Data Diode Solution Market Size, Share & COVID-19 Impact Analysis, By Type (Regular Data Diode and Ruggedized Data Diode), By Application (Government, Energy and Power, Manufacturing, Oil and Gas, Aerospace and Defense, Critical Infrastructure, and Others), and Regional Forecast, 2022-2029

The global data diode solution market size was valued at USD 392.1 million in 2021. The market is projected to grow from USD 437.1 million in 2022 to USD 988.7 million by 2029, exhibiting a CAGR of 12.4% during the forecast period. The global COVID-19 pandemic has been unprecedented and staggering, with data diode solutions experiencing lower-than-anticipated demand across all regions compared to pre-pandemic levels. Based on our analysis, the global market exhibited a decline of 11.2% in 2020 as compared to 2019.

The market size is inclusive of various data diode solutions such as X.D. Prism MPP by Owl Cyber Defense, WF-500 by Waterfall Security Solutions Ltd., 1G (TX to R.X.) by VADO Security Technologies Ltd., BLDPR469EN0918 Hirschmann Rail Data Diode by Belden Inc., among others.

Cyber-attacks, malware, ransomware, and phishing attacks have increased substantially in recent years, necessitating the implementation of comprehensive cyber security architecture to safeguard mission-critical assets. Thus, rising trends and challenges that involve the need for critical infrastructure, cybersecurity, and industrial assets are accelerating the demand for data diode solutions.

• According to research performed by Deep Instinct, a prominent cyber security technology firm, malware attacks grew by 358% in 2020, while ransom wares increased by 435%. In the near future, the development of Operational Technology (O.T.) and Industrial Control Systems (ICS) is projected to fuel market expansion.

COVID-19 IMPACT

Increasing Number of Cyber-attacks on Oil & Gas and Manufacturing Industries amid COVID-19 to Surge the Demand

The coronavirus pandemic has created significant challenges as businesses adjust to a new operational paradigm in which working from home has become the "new normal." Businesses are accelerating their digital transitions, and cybersecurity has emerged as a top priority. The pandemic hampered the overall performance of the market, with several market players witnessing financial downturns.

Industries, such as oil & gas and manufacturing, are heavily investing in strengthening enterprise cybersecurity solutions amid the rising cases of cyber-attacks during COVID-19. Attributable to recent cyber-attacks on the oil and gas industry, large oil and gas corporations have been forced to implement complete data diode solutions that allow for efficient data flow while maintaining security.

• In May 2021, one of the major U.S. fuel pipeline operating companies, Colonial Pipeline, had to shut its entire network after a cyber-attack caused by ransomware. The shutdown raised fear of a price spike ahead of the busy driving season and the susceptibility of the U.S. energy infrastructure vulnerable to hackers.

With the rise of digital transformation and the large volume of data processed and produced, as well as the growing demand for remote access and online services, cyber threats have become more prevalent. Over the forecast period, the long-term growth of the global market will be driven by the upfront growth of the manufacturing and oil & gas industries. Moreover, government agencies, critical infrastructure, aerospace, and defense companies are increasingly relying on data diode technology to protect their data and safeguard important assets. This, as in result, is expected to drive the market growth rate over the forecast period.

LATEST TRENDS

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Growing Trend of IIoT will Contribute to Market Growth

The IIoT has ushered in a digital revolution in industrial technologies. As the internet becomes more widely accessible, the cost of connectivity drops, and more devices with built-in Wi-Fi and sensors become available; the industry may benefit from linking industrial devices to construct smart equipment, machines, processes, service vehicles, and more. The IIoT integrates traditional industrial infrastructure with cutting-edge technologies such as edge computing, machine learning, cloud computing, and mobility. The IIoT aids organizations in improving industrial operations to increase output and efficiency. As industries and manufacturing plants become more connected with the growth of IIoT technologies, the possibilities of data theft and cyber-attacks remain the same.

The data diode provides enhanced security for critical infrastructures that rely on sending business data over the internet, such as the chemical industry, manufacturing, oil and gas, and other industries. Employees and security teams may monitor data flow in production systems without exposing the main network to assaults.

According to a survey conducted by IBM Corporation in 2020, 61% of electronics manufacturing companies reported that the protection of mission-critical data is the primary driver of their IIoT cybersecurity spending. As a result, the expansion of IIoT across sectors is projected to provide market participants with opportunities to improve their solution offerings and embrace a customer-centric business strategy.

DRIVING FACTORS

Rising Prevalence of Major Cyber Attacks on the Oil & Gas Industry to Drive Market Growth

The digitization and penetration of advanced technology in the oil & gas sector has exposed it to a variety of cyber-attacks, including phishing, data breaches, DDoS, and ransomware, among others. Connecting the oil and gas business to more technologically sophisticated solutions such as IIOT has enhanced output and reduced costs, but it has also exposed the industry to fatal cyber-attacks. These malicious intrusions can bring a company's operations to a halt, resulting in huge financial, reputational, and, in some cases, human life losses, as well as environmental disasters. For instance;

• In July 2020, Saudi Aramco, one of the leading oil and gas company confirmed that it had leaked important business information, and the hackers demanded a USD 50 million ransom.

Such incidences have prompted oil & gas and critical infrastructure companies to strengthen cyber-security measures to safeguard their critical data from potential threats and vulnerability from third-party sources. To offer efficient solutions, key players operating in the market are taking key initiatives to better serve companies from data thefts and cyber-attacks. For instance,

• In May 2021, Owl Cyber Defense, a leading data diode company, launched IXD, an individual data diode for critical infrastructure network cyber-security. The newly launched solution is a revolutionary milestone that will help oil & gas, manufacturing, and critical companies in safeguarding their data and critical assets.


• In March 2021, Deep Secure, a security solution provider, partnered with Ingram Micro, a distributor of information technology products and services based in California. This partnership will help Deep Secure to strengthen its global footprints and better serve consumers.

Such initiatives by key players are expected to spread awareness about the advantages of data diode in a variety of industries and drive the data diode solution market growth.

RESTRAINING FACTORS

Associated High Costs and Budget Constraints for Small & Medium-Sized Enterprises to Hinder Market Growth

The industrial control system has grown over time to encompass a varied range of networked devices that help industry employees understand and analyze the operational environment. Attributed to the rise of sophisticated threats and smarter attack tools, better cyber-security solutions are necessary to combat cyber-attacks. Implementation of data diode solutions requires significant upfront investments to set up field-level devices and replace aging cyber-security infrastructure. Also, companies planning to integrate data diode solutions into their security infrastructure need to make sure that servers, applications, and systems are interconnected.

Cybersecurity and management authorities are particularly concerned about high post-deployment operation and maintenance costs. In addition, limited budgets make it difficult for government agencies and SMEs to deploy advanced technologies and solutions. As a result, market development is anticipated to be restrained in the coming years due to the high initial cost of adopting data diodes.

SEGMENTATION

By Type Analysis

Ruggedized Data Diode to Capture Largest Market Share Owing to its Effective Operating Capabilities in Challenging Environments

Based on type, the global market has been studied for regular data diode and ruggedized data diode.

The ruggedized data diode segment captured the largest market share and is expected to maintain its dominance over the forecast period. The growth of this segment would occur on account of its effective operating capabilities in challenging environments such as high temperatures and humid environments. These data diodes are expected to gain momentum as companies opt for cyber-security solutions that offer redundant power supply and uniform access over data flow.

The regular data diode is expected to witness significant demand. The growth of this diode will be driven by increasing demand among major oil & gas and manufacturing companies.

By Application Analysis

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Oil & Gas Industry to Showcase Strong Growth Due to Growing Number of Cyber-attacks 

Data diode solutions have applications in government, energy and power, manufacturing, oil and gas, aerospace and defense, critical infrastructure, and others.

The oil and gas industry captured the largest market share in 2021. The oil and gas industry's digitalization has rendered it vulnerable to cyber-attacks such as malware, denial of service, and phishing. Furthermore, cyber-attacks in the industry have impacted negatively the whole network, including upstream, middle, and downstream operations. To counterattacks rising cyber-threats in the oil & gas industry, companies are putting in place effective cybersecurity measures. For instance, Advenica AB’s DualDiode enables oil & gas companies to transfer data in one direction and eliminate cyber threats. The increasing number of cyber-attacks on oil & gas companies such as the United States Colonial Pipeline ransomware attack, and attack on Saudi Aramco, among others, has prompted companies to integrate data diode solutions into their cyber-security measures. Thus, the industry is expected to witness high adoption of such solutions over the coming years.

The solutions are in high demand among energy and power industries to protect mission-critical data and databases. Hackers target energy and utilities, as well as vital infrastructure, for financial gain. A ransomware attack on Baltimore city systems in May 2019 halted city services for weeks, costing an estimated USD 18.2 million in damages—more than the demanded ransom—making it one of the most public cases of cyber-attack on energy and utility infrastructure. As cyber-attacks on critical power infrastructure become more common, combating them is becoming a concern.

REGIONAL INSIGHTS

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Geographically, the market is studied across five major regions, North America, Europe, Asia Pacific, the Middle East & Africa, and South America

North America accounted for the largest data diode solution market share and is expected to become increasingly popular owing to a high level of internet penetration. In addition, the increasing wireless network for mobile devices has increased data vulnerability, making cyber-security an essential and crucial component of companies in the region. Companies in the region are constantly developing new solutions to meet the demands of advanced cyber threats. The cyber-security and Infrastructure Security Agency (CISA) of the U.S. Department of Homeland Security (DHS) have reported a significant increase in malware and attacks using COVID-19-themed lures.

Europe is anticipated to expand at a significant CAGR during the forecast period. Cyber security initiatives and investments by major corporations in countries such as the U.K., France, Germany, Italy, Spain, and others are driving the industry ahead. Significant advances in Europe have come from the rising need for safety solutions and services in the manufacturing and oil and gas industries.

Asia Pacific is expected to grow at the highest CAGR over the forecast period. Several firms in this region are focusing on developing and launching novel cyber security solutions to address the growing need for security solutions and services. The growth of the market in Japan, India, China, Korea, and others is expected to experience an exceptional CAGR during the forecast period due to increased investments by key players, governments, and foreign investors.

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The Middle East & Africa and South American countries are expected to witness high demand for the solutions. Due to the strong presence of numerous market players, as well as recent security risks in the region, the regional market is likely to accelerate even further.

KEY INDUSTRY PLAYERS

Key Players Are More Focused on Launch of Enhanced Data Diode Solutions and Acquisition Strategies

Companies operating in the market such as OPSWAT, Inc., Forcepoint, BAE Systems, Siemens Mobility, Owl Cyber Defense, Advenica AB, Belden Inc., Fibersystem AB, Waterfall Security Solutions Ltd., Fox-IT, Rohde & Schwarz GmbH & Co, Deep Secure Ltd., and Garland Technology, among others are focused on developing and offering different types of solutions. Also, the high competition in the market is forcing service providers to focus on acquisition strategies for strengthening their positions.

• March 2021 - Deep Secure collaborated with Ingram Micro U.K. Ltd., headquartered in Milton Keynes, U.K. This partnership will expand Ingram’s cyber security portfolio with the help of Deep Secure’s Threat Removal Platform to exchange information with high security and provide protection from cyber-attacks.

LIST OF KEY COMPANIES PROFILED:

• BAE Systems plc (U.K.)


• Belden Inc. (U.S.)


• Siemens AG (Germany)


• ST Engineering (Singapore)


• Advenica AB (Sweden)


• Deep Secure (U.K.)


• Owl Cyber Defense (U.S.)


• Forcepoint (U.S.)


• Fibersystem AB (Sweden)


• Garland Technology (U.S.)

KEY INDUSTRY DEVELOPMENTS:

• June 2021 - Garland Technology partnered with Dragos, Inc., a cyber-security solution provider based in the U.S. Through this partnership, Garland Technology aims to strengthen its network TAP products to provide enhanced network security for industrial controls systems (ICS) and operational technology (O.T.) infrastructures.


• July 2020 – India-based Industrial IoT technology innovator, Knowledge Lens, launched the 4th Generation iLens Data Diode, which assists in providing 100% isolation between the Information Technology (IT) and Operational Technology (OT) and enables unidirectional data flow.

REPORT COVERAGE

An Infographic Representation of Data Diode Solution Market

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The research report provides an in-depth analysis of the market. It focuses on key aspects such as leading companies, product Industry, and leading product applications. Besides this, the report offers insights into the market trends and highlights key industry developments. In addition to the factors mentioned above, the report encompasses several key factors that have contributed to the market's growth in recent years.

Report Scope and Segmentation