Hardware Security Modules Market - By Type, By Deployment Mode, By Application, By End Use - Global Forecast, 2025 - 2034

Hardware Security Modules Market Size

The global hardware security modules market currently accounts for USD 1.4 billion in 2024 and is projected to grow at a CAGR of 14.8% from 2025 to 2034, driven by growing stringent regulatory compliance of data privacy, expansion of cloud services, and integration of hardware security modules with IoT devices.
 

Implementation of data privacy laws such as the General Data Protection Regulation (GDPR) in the European Union has forced organizations to implement strong security features such as hardware security modules (HSMS) to maintain compliance. The laws dictate secure handling of personal information, and non-compliance will be punishable with heavy fines. One such instance is how, as of January 2024, Meta Platforms Ireland Limited received a fine of €1.2 billion by the Irish Data Protection Commission for illegal transfers of data from the EU to the U.S., which is one of the largest such fines to have occurred. Such hefty fines reflect how essential secure data protection processes are. Organizations are thus spending more on HSMS to remain compliant with such regulations, which are contributing to hardware security modules market growth.
 

The rapid growth of cloud computing services has transformed its landscape globally, offering scalability and flexibility to organizations. However, these benefits are accompanied by severe data privacy risks, particularly in terms of data security within multi-tenant systems. To mitigate these issues, both cloud service providers and enterprises are adopting hardware security modules (HSMS) for data management and encryption control. For instance, according to the estimates reported by Statista, the global spending on cloud infrastructure services increased by USD 17 billion in Q4 of 2024 and accounted for USD 330 billion for the year 2024.
 

The rise of Internet of Things (IoT) devices created an intricate web of interconnected devices, which in turn calls for secure frameworks in place to safeguard data integrity as well as avoid unauthorized access. HSMS are central to such an environment through secure storage of keys and cryptographic operations that are essential in device authentication as well as encrypting data. The number of IoT devices globally is estimated to hit more than 17 billion by 2024, as estimated by Statista. The exponential deployment of IoT in industries increases demand for HSMS, making them essential elements in securing IoT infrastructures and accelerating market growth.
 

Hardware Security Modules Market Trends

• The spike in cyber attacks poses a global threat that is heightening the need for effective security measures. Frameworks for hardware security modules (HSMS) play a considerable role in the protection of sensitive material with secure storage of keys and cryptography. Moreover, the anticipated global cost of cybercrime is expected to hit an astounding benchmark of USD 9.22 trillion by the start of 2024, indicating a need for more sophisticated measures. Such toll impacts the economy severely, which HSMS could help mitigate through guarding breaches and sustaining data authenticity. Therefore, as further developments in cybersecurity are deemed essential, the usage of HSMS is also bound to increase, positively influencing HSM market growth.
   
• With the onset of quantum computing, the sphere of data protection is undergoing major change. Supercomputers can tackle incredibly erratic problems with augmented problem-solving abilities at the quantum level. Hence, the worldwide market for quantum computing is projected to grow to 8.6 billion in 2027, compared to 412 million in 2020, showcasing an aggressive pivot towards quantum computing services. The developing quantum technologies will require HSMS for data transmission, protection against new threats and safeguarding quantum data, fueling their market.
   
• The advancement of blockchain technology and decentralized finance (DeFi) systems has brought new security issues. HSMS enable the secure storage of keys and other critical digital assets, cryptographic operations, and the integrity of transactions. The total value locked (TVL) in multiple DeFi blockchains reached roughly USD 50 billion as of 2025. The investment in HSM blockchain technology to secure blockchain transactions is crucial. The market demand for HSMS is likely to increase with the growing adoption of blockchain technologies.
   
• Cloud migration has brought the development of HSM-as-a-service (HSMaaS), which offers scalable and less expensive security measures. HSMaaS allows companies to access the capabilities of HSMS without installing hardware at their locations. In January 2022, it was reported that 47% of enterprises were using HSMS for encryption key management. Such adoption demonstrates a significant shift in the utilization of managed security services. With such shifts, lesser advanced organizations will be able to take advantage such services, expanding the HSM market through the adoption of HSMaaS.
   

Hardware Security Modules Market Analysis

Based on type, the market is segmented into LAN-based/network-attached HSM, USB-based/portable HSM, PCIe-based/internal HSM, and cloud-based HSM. The USB-based/portable HSM segment accounts for the highest market share of 34.2%, and the cloud-based HSM segment is the fastest-growing segment with a CAGR of 15.6% during the forecast period.
 

The USB-based/portable segment accounts for USD 494 million in 2024 and is expected to grow with a CAGR of 15.1%. As cybercrimes become more prevalent in the world today, there has been an alarming need for easily deployable businesses to include cryptographic security into their frameworks. As a result, both portable and USB manufactured hardware security modules, or USB-based/portable HSMS, were developed. These devices are easy to carry around and are perfect for organizations that require secure storage for their keys and cryptographic operations on the go.
 

The cloud-based HSM segment accounts for USD 441 million in 2024 and is the fastest-growing segment in the market, compounding at an annual growth rate of 15.6%. The rapid acceptance of programs enabling cloud computing has greatly boosted the need for HSM units that are remote, or HSMS. These solutions enable businesses to store their data safely on remote servers since they provide crypto logic services that are easy to scale and cheap. Like most HSMS, the cloud-based HSMS also work on the cusp: they provide the highest and fastest growth potential among competitors due to the soaring need for adaptive architectural solutions.
 

Based on deployment mode, the hardware security modules market is segmented into on-premises and cloud-based (as-a-service). The on-premises segment accounts for the highest market share of 56.9%, and the cloud-based (as-a-service) segment is the fastest-growing segment with a CAGR of 18.1% during the forecast period.
 

The on-premises segment accounts for USD 234 million in 2024 and is expected to grow with a CAGR of 16.1%. Globally, organizations that enforce tighter security perimeter boundaries and require compliance still prefer on-premises HSM deployments. This is because such solutions guarantee complete control over the cryptographic keys and data, validating internal security policies. There remains a healthy demand for on-premises HSMS in the banking, government, and other industries.
 

The cloud-based as service segment accounts for USD 177 million in 2024 and is the fastest-growing segment in the market, compounding at an annual growth rate of 18.1%. The transition toward digital transformation, as well as remote work culture, has fast-tracked the demand for cloud-based HSMS. The cloud-based solutions offer operational flexibility and scalability, which makes them cost-effective for all types of organizations. There is tremendous demand for cloud-based HSMS as a result of the requirement for secure key management within cloud infrastructures.
 

Based on application, the hardware security modules market is segmented into payment processing, authentication, code and document signing, database encryption, SSL/TLS key protection, public key infrastructure (PKI), digital rights management (DRM), and others. The payment processing segment accounts for the highest market share of 21.2%, and the SSL/TLS key protection segment is the fastest-growing segment with a CAGR of 16.7% during the forecast period.
 

The payment processing segment accounts for USD 306 million in 2024 and is expected to grow with a CAGR of 15.2%. The escalation in the amount of financial transactions conducted over the internet has created an urgent surge for more sophisticated systems for efficient and secure payment processing. With regards to securing payment data and maintaining compliance with industry regulations, HSMS are invaluable. The expansion in the payment HSM market is maintained by the increasing need for safety and efficiency in payment processing.
 

The SSL/TLS key protection segment accounts for USD 244 million in 2024 and is the fastest-growing segment in the market, compounding at an annual growth rate of 16.7%. As SSL and TLS cyber threats become more frequent, the security of online communication becomes even more vital, placing great importance on the need for adequate protection of SSL and TLS keys. In those specific areas, HSMS are able to securely store a certificate's cryptographic keys and provide reliable management of its various types, thus validating its SSL and TLS certificates. There is a growing adoption of HSMS for the protection of SSL and TLS keys, driven by a need to strengthen organizational cybersecurity defences.
 

Based on end use, the hardware security modules market is segmented into banking, financial services, and insurance (BFSI), government and defense, healthcare, retail and e-commerce, telecom and it, energy and utilities, manufacturing, media and entertainment, and others. The BFSI segment accounts for the highest market share of 18.9%, and the retail and e-commerce segment is the fastest-growing segment with a CAGR of 16.6% during the forecast period.
 

The BFSI segment accounts for USD 273 million in 2024 and is expected to grow with a CAGR of 16.5%. The BFSI industry has strict regulatory compliance requirements and a high level of cyber security threats, calling for stringent security measures. HSMS play a vital role in protecting customer data as well as financial transactions. The BFSI industry remains a leading adopter of HSMS due to increased security and compliance needs.
 

The Retail and e-commerce segment accounts for USD 258 million in 2024 and is the fastest-growing segment in the market, compounding at an annual growth rate of 16.6%. The growth of online payments and web-based shopping has driven the demand for secure retail and e-commerce sites. HSMS secure customer data and enable safe transactions. The retail and e-commerce industry is experiencing growing acceptance of HSMS, as companies look to establish customer trust and meet data privacy regulations.
 

Based on region, the hardware security modules market is segmented into North America, Europe, Asia Pacific, Latin America and MEA. In 2024, the North America segment accounted for the largest market share with over 32.2% of the total market share, and Asia Pacific is the fastest-growing region, growing at a CAGR of 17%.
 

The market for hardware security modules has been expanding steadily in the United States, achieving a CAGR of 14.8% and reaching a valuation of USD 378 million in 2024. The U.S. government has taken a proactive position in terms of cybersecurity that focuses on securing critical infrastructure, including applying strict regulations on hardware used in connected vehicles. Regulations of this kind are put in place to help safeguard sensitive information systems from potential cyber-related problems. Such compliance will, however, increase the requirements for HSMS since organizations will strive to maintain compliance and securely manage their information assets.
 

In Germany hardware security modules market has been expanding significantly, achieving a CAGR of 15.7% and reaching a valuation of USD 71 million in 2024.

Germany reinforces European Union laws with its own regulations in the form of the Federal Data Protection Act, which goes hand in hand with the General Data Protection Regulation. Such laws set forth stronger requirements on security, which is bound to make institutions, which in turn are driven to use HSMS for the protection of personally identifiable information, because of security compliance obligations. The strong concern of data privacy is highly likely to strengthen the German HSM market.
 

In China, the hardware security modules market has been expanding, achieving a CAGR of 18.2% and reaching a valuation of USD 178 million in 2024. Due to the rapid digitisation, especially in automotive and electronic manufacturing, there is a growing adoption of HSMS for cybersecurity purposes. More vehicle manufacturers are adding HSMS to the communications systems of the vehicles to strengthen their cybersecurity and protect from cyber attacks. This suggests that the deepening of digital technology in China will affect the advancement of HSMS.
 

The hardware security modules market in Japan has been experiencing steady expansion, achieving a compound annual growth rate of 14.9% and attaining a valuation of USD 49 million in 2024. With the critical infrastructure growing in Japan, the country is making steps to improve its cybersecurity policy with a focus on launching infrastructure protection, active and safe digital behaviour policies. Adoption of HSMS across industries has been spurred by the implementation of comprehensive cybersecurity laws and policies on secure data management. These developments are expected to enhance the growth of the HSM market in Japan.
 

In South Korea, the hardware security modules market is expanding rapidly, achieving a CAGR of 18.3% and reaching a value of USD 44 million in 2024. The focus of South Korea on technological advancement and cybersecurity has further boosted investment in secure hardware. Partnerships between public institutions and private corporations are designed to improve the country’s cybersecurity system, with HSMS being critical for protecting sensitive information. Such developments are expected to further slow the growth of the HSM market in South Korea.

Hardware Security Modules Market Share

The market for hardware security modules (HSM) is highly competitive and dynamic, with many players competing to acquire the top spot in the market. The top three players dominating the market are Thales Group, IBM Corporation, and Utimaco Gmbh, accounting for the largest market share of 32%. The market is dominated by Thales Group, with the company using its wide global reach and wide range of HSM solutions.
 

Even with dominant industry participants, the market for HSM is still fragmented, and the presence of numerous regional and emerging firms contributes to its heterogeneity. In an endeavour to establish a competitive advantage, dominant companies are placing their bets on innovation and strategic alliances. An example is the Payshield cloud HSM, a subscription payment security as a service that Thales introduced to drive the growth of payment infrastructure based in the cloud.
 

Hardware Security Modules Market Companies

The top prominent companies operating in the hardware security modules industry include:

• Thales Group
• IBM Corporation
• Utimaco Gmbh
• Entrust Corporation
   

Thales Group is a global company that specializes in advanced technologies, with a strong market position in defense, aerospace, and cybersecurity. In the secure hardware security module (HSM) market, Thales has the Luna HSM series, which is recognized for both high performance and strong security. HSM modules provide a basis using cryptography for digital trust to secure payment processing, data on the blockchain, private key lifecycle management, PCI-DSS data, and equipping HSMS using code signing. Thales is primarily selling on the basis of post-quantum cryptographic agility so that HSMS can be applied in the future to any security environment as it evolves. Thales also has the Thales Crypto Command Centre, which provides management capabilities, useful if you have to manage a number of crypto resources.
 

IBM Corporation is a global company that is prominent in computing and its services. In the area of HSMS, it has the 4769 PCle cryptographic coprocessor as its main HSM for secure key management and cryptographic operations. The HSM complies with FIPS PUB 140-2 level 4, which provides a high level of security for sensitive data. IBM's HSM is part of a broader security solutions it provides, including IBM Cloud Hyper Protect Crypto Services, which gives customers the full ability to manage their own encryption keys.
 

Hardware Security Modules Industry News

• On April 16, 2025, Entrust rolled out the Entrust cryptographic security platform, which is a big step for managing keys, secrets, and certificates all in one place. This new platform is designed to give companies better visibility and control over their cryptographic assets, making things safer and easier to manage.
   
• In February 2025, Thales launched the OneWelcome FIDO key lifecycle management solution that enables streamlined, passwordless authentication at scale. This offering allows businesses to streamline the management of FIDO security keys throughout their lifespan, enabling the shift to more robust, phishing-resistant authentication methods.
   
• In February 2025, Futurex became the first company in ABI Research's payment hardware security module competitive assessment. The award marks a recognition of Futurex's efforts in upgrading the technology of HSM, in the case of which its crypto hub platform, supporting multiple virtual HSMS in a single appliance, is of special importance.

The hardware security modules market research report includes in-depth coverage of the industry with estimates and forecasts in terms of revenue in USD million from 2021 – 2034 for the following segments:

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Market, By Type

• LAN-based/network-attached HSM

• USB-based/portable HSM

• PCle-based/internal HSM

• Cloud-based 

Market, By Deployment Mode

• On-premises
• Cloud-based (as-a-service)

Market, By Application

• Payment processing
• Authentication
• Code and document signing
• Database encryption
• SSL/TLS key protection
• Public key infrastructure (PKI)
• Digital rights management (DRM)
• Others

Market, By End Use

• Banking, financial services, and insurance (BFSI)
• Government and defence
• Healthcare
• Retail and e-commerce
• Telecom and it
• Energy and utilities
• Manufacturing
• Media and entertainment
• Others

The above information is provided for the following regions and countries: 

• North America 
  • U.S.
  • Canada
• Europe 
  • Germany
  • Uk
  • France
  • Spain
  • Italy
  • Netherlands
• Asia Pacific 
  • China
  • India
  • Japan
  • Australia
  • South Korea
• Latin America 
  • Brazil
  • Mexico
  • Argentina
• Middle East and Africa 
  • Saudi Arabia
  • South Africa
  • UAE