Data Encryption Hardware Market Size & Share, by Deployment Type (Cloud-Based, On-Premise); End use; Product Type - Global Supply & Demand Analysis, Growth Forecasts, Statistical Report 2025-2037

Request Free Sample Copy

Report ID: 7671
Published Date: May 13, 2025
Report Format: PDF, PPT

Global Market Size, Forecast, and Trend Highlights Over 2025-2037

Data Encryption Hardware Market size was valued at USD 1.73 billion in 2024 and is poised to reach USD 5.17 billion by the end of 2037, growing at a CAGR of 8.3% during the forecast period from 2025 to 2037. In 2025, the industry size of data encryption hardware is estimated at USD 1.87 billion.

The market is characterized by a specialized supply chain involving multiple steps from the fabrication of semiconductors that are encryption-specific to the manufacturing of secure hardware. Moreover, the market’s economic indicators can be analyzed via the changes in the Producer Price Index (PPI) and the Consumer Price Index (CPI). The table below highlights key changes in the PPI and the CPI.

Indicator	Value (March 2025)	Year-over-Year Change	Context
Producer Price Index (PPI) for Semiconductor & Electronic Component Manufacturing	153.2	+5.4%	Highlights a growth in production costs for semiconductors (encryption-specific), cryptographic modules, and processors.
Consumer Price Index (CPI) for IT Hardware & Services	108.7	+2.3%	Indicates an increase in the consumer costs for data encryption hardware.
Impact on Data Encryption Hardware Production	Increased production costs	-	Hardware security modules (HSMs) highlight an increase in the consumer costs for data encryption hardware due to a rise in semiconductor costs.
Market Trend	Escalating costs	-	High-performance encryption solutions underwent a rise in demand, leading to an increase in both production and acquisition costs.

A major feature of the sector’s expansion is the continuous rise in cyberattacks and data breaches due to the improvements in connectivity across the world. In 2024, IBM released the Cost of a Data Breach Report, 2024 found that the average cost of a data breach exceeded USD 4.0 million, indicating a heightened requirement for data encryption solutions. The United Nations Comtrade database estimated the value of the export of cryptographic hardware at USD 2.3 billion in 2024. A well-established trade of data encryption hardware supports the continued market growth, and Germany, the U.S., and China are major players in the trade dynamics of encryption hardware components.

Get more information on this report: Request Free Sample PDF

Data Encryption Hardware Sector: Growth Drivers and Challenges

Growth Drivers

Emergence of quantum computing: Quantum computing has emerged as a potential game-changer in cryptography. Theoretically, quantum computers can break encryption algorithms that are widely used. This creates a demand for quantum-resistant cryptographic methods, leading to opportunities in the data encryption hardware market. Key players in the market are launching innovative solutions to cater to the demand. For instance, in February 2025, Quantum Dice and Thales launched the data encryption hardware bolstered with a Quantum Random Number Generator, integrated with Luna data encryption hardware of Thales and Quantum Dice’s Quantum Entropy-as-a-Service.
Increased adoption of bring your own device (BYOD) policies in enterprises: BYOD policies have become a global trend, supported by the proliferation of hybrid and remote working models. The BYOD trend has amplified the demand for data encryption in consumer electronics such as smartphones, USB drives, laptops, etc. Such devices are used for personal as well as corporate purposes and require strong encryption to ensure the protection of sensitive data. A major end user of data encryption hardware is set to be from the consumer electronics sector. In October 2024, ISACA highlighted a rise in BYOD policies, which adds to the risk of data breaches, noting that more than 80% of data breaches in 2022 involved human fault, such as unsecured devices. This creates a burgeoning requirement for data encryption solutions.

Technological Trends Shaping the Data Encryption Hardware Market

The data encryption hardware industry is impacted by technological developments improving the quality of encryption as well as that of hardware components. Key trends shaping the market are the growing adoption of quantum-resistant cryptography. For instance, the risk to traditional encryption algorithms has expanded, leading to the advent of quantum-resistant cryptographic algorithms. Moreover, Hardware Security Modules (HSMs) are evolving to support the post-quantum cryptography standards, while the new algorithms are set to be designed to resist decryption by quantum algorithms. The table below highlights measurable outcomes and advancements impacting the market:

Trend	Industry	Adoption/Example	Impact
Cloud-based Encryption	Finance	60% of banks use cloud encryption (Thales, 2024)	Better scalability & Compliance
Quantum-resistant Encryption	Telecom	Ericsson deploys quantum-safe hardware (Ericsson, 2023)	Future-proof encryption
AI-driven Key Management	Healthcare	31% increase in AI adoption (McAfee, 2024)	Automated threat detection
IoT-integrated Encryption	Manufacturing	Bosch reduces supply chain attacks by 26% (Bosch, 2023)	Secure device authentication
Blockchain Encryption	Retail	Visa cuts fraud by 21% with blockchain (Visa, 2024)	Tamper-proof transactions

Bottom of FormGrowing Cybersecurity Risks in the Global Market

The data encryption hardware market is driven by the surge in cybersecurity risks. The evolution of cybersecurity risks with the increasing connectivity across the world is driving advancements in the market. Ransomware and supply chain attacks have become increasingly sophisticated, leading to manufacturers releasing advanced encryption hardware solutions to keep pace with the threats. A report by Thales in 2024 highlights that more than 61% of data encryption hardware providers suffered from phishing attacks due to a lack of proper employee training, while more than 35% were afflicted with firmware tampering risks. The table below highlights major cyberattacks on key companies, which are set to drive sustained demand in the market:

Company	Cyber Attack (2023-24)	Impact	Potential Remedies
Thales	Ransomware attack (Q2 2023)	$15.5M loss, 10-day operational shutdown	AI-based anomaly detection + automated backups
Utimaco	Supply chain breach (2024)	Firmware tampering, reputational damage	Hardware integrity verification + zero-trust
Gemalto	Phishing scam (2023)	Employee data leak, regulatory fines	MFA + bi-weekly security training
IBM	API exploit (2024)	Data encryption hardware key exposure, client distrust	API encryption + behavioral ana

Challenges

Pricing pressures and cost competitiveness: The pricing pressures on data encryption hardware create a major impediment for the sector. The impact is felt especially on the small and medium enterprises (SMEs). In 2023, the World Trade Organization (WTO) released a report highlighting the challenges faced by small businesses in integrating leading cybersecurity measures. An increase in costs deters multiple businesses from actively investing in data encryption hardware, and the impact is felt on the overall security structure. The sophisticated technology is an additional factor that can limit market penetration.
Export restrictions and cross-border trade barriers: The International trade in data encryption hardware has faced the constraint of export restrictions. Moreover, the challenge is compounded by the ongoing tariff negotiations and disagreements plaguing international trade. In 2023, due to the US export controls, several manufacturers from the country were unable to sell their products in a few APAC markets, reducing revenue.

Data Encryption Hardware Market: Key Insights

Base Year	2024
Forecast Year	2025-2037
CAGR	8.3%
Base Year Market Size (2024)	USD 1.73 billion
Forecast Year Market Size (2037)	USD 5.17 billion
Regional Scope	North America (U.S. and Canada) Asia Pacific (Japan, China, India, Indonesia, Malaysia, Australia, South Korea, Rest of Asia-Pacific) Europe (UK, Germany, France, Italy, Spain, Russia, NORDIC, Rest of Europe) Latin America (Mexico, Argentina, Brazil, Rest of Latin America) Middle East and Africa (Israel, GCC North Africa, South Africa, Rest of the Middle East and Africa)

Get more information on this report: Request Free Sample PDF

Data Encryption Hardware Segmentation

Deployment Type (Cloud-Based, On-Premise)

The cloud-based segment of the data encryption hardware market is slated to hold a dominant revenue share worth 65.7% by the end of 2037. Due to a surge in the demand for advanced security solutions by organizations from multiple industries, the segment is set to experience heightened end use throughout the forecast period. Two reports that highlight favorable data for the segment are a 2023 report by NIST, indicating that more than 90% of the federal agencies in the U.S. use cloud services, leading to a surge in demand for data encryption hardware. The other report was by the Cybersecurity and Infrastructure Security Agency (CISA), which highlighted a 28% increase in attacks specifically targeting the cloud. Moreover, the strict regulatory guidelines create opportunities in the segment.

Product Type (Hardware Security Modules (HSMs), Encryption Appliances, Secure Storage Devices, Trusted Platform Modules (TPMs), Cryptographic Processors)

The hardware security modules (HSMs) segment is poised to account for a 36.2% revenue share by the end of 2037. The segment’s major drivers include the escalation of cyberattacks. In 2024, the FBI reported that there was a 26% increase in data breaches that involved cryptographic failures. Moreover, strict regulations, including the FIPS 140-3, which was enforced in 2023 by NIST, mandate HSM use for federal agencies that handle sensitive data. Additionally, a major revenue stream in the segment is expected to arise from the rise in electronic payments across the world, with a 16% increase estimated in electronic payments in the U.S. alone by a Federal Reserve Study in 2023.

Our in-depth analysis of the global market includes the following segments:

Deployment Type	Cloud-based On-Premise
End use	Banking & Financial Services Government
Product Type	Hardware Security Modules (HSMs) Encryption Appliances Secure Storage Devices Trusted Platform Modules (TPMs) Cryptographic Processors

Want to customize this research report as per your requirements? Our research team will cover the information you require to help you take effective business decisions.

Customize this Report

North America Market Forecast

The North America data encryption hardware market is poised to register a revenue share of 35.7% by the end of 2037. A major feature of the market is due to the heightened cybersecurity threats along with strict regulatory frameworks. The NIST guidelines in the U.S., such as the FIPS 140-3, are a key feature of the regional market. The guidelines create a steady demand for data encryption hardware. Moreover, an exponential growth in digital solutions in the region has led to enterprises prioritizing cybersecurity.

The U.S. data encryption hardware sector is supported by the increase in data breaches, which has created ample opportunities to supply data encryption hardware solutions. In 2023, the crime report released by the FBI highlighted cybercrime incidents in the country reaching unprecedented levels (800,100). The trends of rising cybercrime incidents drive a sustained requirement for hardware-based security. Organizations, including DARPA in the U.S., lead in R&D activities through active investment in next-generation cryptographic hardware. Additionally, with the U.S. leading in the global AI race, the complexity of cyberattacks is set to expand during the forecast period, creating lucrative opportunities to supply encryption hardware services.

The Canada data encryption hardware market is poised to expand at a rapid pace during the forecast period. The growth in cyberattack cases has created a necessary demand for data encryption hardware in Canada. The Canadian Centre for Cyber Security’s 2023 report highlights the need for encryption to counter the rising ransomware attacks. Moreover, Canada is impacted by its proximity to U.S. manufacturers and trade agreements, such as the USMCA, to ensure regular availability of components for manufacturing encryption hardware.

Europe Market Forecast

The Europe data encryption hardware market is set to register the fastest growth of 7.9% during the forecast period. The General Data Protection Regulation (GDPR) mandates strong data protection guidelines in Europe, creating opportunities throughout the economies in the region. Another key act is the Digital Operational Resilience Act (DORA) that requires entities in the financial sector to implement necessary measures to adequately protect ICT systems. Moreover, efforts by ENISA to create interoperable guidelines for cybersecurity are set to benefit the future outlook of globalmarket.

Germany data encryption hardware market is boosted by the data protection laws and a strong industrial base. Cybersecurity remains a major cause of concern in Germany, especially against the backdrop of geopolitical tensions rising and internal threats. This creates an environment conducive to the penetration of data encryption hardware solutions. Additionally, Germany remains an active participant in the EU’s cybersecurity initiatives, such as the European Cybersecurity Act.

The France data encryption hardware market is estimated to expand its revenue share by the end of 2037. A key feature of market growth is the push to improve domestic cybersecurity measures. For instance, the French National Agency for the Security of Information Systems (ANSSI) plays a pivotal role in the promotion of cybersecurity practices in the country. Recently, France participated in the European Quantum Communication infrastructure (EuroQCI), which in turn bodes well for the future of the market in the country.

Get more information on this report: Request Free Sample PDF

Companies Dominating the Data Encryption Hardware Landscape

The data encryption hardware market is set for robust expansion throughout the forecast timeline. The market is dominated by major players such as the Thales Group, IBM, Utimaco GmbH, etc. The competitive market is rife with strategic acquisitions to expand revenue share. For instance, the acquisition of Gemalto by Thales boosted the latter’s digital security offerings. Emerging players in the sector include Securemetric and Yubico, with promising growth curves. Below are the top market players operating in the global data encryption hardware industry:

Company	Country of Origin	Market Share (%)
Thales Group	France	31%
IBM Corporation	USA	22%
Utimaco GmbH	Germany	16%
Futurex	USA	11%
Entrust Corporation	USA	9%
Atalla (Utimaco Atalla)	USA	xx%
Securosys SA	Switzerland	xx%
Yubico AB	Sweden	xx%
Ultra Electronics	UK	xx%
Micro Focus International	UK	xx%
Huawei Technologies	China	xx%
Samsung SDS	South Korea	xx%
NEC Corporation	Japan	xx%
Tata Communications	India	xx%
Securemetric Technology	Malaysia	xx%

In the News

In February 2025, Utimaco announced a strategic collaboration with Cosmian to integrate their data integration hardware with the Key Management System of Cosmian. Via this integration, Utimaco is expected to bolster data security.
In October 2024, Utimaco’s KeyBRIDGE Point of Interaction (POI) was integrated with the VeriShield Remote Key (VRK) of Verifone. The partnership improved security for the financial point-of-sale transactions.

Author Credits: Abhishek Verma

Report ID: 7671
Published Date: May 13, 2025
Report Format: PDF, PPT

Frequently Asked Questions (FAQ)

The data encryption hardware market was valued at USD 1.73 billion in 2024 and is poised to expand at a CAGR of 8.3% during the forecast period from 2025 to 2037.

The data encryption hardware market was valued at USD 1.73 billion in 2024 and is poised to reach USD 5.17 billion by the end of 2037 at a CAGR of 8.3% during the forecast period from 2025 to 2037.

The major players in the market are Thales Group, IBM Corporation, Utimaco GmbH, Futurex, Entrust Corporation, Atalla, Securosys SA, Yubico AB, and others.

The cloud-based segment of the data encryption hardware market is poised to account for 65.7% revenue share by the end of 2037. The segment’s expansion is attributed to the rising threats to cloud-based data driving demand for data encryption hardware solutions.

The North America data encryption hardware market is estimated to hold a 35.7% revenue share throughout the forecast period. The regional market’s dominance is attributed to a rise in cybersecurity threats leading to a surge in demand for data encryption hardware solutions.