Hardware Security Modules Market

Rising numbers of cyberattacks and data breaches propel the market growth

A data breach involves taking information from a system without the owner's knowledge or consent. Large businesses or organizations are frequently the targets of data breaches. The information that was taken could be delicate, exclusive, or private (such as credit card numbers, customer data, trade secrets, or national security information). 

Despite better security, government and healthcare institutions continue to be the main targets of cyberattacks because of the priceless personal information they gather and may sell. A report by the U.K. government indicates that 39% of companies will experience cyberattacks in 2021. Phishing attacks were the most common (83%). A denial of service, malware, or ransomware attack was among the more advanced attack types described by nearly 1 in 5 (21%) of the 39%. Despite its low incidence, corporations have deemed ransomware a serious threat, and 56% of companies have a policy against paying ransoms.

Similar data theft and breach incidents have occurred in India in recent years. 

Companies that allow workers to work from home (WFH) are ill-equipped to guard against unwanted access to or use of their data. This makes them a weak target for cybercriminals, leading to increased cybersecurity breaches. Consider the Big Basket data breach in 2019, where the personal information of about 20 million users was made available for purchase on a forum on the dark web. Cyberattacks against India rose 37% in the first quarter of 2020 compared to the same period in 2019.

Thus, one of the key drivers boosting the market for hardware security modules (HSM) is the rise in data breaches and cyberattacks. Thus, this factor is driving the market CAGR.

Furthermore, the adoption of contemporary technologies like IoT and cloud computing is fueling an increase in the need for information and data security, which is driving the growth of the hardware security module market. The preservation of authenticity, client privacy, and data and communication become the main topics to concentrate on with IoT. All industries have as a top priority securing these HSM. A high-performance security device, the new Horus HSM from ATOS SE, was launched in 2019 with the primary goal of securing the IoT environment utilizing cryptographic features.

So, it is anticipated that this aspect will accelerate hardware security modules (HSM) market revenue globally.

The proliferation of Internet of Things IoT devices is emerging as a significant driver for the Global Hardware Security Modules HSM Market Industry. As more devices become interconnected, the potential attack surface expands, necessitating enhanced security measures. HSMs play a crucial role in securing the communication and data integrity of IoT devices by managing cryptographic keys effectively. This trend is likely to accelerate the adoption of HSMs, as organizations seek to protect their IoT ecosystems from vulnerabilities and cyber threats.

The rapid adoption of cloud computing services is driving the Global Hardware Security Modules HSM Market Industry. As businesses migrate to cloud environments, the need for secure key management solutions becomes paramount. HSMs provide a secure method for managing cryptographic keys in cloud applications, ensuring that sensitive data remains protected. This shift towards cloud services is expected to contribute to a compound annual growth rate of 10.87% from 2025 to 2035, reflecting the increasing reliance on HSMs to secure data in cloud infrastructures.

The increasing frequency and sophistication of cyberattacks is a primary driver for the Global Hardware Security Modules HSM Market Industry. Organizations are compelled to adopt robust security measures to safeguard sensitive data and maintain compliance with regulations. For instance, the rise in ransomware attacks has led to substantial financial losses, prompting businesses to invest in HSMs as a means of protecting cryptographic keys and sensitive information. This trend is reflected in the projected market value of 1.49 USD Billion in 2024, indicating a growing recognition of the need for enhanced security solutions.

Stringent regulatory frameworks across various sectors are significantly influencing the Global Hardware Security Modules HSM Market Industry. Regulations such as GDPR, HIPAA, and PCI DSS necessitate the implementation of strong data protection measures, including the use of HSMs. Organizations are increasingly aware that non-compliance can result in hefty fines and reputational damage. As a result, the demand for HSMs is expected to rise, with the market projected to reach 4.64 USD Billion by 2035. This growth underscores the critical role of HSMs in ensuring compliance and protecting sensitive data.

Organizations are increasingly investing in digital transformation initiatives, which is positively impacting the Global Hardware Security Modules HSM Market Industry. As businesses digitize their operations, the need for secure data management and protection becomes more pronounced. HSMs are integral to ensuring the security of digital transactions and sensitive information. This trend is expected to drive the market growth, with projections indicating a substantial increase in demand for HSMs as organizations prioritize security in their digital transformation strategies.

By region, the study provides market insights into North America, Europe, Asia-Pacific, and the Rest of the World. The North American hardware security modules (HSM) market accounted for USD 0.5 billion in 2021 and is expected to exhibit a 43.20% CAGR during the study period due to the growing use of hardware security modules (HSM) in a variety of end-use sectors, including BFSI, retail, telecom, and government entities, across countries around the region, particularly in the United States and Canada.

Further, the major countries studied in the market report for hardware security modules (HSM) are: The U.S., Canada, Germany, France, the U.K., Italy, Spain, China, Japan, India, Australia, South Korea, and Brazil.

Figure 3: HARDWARE SECURITY MODULES (HSM) MARKET SHARE BY REGION 2021 (%)

Source: Secondary Research, Primary Research, MRFR Database and Analyst Review

European hardware security modules (HSM) market is expected to grow at a significant CAGR from 2022 to 2030. In the region, especially in the UK, Germany, and France, the introduction of cutting-edge technologies like 5G, LoT, and Artificial Intelligence (A.I.) has increased the demand for network security. In recent years, several cyberattacks have targeted the European banking and retail industries. For instance, a cyberattack in April 2022 led The Works, a U.K. company, to shut down its locations and stop replenishment deliveries.

Moreover, Germany hardware security modules (HSM) market held the largest market share, and the U.K. hardware security modules (HSM) market was the fastest-growing market in this region.

Asia Pacific hardware security modules (HSM) market accounts for the second-fastest growing market share because of the growth of I.T. companies and an increase in cyberattacks across the region, particularly in China, Japan, and India. According to data, Asia was the region most frequently attacked by cyberattacks in 2021. Companies have increased their investments in this region as a result of the region's high demand for network security and hardware security modules (HSM) due to increased concerns about cyberattacks.

Further, the China hardware security modules (HSM) market held the largest market share, and the India hardware security modules (HSM) market was the fastest-growing market in the region

Major market players are spending a lot on R&D to increase their product lines, which will help the hardware security modules (HSM) industry grow even more. Market participants are also taking various strategic initiatives to grow their worldwide footprint, including new product launches, contractual agreements, mergers and acquisitions, increased investments, market developments and collaboration with other organizations. Competitors in the industry must offer cost-effective items to expand and survive in an increasingly competitive and rising market industry.

One of the primary business strategies manufacturers adopt in the hardware security modules (HSM) industry to benefit clients and expand the sector is manufacturing locally to reduce operating costs. In recent years, hardware security modules (HSM) industry has provided medicine with some of the most significant benefits. The hardware security modules (HSM) market major player such as Gemalto NV (Amsterdam), Thales e-Security Inc. (U.S.), Utimaco GmbH (Germany), International Business Machines Corporation (U.S.), FutureX (U.S.), Hewlett-Packard Enterprise Development L.P. (U.S.) SWIFT (Belgium), Atos S.E. (France), Ultra-Electronics (U.K.) and Yubico (U.S.).

The world's biggest and most prestigious brands rely on Thales e-Security Inc.'s Data Protection and Identity and Access Management solutions to safeguard their information and intellectual property while enabling safe access to applications and data. In February 2022, Microsoft Azure Payment Hardware Security Module (HSM) will be delivered with the aid of payShield 10K technology, according to Thales Group (HSM). This brand-new service secures crucial real-time financial transactions carried out in Azure using cryptographic key operations.

With offices in Aachen (Germany) and Campbell, California, UTIMACO is a trusted platform provider of cybersecurity and compliance solutions and services (USA). In June 2021, Realsec was acquired by Utimaco. The Utimaco group will benefit from Realsec's key management, HSM, compliance, and regulations expertise.