Homomorphic Encryption Market Set for Growth, Projected to Reach USD 359 Million by 2030
According to Next Move Strategy Consulting, the global Homomorphic Encryption Market is experiencing significant growth, expected to reach USD 359 million by 2030, with a Compound Annual Growth Rate (CAGR) of 8%.
Homomorphic encryption is a groundbreaking cryptographic technique that allows computations to be performed on encrypted data without the need for decryption. This technology preserves the confidentiality and privacy of data while it is being processed, making it a powerful tool for secure cloud computing, data privacy, and confidential data handling.
Homomorphic encryption works by enabling calculations to be carried out on encrypted data, with the results also remaining encrypted. This allows organizations to process sensitive information without exposing it to potential security threats. As more businesses adopt digital technologies, homomorphic encryption is becoming increasingly essential for ensuring the privacy and security of data.
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Market Dynamics and Key Trends
The rising demand for homomorphic encryption is primarily driven by the growing adoption of cloud computing and the increasing need for secure data storage and transmission. With more businesses relying on cloud services to store sensitive information, there is a heightened need to protect this data during both storage and processing. Homomorphic encryption provides a secure method for working with encrypted data, eliminating the need to decrypt it beforehand.
In addition to the cloud computing boom, concerns over data privacy and security are pushing the demand for more advanced encryption solutions. The increasing frequency of cyberattacks and data breaches has raised awareness among businesses and consumers about the importance of protecting sensitive information. According to the FBI's Internet Crime Report for 2022, there were 800,944 complaints of cybercrime in the U.S. alone, with losses totaling USD 10.2 billion. Homomorphic encryption offers an added layer of security that can mitigate these threats.
Government regulations and laws focused on data privacy and security are further bolstering market growth. Many countries are introducing or updating their data protection laws to address rising concerns over personal data misuse. For instance, the UK’s recent Data Protection and Digital Information Bill is part of the government's effort to streamline data protection rules, which is expected to drive the adoption of encryption technologies like homomorphic encryption.
Despite its promising growth, homomorphic encryption faces challenges such as high computational complexity and significant costs associated with implementation. The algorithms involved require substantial computational power and resources, which can be expensive and time-consuming for businesses. However, the introduction of fully homomorphic encryption (FHE), which allows for more complex computations on encrypted data, is expected to open up new growth opportunities in the market. FHE technology can process a broader range of operations, making it highly versatile and more appealing to enterprises.
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Market Segmentation and Scope
The homomorphic encryption market is segmented by type, component, application, end-user, and geography. The type segment includes partially homomorphic encryption, somewhat homomorphic encryption, and fully homomorphic encryption. The component segment is divided into solutions and services. Solutions include encrypted data analytics, encrypted AI/ML data modeling, encrypted database querying, encrypted biometrics and behavioral data, and encrypted data linkage. The service segment is further categorized into managed services and professional services.
Applications for homomorphic encryption span secure data computation, data monetization, data privacy, and regulatory compliance. End-users include industries such as banking, financial services and insurance (BFSI), healthcare, government, and others. Geographically, the market is analyzed across North America, Europe, Asia-Pacific, and the rest of the world (RoW), with North America maintaining the largest market share due to the region's strong emphasis on data privacy and security.
Geographical Insights
North America dominates the homomorphic encryption market, and this trend is expected to continue in the coming years. The region’s strong demand for enhanced data security solutions is driven by an increasing number of cybercrimes. A report by the Federal Trade Commission revealed that U.S. consumers lost over USD 5.8 billion to fraud in 2021, underscoring the need for robust encryption technologies. Additionally, North America's advanced IT infrastructure and significant investment in cutting-edge technologies like artificial intelligence and cloud computing further fuel market growth. The U.S. Department of Defense's planned USD 874 million investment in AI and machine learning in 2022 is just one example of the region's focus on technological advancement.
Europe is also experiencing substantial growth in the homomorphic encryption market, driven by an increasing focus on data privacy regulations. The UK’s introduction of the Data Protection and Digital Information (No. 2) Bill and the European Commission’s proposal for the Data Act are key regulatory initiatives aimed at strengthening data protection. These regulations are expected to encourage businesses to adopt encryption technologies to comply with data privacy laws. The European market is also benefiting from the growing adoption of big data analytics and the development of new encryption technologies within government sectors.
Competitive Landscape
The homomorphic encryption market is highly competitive, with several major players including Cosmian Tech, Desilo Inc., Duality Technologies Inc., Galois, Inc., Google LLC, IBM Corporation, Intel Corporation, Microsoft Corporation, Netskope, Inc., and Thales Group. These companies are focusing on innovation and strategic collaborations to maintain their market leadership.
For example, in October 2022, Duality Technologies launched the first enterprise-ready privacy-enhanced data collaboration platform, allowing organizations to securely share and analyze sensitive data while maintaining privacy and regulatory compliance. In March 2021, Intel partnered with Microsoft and the Defense Advanced Research Projects Agency (DARPA) to develop an accelerator for fully homomorphic encryption as part of the DPRIVE program. Additionally, in December 2020, IBM Security introduced a service for companies to experiment with fully homomorphic encryption, enabling them to perform secure computations on encrypted data.
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