Global Market Size, Forecast, and Trend Highlights Over 2025-2037
Hardware in the Loop Market size was USD 1.2 billion in 2024 and is estimated to reach USD 4.2 billion by the end of 2037, expanding at a CAGR of 10.4% during the forecast period, i.e., 2025-2037. In 2025, the industry size of hardware in the Loop is assessed at USD 1.3 billion by 2025.
The hardware in the Loop (HIL) production is focused on the supply chain of high-precision electronics, software platforms, digital equipment, and embedded solutions. The steady supply of these systems reflects a positive influence on the trade of hardware in the Loop components. The majority of raw materials are imported by Western manufacturers, particularly from the U.S. are from Asia Pacific countries such as Japan, Taiwan, and South Korea. The analysis by the U.S. International Trade Commission (USITC) highlights that in 2023, around USD 17.9 billion worth of semiconductor imports were registered in the U.S. The report by the U.S. Geological Survey (USGS) also estimates that more than 65.5% of global rare earth exports are sourced from China. This underscores that the trade of raw materials vital for the production of hardware in the Loop components is dominated by Asia Pacific.
The Bureau of Labor Statistics states that the Producer Price Index (PPI) for electronic instruments and control systems increased by 3.6% and the Consumer Price Index (CPI) for technical services rose by 2.9%, in 2024 in the U.S. These statistics reflect a positive rise in production and commercialization of electrical solutions and labor & component prices across the hardware in the Loop HIL value chain. Furthermore, the public investments in the HIL-aligned technologies in the energy sector are set to gain traction in the coming years. The U.S. Department of Energy (DOE) states that in 2024, through its grid modernization initiative, it allocated around USD 126 million in real-time simulation infrastructure, particularly for energy systems testing. Thus, the public funding moves are estimated to play a vital role in accelerating the adoption of hardware in the Loop solutions.
Hardware in the Loop Sector: Growth Drivers and Restraints
Growth Drivers
- Aerospace and defense modernization: The HIL solutions are in demand in the aerospace and military sectors owing to their advanced capabilities in avionics, navigation systems, and flight control. Initiatives, such as the European Space Agency’s 2024–2030 Horizon Defense Roadmap, the U.S. Air Force Digital Twin Initiative, and NASA’s Artemis, drive a high demand for real-time validation systems. The swift rise in digital transformation is also expected to fuel the adoption of hardware in the Loop components in the years ahead. Furthermore, the high defense budgets aimed at enhancing digitalization are creating a profitable environment for HIL manufacturers.
- Industry 4.0 & digital twin integration: The smart manufacturing trend is propelling the employment of hardware in the Loop solutions in various industries such as automotive, energy, and aerospace. Digital twin and Industry 4.0, coupled with HIL systems, are estimated to gain traction during the foreseeable period. The Research Nester’s study estimates that the demand for HIL in smart manufacturing is anticipated to increase at a CAGR of 9.5% from 2025 to 2037. Germany, Japan, and South Korea are expected to drive the adoption of hardware in the Loop components owing to their leadership in innovations.
Technological Innovations in the Hardware in the Loop Market
Technological innovations are aimed at enhancing the workflow of end use companies. Energy, aerospace, automotive, and electronic companies are increasingly investing in the technologically advanced HIL platforms to increase their operations. The table below highlights the HIL adoption statistics and real-world applications.
|
Technology Trend |
Industry |
Company/Entity |
Adoption Rate / Statistic |
Results Achieved |
|
AI-enhanced HIL |
Automotive |
dSPACE GmbH |
Minimized ECU validation cycle by 42.4% |
20.4% faster time-to-market for EV models |
|
FPGA-enabled Simulation |
Aerospace/Defense |
NASA, Lockheed Martin |
Employed in over 80.3% of avionics simulation testbeds |
30.3% improvement in fault detection latency |
|
Power HIL (PHIL) |
Energy |
U.S. Dept. of Energy (DOE) |
Deployed in 22+ grid modernization labs |
18.5% enhancement in DER integration performance |
AI & ML Integration in the Hardware in the Loop Market
Many end users are employing AI & ML integrated HIL platforms to improve their operational efficiency and product quality. Industrial automation and digitalization trends are mainly backing the sales of AI & ML integrated HIL solutions. The table below underscores the employment of AI & ML and its outcome.
|
Company |
Integration of AI & ML |
Outcome |
|
dSPACE GmbH |
Employed AI to optimize ECU test scenarios in HIL platforms |
Decreased development time by 42.4% |
|
National Instruments |
Used ML algorithms to find anomalies in real-time simulation data |
Reduced test failure rates by 28.4% |
|
Siemens |
Deployed AI for dynamic supply chain management across HIL component production lines |
Minimized logistics costs by 33.3% |
5G Role in the Hardware in the Loop Market
The increasing adoption of industrial IoTs is accelerating the need for robust connectivity networks, including 5G networks. Companies are employing 5G-enabled HIL testbeds in smart factories to enhance their operational processes. Follow the table below for 5G employment and its results.
|
Company |
5G Deployment Use Case |
Outcome (2023–2024) |
|
Bosch |
5G-integrated HIL in smart factory robotics testing |
Improved operational efficiency by 35.5% |
|
Foxconn |
5G-connected IoT sensors for HIL simulation of assembly lines |
Decreased production errors by 27.4% |
|
Ericsson |
5G HIL platform for telecom equipment validation |
Increased product release cycles by 22.3% |
Challenges
- Cross-border data transfer limitations: The strict regulations aimed at protecting the personal data of consumers from cross-border transfers are expected to limit the hardware in the Loop solution sales to some extent. The EU's General Data Protection Regulation (GDPR) and the Digital Personal Data Protection Act (2023) of India are some of the polices that restrict the flow of data internationally, which limits the production and improvement of cloud-based HIL solutions. Overall, the strategic collaborations with public entities or other industry giants are expected to aid in combating this challenge.
- Infrastructure gaps: The installation of hardware in the Loop solutions is a complex process and requires advanced infrastructure. The unavailability of digital technologies and robust connectivity networks in the budget-constrained markets is estimated to challenge the revenue growth of the HIL manufacturers. However, the industry giants are considering such regions as high-potential markets and expanding their facilities to earn high opportunities from untapped markets.
Hardware in the Loop Market: Key Insights
| Report Attribute | Details |
|---|---|
|
Base Year |
2024 |
|
Forecast Year |
2025-2037 |
|
CAGR |
10.4% |
|
Base Year Market Size (2024) |
USD 1.2 billion |
|
Forecast Year Market Size (2037) |
USD 4.2 billion |
|
Regional Scope |
|
Hardware in the Loop Segmentation
Application (Automotive, Aerospace & Defense, Industrial Automation, Semiconductor & Electronics, Power Systems)
The automotive segment is expected to capture 42.8% of the global hardware in the Loop market share by 2037. The increasing popularity of advanced driver assistance systems (ADAS) and autonomous driving is estimated to fuel he adoption of hardware in the Loop systems. The evolving mandatory regulations, including the EU’s Road Safety Programme (2021–2030) and the U.S. Department of Transportation’s AV policy updates (2023), are accelerating the employment of automotive HIL platforms. In addition, the increasing demand for electric vehicles is expected to fuel the adoption of HIL solutions in the coming years.
Component (Hardware, Software, Services)
The hardware segment is projected to account for 39.9% of the global market share throughout the study period. The industrial automation and smart manufacturing trends are fueling the application of real-time processors and I/O modules in HIL testing. The National Institute of Standards and Technology (NIST) states that in 2023, the manufacturing investment in embedded control systems and real-time simulation in the U.S. increased by 14.6%. The main factors driving this growth were the rising adoption of digital twin technology and predictive maintenance solutions.
Our in-depth analysis of the global hardware in the loop market includes the following segments:
|
Component |
|
|
Application |
|
|
End use |
|
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Customize this ReportHardware in the Loop Industry - Regional Scope
North America Market Forecast
The North America hardware in the Loop market is estimated to hold 37.2% of the global revenue share through 2037. The growing adoption of real-time system simulation in the aerospace, automotive, and industrial automation sectors is contributing to the high sales of HIL solutions. The supportive government policies are also accelerating the employment of HIL solutions. The National Telecommunications and Information Administration (NTIA) allocated more than USD 42.5 billion to modernize ICT infrastructure in 2023. These investment moves are expected to lay the groundwork for technologies including HIL. The telecom and automotive industries are driving high sales of HIL platforms.
The market for hardware in the Loop in the U.S. is projected to reach USD 2.7 billion by the end of 2037. The ongoing research and development activities in the defense, automotive, and semiconductor industries are set to fuel the employment of HIL platforms in the coming years. The rapid rise in digital infrastructure and industrial automation is creating a profitable environment for hardware in the Loop components manufacturers. The swift expansion of the telecommunication sector is also playing a vital role in the commercialization of the HIL solutions.
The sale of HIL solutions in Canada is foreseen to increase at a CAGR of 9.1% throughout the forecast period. The digitalization of industrial infrastructure and automotive innovation are fueling the HIL solution trade in the country. The Innovation, Science, and Economic Development’s Innovation Superclusters Initiative and the around USD 1.03 billion Strategic Innovation Fund are forecast to aid high-tech companies in integrating HIL for prototyping and system validation.
APAC Market Statistics
The Asia Pacific hardware in the Loop market is anticipated to increase at a robust CAGR of 10.7% between 2025 and 2037. The strong presence of end users such as automotive, electronics, aerospace, and energy is propelling the adoption of hardware in the Loop platforms. The automation and digitalization trend is accelerating the demand for HIL solutions in the region. Japan and South Korea’s precision in technological advancements are set to drive the sales of innovative HIL solutions. Ministry of Economy, Trade and Industry (METI) estimates that nearly IUSD 6.2 billion, or 9.6% of its total technology R&D budget, was allocated to embedded systems validation in 2024. Such investment initiatives are expected to drive the development and commercialization of hardware in the Loop platforms in the coming years.
China, being a hub for semiconductor and other electronic component manufacturing, is likely to drive the sales of HIL solutions in the years ahead. The government's digital transformation strategies are expected to open new opportunities for hardware in the Loop component manufacturers in the country. The China Academy of Information and Communications Technology (CAICT) estimates that more than 8,000 enterprises have integrated HIL systems in their product testing. Furthermore, the government's efforts to streamline hardware-software integration through standards and subsidies are estimated to boost the adoption curve.
The India hardware in the Loop market is foreseen to expand at a high 19.1% CAGR through 2037. The rise in public-private investments for R&D, advancements in semiconductor manufacturing, and booming automotive trade are set to increase the revenue shares of HIL manufacturers. The auto makers are increasingly using HIL platforms for EV powertrain testing purposes. The Digital India and Semicon India initiatives are also contributing to the overall market growth. The modernization of the aerospace and defense sector is poised to offer fruitful gains to HIL producers in the years ahead.
Companies Dominating the Hardware in the Loop Landscape
- Company Overview
- Business Strategy
- Key Product Offerings
- Financial Performance
- Key Performance Indicators
- Risk Analysis
- Recent Development
- Regional Presence
- SWOT Analysis
The prime companies in the hardware in the Loop market are employing various organic and inorganic strategies such as technological innovations, mergers & acquisitions, new product launches, partnerships & collaborations, and regional expansion to uplift their sales and position. Germany and the U.S.-based players are entering into strategic collaborations with automotive and aerospace companies to boost their dominance in particular sectors. The growth in public-private investments is also expected to fuel the revenue shares of industry giants in the years ahead. Here is a list of key players operating in the global market:
|
Company Name |
Country of Origin |
Revenue Share 2024 |
|
National Instruments Corporation |
United States |
13.7% |
|
dSPACE GmbH |
Germany |
12.9% |
|
Vector Informatik GmbH |
Germany |
10.4% |
|
OPAL-RT Technologies Inc. |
Canada |
7.2% |
|
Siemens AG |
Germany |
6.6% |
|
Speedgoat GmbH |
Switzerland |
XX% |
|
Typhoon HIL Inc. |
Switzerland |
XX% |
|
AVL List GmbH |
Austria |
XX% |
|
ETAS GmbH (Robert Bosch GmbH Subsidiary) |
Germany |
XX% |
|
Keysight Technologies |
United States |
XX% |
|
MathWorks Inc. |
United States |
XX% |
|
IPG Automotive GmbH |
Germany |
XX% |
|
LHP Engineering Solutions |
United States |
XX% |
|
Tata Elxsi Ltd. |
India |
XX% |
|
DreamEDGE Sdn. Bhd. |
Malaysia |
XX% |
Below are the areas covered for each company in the hardware in the Loop market:
Recent Developments
- In February 2024, dSPACE GmbH announced the launch of an enhanced version of its SCALEXIO Hardware in the Loop (HIL) system for autonomous vehicles. This innovation contributed to a 12.5% rise in HIL sales during the first quarter of 2024.
- In January 2024, National Instruments introduced HIL Software Suite 2024, specifically designed for 5G and electric vehicle (EV) powertrain simulations. This move aided the company in an 8.9% YoY increase in software revenue in Q1 2024.
Author Credits: Abhishek Verma
- Report ID: 3831
- Published Date: May 19, 2025
- Report Format: PDF, PPT
