Embedded Security Market Size & Share Analysis - Trends, Drivers, Competitive Landscape, and Forecasts (2025 - 2032)

Embedded Security Market Trends & Growth Drivers

Digital Payments Are Key Market Trends

• The development of smartphones and smart wearables, near-field communication technology, and mobile internet has allowed for the integration of payment services into existing mobile devices.
• Convenience and the elimination of the requirement for carrying cash have been the driving forces for cashless and contactless payment methods, while the internet has played an integral role in enabling online commerce.
• The coronavirus pandemic has further fueled the trend of cashless and contactless payments, thus strengthening the need for stronger cybersecurity measures.
• With the continuous evolution in and adoption of wearable technology in multiple applications and the integration of payment apps in smart phones and watches, while ensuring the encryption of data, embedded security companies are exploring new solutions to cater to users.
• For instance, India-based Axis Bank collaborated with Thales Group and launched wearable contactless payment devices, called Wear ‘N’ Pay.

Increase in Adoption of IoT Devices Drives Market

• The deployment of IoT will continue to grow during the forecast period. IoT-integrated devices are digitally connected and now common in every aspect of the human life, including homes, offices, and cars.
• The technology enables speedier and better monitoring, processing, and control, as and when needed. Some decision-making can be even pre-programmed/automated.
• However, a major issue faced by IoT is that it generates too much data, which makes the devices vulnerable and prone to cyber-attacks.
• Therefore, security is critical to the success of the internet of things market. Attacks on industrial machine-to-machine networks have highlighted several dangers of cyberattacks, such as operational disruptions, dents in customer relationship, and devaluation of the brand.
• With the increasing number of devices being integrated with IoT, the requirement for security will grow during the forecast period.
• For instance, Infineon’s OPTIGA TPM stores sensitive information in much the same way as if it were in a vault, thus providing high levels of protection against cyber-attacks.
• The trusted platform module (TPM) secures all the major communication channels in a car, such as the central gateway, telematics unit, and infotainment system.

Cost and Designing Constraints Are Major Market Restraints

• The major restraints for the embedded security systems are the high costs and complexities associated with designing security modules.
• Although primitive embedded security systems are simple, their complexity continues to increase with the advancements in almost every industry.
• Additionally, they are costly to develop as they are based on commercial hardware.
• Moreover, the resources required to use and maintain these devices adds to the operating expenses for users.
• The replacement of legacy security systems with modern ones can further increase the cost pressure on SMEs.

Embedded Security Market Analysis

Offering Insights

Hardware holds the largest share, of 55%, as it is the basis for any embedded security systems and the most complex and costliest to develop of all components. Embedded SIMs, secure elements, trusted platform modules, hardware tokens, and hardware security modules are among the most-significant pieces of such hardware. The demand for them is driven by the growing adoption of connected systems and the accumulation of increasing volumes of data. Embedded systems are important components of connected automobiles, automated industrial machinery, remote patient monitoring systems, and pieces of smart city infrastructure. Moreover, the increasing incidence of cyberattacks on embedded security systems is driving the need for advancements in the hardware.

The software category is expected to grow the fastest over this decade, with 7.0% CAGR. The growing complexity of cyberattacks necessitates the development of cutting-edge software to protect critical devices. Adaptive security measures, behavioral analysis, and real-time threat detection software is witnessing rapid adoption around the world due to these challenges. Additionally, software-defined security protocols are flexible and scalable, enabling quick updates and patch creation to protect against evolving attacks, where hardware-only security models are ineffective. Software-based embedded security is also important in this era of the rising data volumes for to IoT adoption, which offer cybercriminals more entry points into databases.

The report offers insights into the following offerings:

• Hardware (Largest Category)
• Software
• Services (Fastest-Growing Category)

Application Insights

The payment category dominates the market with 45% share on account of the growing volume of online transactions. As per the National Informatics Centre of the Indian government, UPI payment value in the country stood at INR 125.95 trillion in 2022. The biggest factor influencing this trend is the growth of the global e-commerce industry, itself aided by the rising sales of smartphone and increasing access to the internet. Simliarly, as per the U.S. Census Bureau, people in the country spent USD 291.6 billion on online shopping in 2024 Q2. Additionally, other forms of electronic payments are witnessing a rapid surge in popularity, especially credit and debit cards, as well as the enabling touch-based and touchless PoS terminals.

Authentication is the fastest-growing category in the market, with an expected CAGR of 6.0%. This is attributed to the proliferation of connected devices in all facets of life, which raises the need for strong authentication protocols to protect data and machinery. The need for embedded security systems for authentication purposes is also propelled by the implementation of stringent data protection regulations in developed countries.

We have studied these applications:

• Authentication (Fastest-Growing Category)
• Payment (Largest Category)
• Content Protection
• Others

End Use Insights

The automotive category is expected to witness the fastest growth in the embedded security market, of around 7.0%, during 2025–2032, after holding the largest share, of 30%, in 2024. Electric vehicles are the major drivers of this category; in 2023, over 14 million electric cars were sold around the world. As much as they are beneficial to the environment, they have a higher probability of data theft. As per reports, the automotive industry is likely to lose over USD 500 billion by 2024 to cyber-attacks. Moreover, more than 80% of the cyber-attacks in 2021 were carried out remotely.

Moreover, the automobile sector is immensely dependent on software and electronics. With the growth in the sale of connected cars and increase in the attention on autonomous driving, security becomes paramount in connected car systems, such as sensors, car access systems, secure gateways, powertrains, and chassis. With the security threats continuing to rise, deeper integration of the software with vehicles is required for the latter’s protection from unauthorized access to systems and software manipulation, thus improving the growth of the embedded security market outlook in the forecast period.

Furthermore, the requirement for security in the healthcare system is gaining traction. The Health Insurance Portability and Accountability Act (HIPAA) of 1996, along with the American Recovery and Reinvestment Act of 2009, have legislated investments in electronic health records (EHRs). These systems contain sensitive information and are of tremendous value, which makes them a favorite target of cyber-criminals.

Substituting private/standalone systems with cloud operations offers rewards, but risks at the same time, with the escalation in the frequency of ransomware and other attacks, which are, additionally, becoming more sophisticated. Hence, security solutions that can protect the data from cyber-attacks will be in demand. Such software would be required to be tailored with application whitelisting, antivirus and anti-malware protection, device management, encryption, and risk and compliance, in order to meet specific design requirements.

We have analyzed the below-mentioned end uses:

• Automotive (Largest and Fastest-Growing Category)
• Healthcare
• Consumer Electronics
• IT & Telecommunications
• Aerospace & Defense
• BFSI
• Others

Regional Analysis

• APAC holds the largest embedded security market share globally, of 45%, and it will register the highest CAGR, of 6.0%, from 2024 to 2032.
• With the increasing degree of interconnection between billions of devices through IoT, stronger IT security is the need of the hour.
• Cybersecurity concerns are growing in many developing countries in the region, including Singapore, China, and India.
• As per reports of Check Point Software Technologies Ltd., in the first quarter of 2023, APAC witnessed the highest YoY increase in cyberattack incidence around the world.
• The average number of attacks per company based in APAC stood at 1,835, which was significantly higher than the global weekly average of 1,248 attacks.
• This is attributed, in part, to the increasing usage of smartphones, tablets, and other connected gadgets in regional countries, especially for social media.
• In the same way, the proliferation of WFH models and BYOD culture widens the attack surface, offering criminals more vulnerable entry points to exploit.
• The World Economic Forum also blames the regional manufacturing industry’s huge potential and IP portfolio for encouraging cyber criminals to target this region.

The following is the reginal breakdown of the market:

• North America
  • U.S. (Larger Country Market)
  • Canada (Faster-Growing Country Market)
• Europe
  • France
  • Germany (Largest Country Market)
  • Italy
  • Spain
  • U.K. (Fastest-Growing Country Market)
  • Rest of Europe
• Asia-Pacific (APAC) (Largest and Fastest-Growing Regional Market)
  • China (Largest Country Market)
  • India (Fastest-Growing Country Market)
  • Japan
  • South Korea
  • Australia
  • Rest of APAC
• Latin America (LATAM)
  • Brazil (Largest Country Market)
  • Mexico (Fastest-Growing Country Market)
  • Rest of LATAM
• Middle East and Africa (MEA)
  • Saudi Arabia (Largest Country Market)
  • U.A.E. (Fastest-Growing Country Market)
  • South Africa
  • Rest of MEA

Embedded Security Market Share

The market is fragmented in nature with the presence of several major players and the diversity of solutions available. While some companies specialize in hardware security modules, other focus on software-driven approaches. Additionally, countries have varying stringency of data privacy regulations, enabling companies with diverse levels of expertise in this field flourish.

Embedded Security Market News

• In September 2024, NXP Semiconductors N.V. unveiled Trimension SR250, a single-chip platform enabling secure UWB ranging and short-range UWB radar for smart home and for IIoT ecosystems.
• In August 2024, Microchip Technology Inc. expanded its TrustFLE platform with the addition of the SHA10x and ECC20x lines of secure authentication ICs.
• In June 2024, STMicroelectronics N.V. launched an embedded SIM that enables data handling and secure asset tracking for the IoT devices in smart homes, cities, and factories.
• In February 2024, Infineon Technologies AG launched the OPTIGA Trust M MTR, a secure element certified to the Matter standard for smart home device communication. This tamper-resistant security controller is easily embeddable into any product design based on an MCU for performing functions related to security and cryptography with sensitive data.