Hardware Security Module Market Size & Share Analysis - Trends, Drivers, Competitive Landscape, and Forecasts (2024 - 2030)

Hardware Security Module Market Size

Hardware Security Module Market Trends & Drivers

Cybersecurity Concerns with Increasing Acceptance of Cloud, AI, and Other Technologies

The internet of things (IoT) technology has proliferated in this modern, digital world. Smart devices and sensors are collecting huge volumes of data and transforming it into business insights more rapidly, at a lower cost, and with higher accuracy. IoT has been transforming many consumer, industrial, government, and defense applications, with use cases spanning the supply chain, operations, customer relationship management, quality control, inventory management, and HR business functions.

The growth of the hardware security modules market is essentially driven by an increase in the demand for information and data security, which results in the adoption of modern technologies, such as IoT and cloud computing. With IoT, to maintain the level of authenticity, enterprises’ privacy and data communication become important areas to focus on. By 2030, the number of consumer IoT devices would be more than three times the 2019 levels.

Therefore, to meet the growing demand for device security, in 2019, ATOS SE announced the launch of an HSM designed primarily to secure the IoT ecosystem by using cryptographic features.

Rising Use of Mobile Banking applications

The rise in the need for personalization and self-service on products and services is the major factor for the growth in the usage of mobile banking applications. Moreover, the technological advancements in mobile banking, such as the smart bots used for personalized real-time customer service, and the increase in the usage of smartphones fuel the growth in the number of individuals accessing banking services through mobile applications.

With the rise in the usage of mobile banking apps comes a higher risk of cyber fraud, thus propelling the need for hardware security modules. According to research, 70% of the people use mobile apps as their primary means to access their banking accounts. The development of mobile banking apps entails adherence to strict security regulations and processes. HSM protects users from any kind of cyber fraud or leakage of confidential data while accessing their accounts. Thus, with the rise in the number of mobile app users, the adoption of HSMs will continue to rise.

Hardware Security Module Market Analysis

Cloud Deployment Category To Witness Faster Growth

The cloud deployment category is predicted to expand at the higher rate, of around 15%, over the projection timeframe. With cloud-based HSMs, industries can generate encryption keys on the cloud with ease, without the need for hosting and maintaining on-premises servers. The other benefits organization are offered by cloud services are flexibility, scalability, and the convenience of updating systems so that companies can invest their time in their core business strategies.

In January 2021, Futurex LP announced that a web API must be used for payment HSMs, to deploy payment applications with the company’s key management technology and enterprise encryption.

USB-Based/Portable Category To Witness Fastest Growth

The USB-based/portable category is predicted to expand at the highest rate, of around 14.8%, over the projection timeframe. These devices are portable and small, therefore can be deployed for various functions, such as coding and signing, digital signatures, and secure key storage. Portable HSMs are majorly used for offline operations, with a physical safe used for storing the module.

These variants are preferred by all industries as they offer superior security, cost-efficiency, and ease of deployment. HSMs with USBs are, therefore, widely used by governments and financial institutions to secure data, applications, and identities, to reduce the chances of risk and ensure regulatory compliance. Moreover, USB connectivity makes such modules suitable for use with desktops, laptops, and workstations. With the use of an integrated reader, these modules become ideal for situations with limited space or where they must be used frequently.

These modules also come with integrated hardware-based security solutions ensuring increased protection for confidential data. They can be inserted easily into systems and servers by just plugging them in, which results in easily securing cloud data, cryptocurrency exchanges, and IoT gateways. Moreover, the data inside less-secure storage is verified by these devices, which also encrypt it for storage.

Banking, Financial Services, and Insurance Category To Witness Fastest Growth

The banking, financial services, and insurance (BFSI) category is predicted to expand at the highest rate, of around over 15.1%, over the projection timeframe, primarily due to the increasing demand for digital banking, 3D secure payments, and e-wallet payment solutions. For a long time, hackers have strongly focused on the BFSI sector, using modern techniques to steal bank account and credit/debit details, tax records, user credentials, and insurance data, which drives the usage of hardware security modules here.

For example, in May 2022, LevelField tied up with Metaco as a technology service provider on IBM Cloud, for its digital asset operations. Supported by IBM Cloud Hyper Protect Services, the orchestration and digital asset custody platform of Metaco has been created to store encrypted keys in an external database, which is protected by IBM's level 4-rated hardware security modules.

Consumer goods and retail is projected to witness the second-highest growth rate in the market. Poor security can lead to problems such as hackers taking control of the manufacturing software or stealing customers’ information. The loss of such data can lead to high financial losses and the destruction of the company reputation. Thus, the usage of HSMs is growing in the retail industry to provide high levels of protection, to prevent the theft of critical product information. In this vertical, hardware security modules provide solutions such as message authentication, PIN card processing, general-purpose cryptographic processing, and comprehensive key management.

Regional Analysis

North America Has a Significant Market

North America has a significant market share, due to the increasing adoption of these devices in various industries, such as retail, telecom, and government, in the U.S. and Canada. The last few years have witnessed a steady rise in the adoption of cloud technologies by businesses. Moreover, the rapid digitalization of business operations and the high internet penetration have consequently increased the risk of data breaches and other cybercrimes, forcing enterprises to adopt robust cybersecurity solutions.

These solutions help enterprises with virus containment and network intrusion detection, which helps them secure digital assets and minimize the risk of any loss. In November 2021, the American government declared an investment of USD 2 billion in cybersecurity for the energy, transportation, manufacturing, water utilities, IT, and healthcare sectors. In addition, the growing concerns about a Russian cyberattack on the U.S., in the wake of the Russia and Ukraine War, are expected to increase the U.S.’s focus on making investments in cybersecurity, including HSMs.

Moreover, the Asia-Pacific market is expected to register a high revenue growth rate during the forecast period due to the technological developments, digitalization of firms, and increasing incidence of cyberattacks, especially in China, Japan, and India. Asia was the most-targeted region by cybercriminals in 2021.

Over 59% of the organizations in APAC have experienced a cyber incident, of which 32% have suffered multiple incidents, including malware, ransomware, spyware, and viruses. Further, phishing and password-related attacks are the top cybersecurity issues, accounting for more than half the incidents reported. The rising concerns about cyberattacks create a high demand for network security as well as hardware security modules across the region, which has prompted semiconductor and computer hardware companies to invest more here.

For instance, in February 2022, IBM announced plans to make substantial investments in a cybersecurity training center in India to manage cybersecurity issues across Asia.

Market Breakdown

This report offers deep insights into the hardware security module industry, with size estimation for 2019 to 2030, the major drivers, restraints, trends and opportunities, and competitor analysis.

Based on Type

• LAN Based/ Network Attached
• PCI-Based/ Embedded Plugins
• USB-Based/ Portable
• Smart Cards

Based on Application

• Payment Processing
• Code & Document Signing
• Authentication
• Application-Level Encryption
• Database Encryption
• PKI & Credential Management
• Security Sockets Layer (SSL) & Transport Security Layer  (TSL)

Based on Deployment  

• On-premise
• Cloud

Based on Industry Vertical

• Consumer Goods & Retail
• Banking, Financial Services, and Insurance
• Aerospace & Defense
• Public Sector/ Government
• Energy & Power
• Industrial Manufacturing
• Medical & Life Sciences
• Transportation
• IT & Telecommunications

Geographical Analysis

• North America
  • U.S.
  • Canada
• Europe
  • Germany
  • U.K.
  • France
  • Italy
  • Spain
• Asia-Pacific
  • Japan
  • China
  • India
  • South Korea
  • Australia
• Latin America
  • Brazil
  • Mexico
• Middle East and Africa
  • Saudi Arabia
  • South Africa
  • U.A.E.

Top Hardware Security Module Manufacturers