infrastructure at 4%.

In December 2023, Nitrokey launched NetHSM, a fully integrated open-source module after 8 years of continuous effort. The device stores and manages cryptographic keys which can be used for web servers, blockchains, CA. The open-source code provides facilities such as customization according to use cases, vendor independence, and backdoor checking, etc.

Increasing Data Security and Cybersecurity Concerns Propel Market Growth

Data security and cyber-attacks are major concerns for the security of hardware modules. Regulatory authorities worldwide are strengthening their law security in data breaches and taking necessary measures to establish robust firewall for protection of hardware modules against malware. As malicious actors continually target sensitive data and valuable assets, organizations across various industries increasingly recognize the need to safeguard their cryptographic keys and secure their digital transactions. Tamper-resistant hardware-based security solutions are emerging as new catalysts in the industry to further boost the trends and dynamics of the market. This ensures integrity and transparency of data.

On October 11, 2021, Infineon launched the SLS37 V2X hardware security module to protect the vehicle-to-everything communication system. The discrete HSM supports system integrators in solving the critical operation between high performance and high security. Therefore, the operating principle of the SLS37 V2X HSM is focused on high security tasks such as key storage and the generation of signatures for outgoing messages.

Rising Adoption of 5G Network Connectivity Boost the Market Share

Increased usage and adoption of 5G networks throughout the globe have created diverse opportunities for market players. For instance, in 2022, Ericsson integrated the Thales hardware security module in its 5G Core authentication solution to lessen the rising vulnerability risks in the large 5G environment. Furthermore, increase in the number of IoT gadgets quickens the demand for excessive-pace and low-latency connectivity that can guide real-time facts switch and processing. The element proliferates the sizable upward thrust in advancement across the 5G network market, with faster data transfer and lower latency, which in turn, drives the hardware safety module market growth. Moreover, regional governments and private and public organizations are continuously worried in promoting digitalization in 5G operations and upkeep.

For instance, in April 2023, Ericsson partnered with the Canada authorities at more than USD 34.87 million (CAD 470 million). The alliance predominantly emphasized the development of next-era communications technology. Similarly, in February 2023, Nokia partnered with Kyndryl to extend the threshold computing development by delivering the LTE and 5G personal wireless offerings and Industry 4.0 to the clients. Such traits are expected to drive the hardware security module market growth.

Europe Dominating Hardware Security Modules Market

Europe accounts for the largest share in the global hardware security modules market, on account of the rising transition within the BFSI, IT, and telecommunications, and medical and lifestyles sciences, together with the automobile enterprises. Furthermore, the upward thrust in the improvement of 4G LTE technology will in addition raise the growth of hardware protection modules market inside the vicinity throughout the forecast period. South America is projected to observe boom in the hardware security modules market due to the governing compliances. Moreover, the penetration of technologies such as IoT, cloud, and others is further expected to propel the increase of global hardware security modules market in the forecast years.

Cost Effective Price Poses Significant Restraint In the Market Expansion

Increase in costs is driven by a set of factors such as increased demand for robust data security, supply chain disruptions, and the addition of advanced features in modern HSMs. As organizations increasingly begin to give higher priority to protect their mission-critical data and cryptographic keys, the cost of procuring and deploying these unique security appliances has risen. In the context, businesses consider the cost-benefit rationale of HSMs, and the price factor becomes a significant consideration in deciding whether or not to implement these critical security measures.

Increasing Adoption of Cryptographic Keys Influence the Market Trends

The increasing reliance on cryptographic keys has made them a basic building block of data security, demanding an equal escalation in their management. HSMs are therefore recording huge sales in growth of global hardware security module market, given the fact that there is an ever-growing demand for reliable key management solutions to guarantee the integrity and confidentiality of digital assets from the swelling menace of cyberattacks. HSMs have turned out to be the indispensable tools in accomplishing the task, as they can efficiently create, store, and deal with cryptographic keys in a secure way. From this understanding, HSM market is realizing considerable growth due to the fact that businesses are acknowledging these devices' crucial role in safeguarding their cryptographic keys, and by extension, their data. All these factors are likely to further provide a lucrative opportunity for the growth of global hardware security module markets.

Future Market Scenario (2024-2031F)

The market is expanding exponentially, and there is optimistic growth in the future scenario of the global hardware security market as governments and regulatory authorities worldwide are strengthening their security infrastructure, which is critical for the market to expand. Parallelly protecting devices and data instruments from cyber threats will further propel the market. The market growth will be further influenced by the need for robust data infrastructure and critical security deployments, especially designed for industries such as IT and telecom, automotive, aerospace, and defense, which will be the most effective and strong growth end-user segment in the forecast period.

Key Players Landscape and Outlook

Global hardware security module market is witnessing a swift growth trajectory due to the increasing emphasis placed by companies worldwide on establishing advanced data security infrastructure and hardware security. The reasons for an ever-increasing rise in costs are a set of factors: growing demand for strong data security, supply chain disruptions, and advanced features added to modern HSMs. As companies increasingly start to give priority to protecting their mission-critical data and cryptographic keys, the cost of procuring and deploying these special security appliances has gone up. In this context, businesses look forward to the cost-benefit rationale of HSMs, and the price factor becomes major in deciding whether to roll out these critical security measures.

In September 2022, Elektrobit and Argus Cyber Security introduced the EB zoneo SwithCore Shield, an innovative solution that integrates embedded intrusion detection and prevention (IDP) capabilities into advanced network management systems for next generation vehicles. The collaborative effort presents a compact embedded module featuring the Argus Ethernet Intrusion Detection and Prevention System (IDPS). The robust cybersecurity safeguard is specifically designed for automotive Ethernet networks and is seamlessly integrated as an automotive-grade switch firmware within the vehicle's electrical and electronic (E/E) architectures.

In September 2022, Marvell introduced the LiquidSecurity 2 (LS2) hardware security module (HSM) adapter, hailed as the most advanced solution in the industry for facilitating encryption, key management, authentication, and other HSM services in cloud environments. LS2 serves as a comprehensive security platform catering to payment, privacy compliance, and general-purpose applications. Powered by Marvell's cloud optimized OCTEON data processing unit (DPU), which has demonstrated its efficacy across the world's largest hyperscale clouds, LS2 offers unparalleled cryptographic acceleration and processing capabilities. It boasts hardware-secured storage for up to one million keys across AES, RSA, and ECC encryption algorithms, along with 45 partitions designed to support robust multi-tenant scenarios.