Embedded Systems Market Size, Share & COVID-19 Impact Analysis, By Component (Hardware and Software), By Type (Standalone Embedded Systems, Real-Time Embedded Systems, Network Embedded Systems, and Mobile Embedded Systems), By Application (Consumer Electronics, Medical Equipment, Industrial Automation, Automotive Systems, Aerospace & Defense Technologies, Telecommunications, Smart Devices, and Others), and Regional Forecast, 2023 – 2030

The embedded systems market size was valued at USD 94.77 billion in 2022 and is projected to grow from USD 100.04 billion in 2023 to USD 161.86 billion by 2030, exhibiting a CAGR of 7.1% during the forecast period (2023-2030). North America accounted for a market value of USD 39.06 billion in 2022. An embedded system is a specialized computer hardware system driven by a microprocessor, designed to fulfill a dedicated function within a more extensive system or independently. At its core, it is an integrated circuit for real-time computation, ranging from single microcontrollers to multi-processor setups with various peripherals. The complexity varies widely from simple devices, such as digital watches to sophisticated applications in hybrid vehicles and avionics.

Nearly 98% of microprocessors are used in embedded technology, these microprocessors are managed by microcontrollers, Application-Specific Integrated Circuits (ASICs), Graphics Processing Units (GPUs), Digital Signal Processors (DSPs), Field-Programmable Gate Arrays (FPGAs), and gate arrays with firmware instructions stored in read-only or flash memory. The peripherals enable connectivity with input and output devices.

The embedded systems market is driven by the increasing demand for IoT applications, automotive electronics, and industrial automation. Also, advancements in technology, especially in wireless communication, will boost the adoption of such systems. For instance, in June 2023, Analog Devices, Inc. launched Apollo MxFE, a software-defined, direct RF-sampling platform. It enables next-generation applications, such as electronic surveillance, phased array radar, 6G communications, and test & measurement in the instrumentation, aerospace & defense, and wireless communication industries.

COVID-19 IMPACT

Lockdowns and Trade Restrictions during Pandemic Decreased Demand for Semiconductor Products

The COVID-19 pandemic not only disrupted the functioning of industries providing embedded components, but also affected businesses utilizing these products. Reduced demand for consumer electronics during lockdowns across the world negatively impacted the semiconductor market. Decrease in the global demand and automotive exports adversely affected the semiconductor industry, slowing down the product demand.

However, the healthcare sector benefitted from the increasing demand for embedded hardware components in ventilators and advanced medical equipment, positively impacting the market. Also, a few companies tried their best to retain their lead market position by launching new products. For instance, in September 2020, Advantech launched UNO-2372G-J1, a modular and compact embedded IoT automation gateway for industrial applications. It comes with an Intel Celeron quad-core J3455 processor, dual display interfaces, and 4GB of DDR3L memory.

LATEST TRENDS

Rising Need for Seamless Connectivity to Increase Demand for Wireless Embedded Solutions

The objective behind developing wireless embedded software solutions is to ensure the seamless transmission and reception of information. These solutions play a vital role in situations where physical connections are unfeasible, making them essential for Internet of Things (IoT) peripheral devices and interconnected systems.

Advancements in wireless technologies, such as Bluetooth, Z-Wave, ZigBee, and Wi-Fi have significantly broadened the scope of embedded wireless systems. These solutions facilitate efficient communication and data transfer between devices without the constraints of cables or wires, enhancing flexibility, scalability, and mobility across various applications. Whether in wearable devices, industrial automation, smart home, or healthcare monitoring, wireless embedded solutions serve as the foundation for seamless connectivity and real-time data exchange. For instance, in March 2023, Qualcomm Technologies, Inc. launched integrated 5G IoT processors supporting four operating systems. The Qualcomm QCM6490/QCS6490 can run on Ubuntu, Linux, and Microsoft Windows IoT Enterprise, along with the Android operating system.

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EMBEDDED SYSTEMS MARKET GROWTH FACTORS

Surging Demand for Electric and Hybrid Vehicles to Drive Market Growth

The rising popularity of electric and hybrid vehicles is fueling the demand for embedded solutions. These systems play a pivotal role in electric vehicles by managing tasks, such as motor control, battery regulation, performance monitoring, and providing driver information. With the escalating adoption of electric and hybrid vehicles, the need for embedded solutions is on the rise.

The growing sophistication of these vehicles amplifies the complexity of the required embedded solutions. Consequently, the market is poised for substantial growth due to the surging demand for electric and hybrid vehicles. The market’s growth is also anticipated to be exceptionally robust in sectors, such as automotive electronics, power management systems, and electric vehicle charging infrastructure, all of which are heavily reliant on embedded technologies. For instance, in November 2022, Cybellum and Jingwei HiRain collaborated to tackle the challenges of cybersecurity across the automotive supply chain. With this partnership, customers strengthened their cybersecurity without affecting their operations by automatically managing risks in embedded software components.

RESTRAINING FACTORS

Complex Architecture and High Manufacturing Costs to Impede Market Growth

The demand for embedded solutions can decrease due to their high manufacturing cost. The complexities involved in designing and producing such systems, due to the need for specialized components and production processes, elevate the manufacturing expenses. This high cost can cause challenges for companies, hindering their entry into the market and potentially raising the product prices. Particularly in industries with strict safety or regulatory requirements, developing such systems can incur substantial costs, thereby creating entry barriers for smaller companies and impeding innovation.

However, ongoing technological advancements and growing economies of scale have led to a gradual decline in embedded system costs, enhancing their accessibility for a broader range of companies and industries as demand continues to rise.

SEGMENTATION

By Component Analysis

Need for Hardware Components to Grow for Better System Functionality

Based on component, the market is divided into hardware and software.

The hardware segment holds the highest share in the market owing to its vital role in the system functionality. Hardware components comprise microcontrollers, processors, memory cards, and various integrated circuits that are essential in operating embedded systems.

The software segment is expected to record the highest CAGR during the forecast period. As technology evolves, there is a growing reliance on sophisticated software solutions to enhance the capabilities of embedded technology.

By Type Analysis

Standalone Embedded Systems Gains Traction Owing to Their Ability to Operate Independently

Based on type, the market is divided into standalone, real-time, network, and mobile embedded systems.

The standalone segment holds the largest embedded systems market share due to the ability of these systems to operate independently. Standalone systems operate autonomously without relying on external connections or networks, making them suitable for a wide range of applications. Some of the examples of these systems include cameras, digital watches, and MP3 players.

The real-time segment is forecasted to record the highest CAGR owing to the rising number of applications requiring instantaneous processing and response, such as automotive safety systems and industrial automation.

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By Application Analysis

Growing Need for Safety and Driver Assistance Systems in Vehicles to Drive Product Use in Automotive Systems

Based on application, the market is segmented into consumer electronics, medical equipment, industrial automation, automotive systems, aerospace & defense technologies, telecommunications, smart devices, and others.

The automotive systems segment holds the highest share in the global market. Embedded solutions play a vital role in diverse automotive applications, such as safety & driver assistance systems, infotainment systems, and powertrain control systems. In January 2023, Harman launched External Microphone and Sound and Vibration Sensor embedded products to enhance the audio experience in vehicles. With this launch, OEMs offered acoustic sensing and exterior sound detection features.

The consumer electronics segment is expected to record the fastest CAGR during the forecast period. The industry is witnessing a strong demand for smart devices, wearables, and IoT-connected devices, further amplifying the segment’s growth.

REGIONAL INSIGHTS

The global market has been studied across North America, South America, Europe, Asia Pacific, and the Middle East & Africa.

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North America holds the highest market share owing to the region’s growing focus on cutting-edge technologies and integration of embedded solutions in diverse applications, including automotive, healthcare, and consumer electronics. Also, the growing trend of automation and Internet of Things (IoT) will further fuel the product’s demand as such systems play a crucial role in enabling connectivity and smart functionality.

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Asia Pacific is expected to register the highest CAGR owing to rapid industrialization, increasing adoption of smart devices, and a growing automotive sector. The region's expanding consumer electronics market will fuel the demand for embedded solutions in devices, such as smartphones and smart appliances. For instance, in November 2023, Valeo and Qualcomm collaborated to support small mobility in India. The combined technology will be used for clusters, connected displays, connected smartphone applications, driver assistance, and sensor technology. Moreover, rising government initiatives and investments in research and development, particularly in areas, such as smart cities and infrastructure, will contribute to the embedded systems market growth in the region.

Europe's market is driven by factors, such as technological advancements, increasing adoption of connected devices, rising need for energy-efficient systems, and growing product demand in the consumer electronics and automotive sectors. Additionally, rising emphasis on Industry 4.0 initiatives, along with supportive government regulations, will accelerate the use of embedded solutions in the region.

Similarly, the Middle East & Africa and South America regions are forecasted to grow considerably in the coming years. The market’s expansion in these regions is driven by the growth of smart cities and infrastructure projects, coupled with a rising demand for IoT solutions across industries, including automotive, healthcare, and finance. For instance, in June 2023, Mastercard partnered with PayU to launch Click to Pay embedded payments in South Africa. It is a type of e-commerce technology that aids consumers in paying without entering their card credentials. Such payments made it convenient for consumers across the world to check out from Click to Pay-enabled sites.

KEY INDUSTRY PLAYERS

Collaborations and Partnerships among Vendors to Propel Market Growth

Key players in the market are collaborating and partnering with similar companies to bring significant financial gains to both the parties. Partnerships aid businesses in increasing their sales and cutting down their costs by sharing or combining resources. For instance, in June 2023, Jifiti partnered with FIS to launch an embedded lending solution. The collaboration enabled banks and financial institutions to use embedded solutions to deliver their services to merchants, such as Pay Later (BNPL) and advanced Buy Now programs.

List of Key Companies Profiled in Embedded Systems Market: 

• Renesas Electronics (Japan)


• STMicroelectronics N.V. (Switzerland)


• Infineon Technologies (Germany)


• Texas Instruments Inc. (U.S.)


• Qualcomm Incorporated (U.S.)


• NXP Semiconductors (Netherlands)


• Microchip Technology Inc. (U.S.)


• Analog Devices Inc. (U.S.)


• Intel Corporation (U.S.)


• Advanced Micro Devices, Inc. (U.S.)

KEY INDUSTRY DEVELOPMENTS:

• October 2023: Renesas Electronics Corporation partnered with EdgeCortix to accelerate the development of AI/ML technologies. The partnership enabled Renesas to have access to EdgeCortix’s AI-focused processor technology. The combination of embedded processors, AI software, and EdgeCortix’s solutions will help customers compile their AI code seamlessly.


• October 2023: Infineon Technologies AG collaborated with Eatron Technologies to equip the AURIX TC4x microcontroller (MCU) with advanced machine learning solutions and algorithms. The partnership aimed at evolving the automotive Battery Management Systems (BMS) by helping Electric Vehicle (EV) manufacturers overcome three challenges: charging speed, range anxiety, and battery health.


• July 2023: Microchip Technology Inc. declared its plans to invest around USD 300 million in expanding its operations in the Indian market. The company planned additional improvements to its Chennai and Bangalore facilities and built a new R&D center in Hyderabad.


• May 2023: STMicroelectronics launched the STM32MP2 series Edge AI-powered microprocessors. The new 64-bit microprocessors are built with advanced multimedia features, innovative security features, industrial application-ready interfaces, graphics processing, digital connectivity, and Edge AI acceleration.


• March 2023: Texas Instruments expanded its embedded processing semiconductor product portfolio by launching a scalable Arm Cortex-M0+ microcontroller (MCU) series that offers a vast range of pinout, computing, memory, and integrated analog options. The portfolio will enable designers to spend more time innovating and less time coding and evaluating.

REPORT COVERAGE

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The embedded systems market report provides a detailed analysis of the market and focuses on key aspects, such as leading companies, product/service types, and leading applications of the product. Besides, it offers insights into the latest market trends and highlights key industry developments. In addition to the factors mentioned above, the report encompasses several factors that have contributed to the growth of the market in recent years.

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