Hardware Security Module Market Growth Remains Thwarted by Macroeconomic Pressures, Rising Costs, and Chipset Shortage Fallout

02 May 2024

After minimal growth in 2023, the Hardware Security Module (HSM) market is set for another lackluster year. ABI Research, a global technology intelligence firm, estimated only a 2% annual growth rate in 2023. This coming year is looking much the same.

Growth is stymied by several challenges, notably macroeconomic pressures, including inflation, the rising costs of hardware components, and continued fallout from the chipset shortage. “While HSM OEMs have been able to meet demand, lead times are longer, and list prices have gone up to offset those costs,” says Michela Menting, Senior Research Director at ABI Research. “Average Sale Prices rose slightly in 2023, and will again this year, by 2-3% across the board.”

However, probably the main impact has been the less than stellar adoption in markets that were deemed ripe in 2022, notably IoT and Cloud. The use of HSMs in IoT has faced off against cheaper software-based Public Key Infrastructure (PKI) and Key Management Service (KMS) alternatives. At the same time, cloud migration has been slower than expected. Shipments in the Cloud HSM market were a paltry 4% YoY (22-23) and even less in manufacturing and utilities (1-2%), both estimated to be top markets for IoT.

The HSM OEMs that pivoted to cloud-based services have managed to keep revenues afloat. Both Thales and Futurex have done well in that respect, particularly in their payment of HSM services, an emerging market with growing demand. In fact, cloud providers are increasingly looking to payment HSM-as-a-Service (HSMaaS) as a lucrative opportunity, and HSM OEMs can have an important partnership role in that space.  

Ultimately, the HSM market functions on a cyclical basis, with refresh cycles driving demand. “However, there are also plenty of opportunities for expanding that total addressable market, but it is through the marketing of what HSMs can offer in terms of applications, rather than through the sale of the HSM appliance as a product in itself. Whether that is quantum-safe encryption technologies or machine identity, the HSM market will only see significant growth in new segments by focusing on an application-based strategy,” Menting concludes.

These findings are from ABI Research’s Hardware Security Modules market data report. This report is part of the company’s Cybersecurity Applications research service, which includes research, data, and ABI Insights.

About ABI Research

ABI Research is a global technology intelligence firm uniquely positioned at the intersection of technology solution providers and end-market companies. We serve as the bridge that seamlessly connects these two segments by providing exclusive research and expert guidance to drive successful technology implementations and deliver strategies proven to attract and retain customers.

ABI Research 是一家全球性的技术情报公司,拥有得天独厚的优势,充当终端市场公司和技术解决方案提供商之间的桥梁,通过提供独家研究和专业性指导,推动成功的技术实施和提供经证明可吸引和留住客户的战略,无缝连接这两大主体。

For more information about ABI Research’s services, contact us at +1.516.624.2500 in the Americas, +44.203.326.0140 in Europe, +65.6592.0290 in Asia-Pacific, or visit www.abiresearch.com.

Contact ABI Research

Media Contacts

Americas: +1.516.624.2542
Europe: +44.(0).203.326.0142
Asia: +65 6950.5670

Related Research

Related Service