Homomorphic Encryption Market Size - By Component (Solution, Service), By Method (Full Encryption, Partial Encryption, Somewhat Encryption), By Application, By End-Use & Forecast, 2024 – 2032

Homomorphic Encryption Market Size

Homomorphic Encryption Market size was valued at USD 178.4 million in 2023 and is projected to grow at a CAGR of over 8% from 2024 to 2032, owing to the increase in cyber-attacks, including data breaches and ransomware. According to the Federal Bureau of Investigation, Internet Crime Report, in 2023, ransomware incidents noted over 2,285 complaints representing an increase of over 18% from 2022 with losses rising 74% from USD 34.3 million to USD 59.6 million.
 

Also, the report highlights the emerging ransomware trends including the deployment of multiple ransomware variants against the same victim and the use of data-destruction tactics to increase pressure on victims to negotiate. This evolving cyber threat requires advanced encryption techniques that protect data during processing, not just when it is stored or transmitted. Homomorphic encryption provides a way to perform computations on encrypted data, minimizing the risk of exposure even if data is intercepted. This is expected to drive the growth of the market during the forecast period.
 

As organizations increasingly move their data and applications to the cloud, they face the challenge of securing sensitive information during processing. Traditional encryption protects data at rest and in transit. However, once data is decrypted for processing or analysis, it becomes vulnerable to unauthorized access and cyberattacks. This vulnerability is a significant security risk, particularly in cloud environments where multiple users and services share the same infrastructure. Homomorphic encryption solves this problem by allowing data to be processed while still encrypted, eliminating the need for decryption. This innovation changes how data can be securely managed in the cloud.
 

Homomorphic encryption requires a lot of computing power. Operations on encrypted data require significantly more processing power and time compared to operations on unencrypted data. This can cause delays and slow performance, particularly for complex computations or large datasets. Additionally, the need for powerful processors and large amounts of memory can make homomorphic encryption impractical for some applications, particularly those requiring real-time processing or where resources are limited.
 

Homomorphic Encryption Market Trends

The rapid advancements in computing power and technology have significantly impacted the feasibility of implementing complex cryptographic solutions like homomorphic encryption. Previously, homomorphic encryption was considered too resource-intensive and slow for practical use, but developments in both hardware and software have made it more viable. There have been significant improvements in the algorithms used for homomorphic encryption. Researchers have developed more efficient encryption schemes that reduce the computational overhead, enabling homomorphic encryption to handle larger datasets and more complex operations.
 

As computing power and technology continue to evolve, the ability to implement homomorphic encryption efficiently is expanding its potential applications across various industries. Companies across various industries are using homomorphic encryption technology to ensure high level data privacy.
 

For instance, in April 2024, CryptoLab, a major provider of fully homomorphic encryption (FHE) technology signed a three-year supply contract with Macrogen, a Korea based genetic data analysis company. Under this contract, Cryptolab will integrate its FHE technology into Macrogen’s personalized genomic analysis services to enhance data privacy for customers. This technology allows data to be processed and analyzed while still encrypted, improving the protection of personal information, especially in healthcare.
 

Homomorphic Encryption Market Analysis

Based on component, the market is segmented into solution and services. The solution segment held over 65% of the market share in 2023 and is expected to cross USD 200 million by 2032. The growth of segment can be attributed to the presence of stringent data protection regulations such as General Data Protection Regulation (GDPR) in Europe and the California Consumer Privacy Act (CCPA) in the U.S. which impose strict requirements on data protection, encouraging organizations to adopt advanced encryption technologies such as homomorphic encryption solutions to ensure compliance.
 

Furthermore, enhanced algorithms now support more complex tasks and larger datasets, making homomorphic encryption solutions scalable for use in various industries, from small enterprises to large corporations. This scalability is expected to further boost the growth of the solution segment during the forecast period.
 

Based on end-use, the homomorphic encryption market is segmented into BFSI, healthcare, government, IT & telecom. retail, education and others. The BFSI segment held around 30% of the market in 2023 as the sector handles vast amounts of sensitive information, including personal customer data, transaction details, and financial records. Homomorphic encryption allows this data to be processed securely without decrypting, ensuring that confidential data remains protected even during tasks such as fraud detection and risk analysis.
 

Additionally, in the BFSI sector, multiple parties often need to work on shared datasets, such as in syndicated loans, insurance underwriting, or joint financial investigations. Homomorphic encryption allows secure computations on shared data without exposing it to everyone involved, ensuring secure collaboration while maintaining data privacy.
 

North America holds around 45% of the homomorphic encryption market share in 2023 and is expected to expand significantly through 2032. The region has a presence of many leading technology companies and cybersecurity firms. The region's focus on innovation and early adoption of new technologies supports the development and implementation of homomorphic encryption solutions across various industries, including finance, healthcare, and government. Additionally, the U.S. government and defense sectors require the highest levels of data security. Homomorphic encryption allows secure processing of classified and sensitive information without exposing it, addressing critical national security concerns and driving demand within these sectors.
 

European countries are focusing on data sovereignty, ensuring data processed within the region remains secure and under local control. Homomorphic encryption supports these goals by allowing secure data processing without moving or exposing data outside the region, making it a useful tool for organizations with cross-border operations.
 

The Asia-Pacific region is undergoing rapid digital transformation, with rising adoption of cloud computing, AI, and big data analytics. As businesses in APAC handle more digital data, the need for homomorphic encryption grows to keep data secure during processing, particularly in sectors such as finance and healthcare. Also, the increased awareness of cybersecurity threats in the region is driving demand for robust encryption solutions that can protect data even during analysis and computation, making homomorphic encryption an attractive option.
 

Homomorphic Encryption Market Share

Microsoft Corporation and Google LLC hold a market share of around 15% in the homomorphic encryption industry in 2023. Microsoft through its Microsoft Research division has been working on improving the efficiency and scalability of homomorphic encryption algorithms, such as SEAL (Simple Encrypted Arithmetic Library). This focus on innovation helps the company stay at the forefront of encryption technology, making its solutions more attractive to enterprises that require high levels of data security.
 

Google LLC is embedding homomorphic encryption capabilities into its Google Cloud Platform (GCP). By offering these advanced encryption options, the company attracts customers who need to perform secure computations on sensitive data stored in the cloud. This strategy aligns with the company’s broader focus on security and privacy, differentiating GCP in the competitive cloud market.
 

Homomorphic Encryption Market Companies

Major companies operating in the homomorphic encryption industry are:

• CryptoExperts SAS
• Enveil
• Galois, Inc.
• Google LLC
• IBM Corporation
• Inpher, Inc.
• Intel Corporation
• Microsoft Corporation
• Thales Group
• zama.ai
   

Homomorphic Encryption Industry News

• In July 2024, Ant Group launched SecretFlow Cloud, its cloud-based cryptographic computing platform, and a suite of cryptographic computing solutions tailored for large language models (LLMs).
   
• In April 2024, Mind Network partnered with Io.net. Under this partnership, Mind Network brought its advanced Fully Homomorphic Encryption (FHE) solution to Io.net's decentralized compute platform to help galvanize Io.net's product security and boost its ability to service the global GPU shortage. This partnership significantly improved security and efficiency in crypto AI computations.
   

The homomorphic encryption market research report includes in-depth coverage of the industry with estimates & forecast in terms of revenue (USD Million) from 2021 to 2032, for the following segments:

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Market, By Component

• Solution
  • Encrypted data analytics
  • Encrypted AI/ML data modelling
  • Encrypted data linkage
  • Encrypted database querying
  • Encrypted biometrics and behavioral data 
• Services
  • Professional services
  • Managed services

Market, By Method

• Full encryption
• Partial encryption
• Somewhat encryption

Market, By Application

• Secure data computation
• Data privacy
• Data monetization
• Regulatory compliance

Market, By End-Use

• BFSI
• Government
• Healthcare
• IT & telecom
• Retail
• Education
• Others

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

• North America
  • U.S.
  • Canada
• Europe
  • UK
  • Germany
  • France
  • Italy
  • Spain
  • Russia
  • Nordics
  • Rest of Europe
• Asia Pacific
  • China
  • India
  • Japan
  • South Korea
  • ANZ
  • Southeast Asia
  • Rest of Asia Pacific
• Latin America
  • Brazil
  • Mexico
  • Argentina
  • Rest of Latin America
• MEA
  • South Africa
  • UAE
  • Saudi Arabia
  • Rest of MEA