ePassport Market Set for Challenging 2030 and 2031, as Weak Reissuance During COVID-19 Rears Its Head

The ePassport market is lining up to experience 2 years of significant challenge in 2030 and 2031. COVID-19 resulted in social distancing, significant reduction in international travel, and the closing of borders, resulting in the lack of passport reissuance activity during 2020 and 2021. Reissuance will again rear its head in in 2030 and 2031.

Prior to COVID-19, 2019 issuance of ePassports hit 136 million, a market that was steadily increasing Year-over-Year (YoY), thanks to a combination of organic growth, increasing levels of international travel, and a continuation of migration toward the ePassport variant. The market dip during COVID-19 was immediate and significant, given the high levels of travel restrictions imposed, impacting both net-new passport applications and replacements, with many expired passports during the 2020/2021 period not renewed. To put this into context, the market for ePassport shipments dropped globally by -44% YoY in 2020 and although increasing in 2021, it remained a fraction of what was being issued prior to COVID-19.

As international borders opened and international travel resumed, a level of recovery was achieved, although it took until 2023 before ePassport shipments exceeded that of pre-COVID-19 levels. Between 2023 and 2024 the market stagnated a little as unfavorable economic conditions set in. As consumers became cautious, international travel stagnated and demand for passports slowed. The introduction of new ePassport migration projects will help push the market back to growth in 2025. However, without these, the market could be described as limited from a growth perspective.

The longer-term challenge relates to 2030, due to the fact that the market is largely driven by the replacement of expired credentials. The Total Addressable Market (TAM) for 2030 and 2031 will directly align with the market activity 10 years prior (2020 and 2021), with a significant downturn likely. With a post-COVID-19 renewal cycle set, the ePassport market for 2030 is forecast to reduce by -30% YoY.

First, it’s important to note that a reduction in ePassport issuance in the 2030 to 2031 time period is not reflective of a declining market and should not be viewed as such. It is a unique situation, driven by a resetting of reissuance cycles and a short-term expectation (of up to 24 months).

Setting issuance expectations early and being realistic will be key in helping weather this short-term storm. Strategic planning can be put in place well in advance of the expected market drop and ePassport manufacturers should be working closely with their respective customer bases to ensure that issues such as overstocking are not repeated. Overstocking has plagued key smart card markets over the last few years, most notably in the payment card market. This is a situation that passport suppliers will not want to experience. The potential impact on new bookings/orders in 2030 to 2031 mean that a period of uncertainty will follow, as supply is realized through existing stock with orders not repeated or significantly reduced until existing stock has been depleted.

Planning early and understanding reissuance cycles is a key component in helping manufacturers understand supply and demand, and ensure appropriate levels of componentry stock, materials, and the ability to maneuver resource accordingly.

During the 2030 to 2031 time frame, migration to Post-Quantum Cryptography (PQC) algorithms will become more prominent, with an expectation that hybrid migration approaches are likely to begin in 2027 and accelerate throughout 2030 and 3031. Setting the foundations early is key to ensuring that vendors are well positioned, building authority and trust within the topic. Although 2030 and 2031 will prove challenging from an overall issuance/shipment volume point of view, they will also be the critical time frame years for PQC migration; thus, efforts and leadership positions on PQC could help somewhat counter the extent of potential revenue decline.