Encoder Market Size, Share, and Industry Analysis By Type (Rotary Encoder and Linear Encoder), By Signal Type (Incremental and Absolute), By Technology (Magnetic, Optical, Inductive, and Others), By Application (Healthcare, Automotive, Consumer Electronics, Printing, Textile, Food & Beverages, Energy & Power, and Others), and Regional Forecast 2025-2032

The global encoder market is growing, driven by the widespread automation in industries impacting motion control applications, where accuracy is crucial. Robotics, manufacturing, and automotive systems require encoders for precise position and speed measurement.

• According to the Federal Communications Commission (FCC), 9% of population in the U.S. does not have access to advanced telecommunications capability, demonstrating an immediate need for more advanced encoder technologies for the national network infrastructure.

AI-driven applications are ramping up the entry of AI into encoder technology, as evidenced by the AI-mediated encoding solutions showcased during Broadcast Asia 2024. The result of that is a performance boost, for example, a new efficiency, and enables next-generation applications such as extended reality (XR) and smart manufacturing.

Encoder Market Driver

Industrial Automation and RFID Adoption Drive Encoder Market Growth

The encoder market has a wide growth potential as encoders are increasingly relied upon by machine manufacturers for precision in automated machinery, the key driver being industrial automation itself and Industry 4.0. The automotive sector also stands to benefit from this market, wherein encoders are immensely important to the working of electric power steering and transmission control. Specifically for motion tracking and positioning in robotics, applications for encoders span into the healthcare and industrial automation sectors. With the rapidly increasing adoption of RAIN RFID technology, with shipments expected to reach 115 billion units by 2028, as per RAIN Alliance, the market is expected to grow in the near future in North America.

Encoder Market Restraint

High Costs, Integration Issues, and Environment Constraints Hinder Market Growth

The high cost of advanced encoders at the outset, especially those offering high precision and durability features, can restrict their adoption within small and medium-sized enterprises. Apart from that, integrating encoders with complex machines proves to be technical due to the interoperability issue differences in model and communication protocols. Moreover, environmental constraints impose themselves at maximum temperatures and possible contamination and can affect the performance, lifetime, and reliability of encoders in extremely harsh operating conditions.

Encoder Market Opportunity

Healthcare, Asia Pacific, and IoT Drive Encoder Market Growth

The encoder market finds enormous growth opportunities in the healthcare industry, and the increased demand for automation and robotic surgery systems and diagnostic equipment further fuels this growth. The Asia-Pacific region offers promising market prospects due to swift industrialization coupled with higher applicability of automation technologies in manufacturing industries. Through the development of IoT-compatible encoders, new avenues for smart factories and predictive maintenance are being opened up for improved efficiencies across industries. The Asia Video Industry Association members provide services to over 700 million homes in Asia and Australasia, which further proves the demand for encoding technology in digital content delivery.

Key Insights

The report covers the following key insights:

• Adoption of Encoder Technology in Automation and Telecommunications, By Key Regions
• Drivers, Restraints, Trends, and Opportunities
• RAIN RFID Adoption and Its Impact on Encoder Demand
• Business Strategies Adopted by Key Players
• Consolidated SWOT Analysis of Key Players
• Key Industry Developments (Mergers, Acquisitions, Partnerships)
• Overview: Regulatory and Technological Advancements in Encoder Market

Segmentation

Analysis by Type

By type, the market is divided into rotary encoder and linear encoder.

The rotary encoder segment is anticipated to account for a larger market share, owing to a wide range of applications in industrial automation, robotics, and automotive systems. Other partner orientation companies, such as Encoder Products Company (EPC), joined MHI's Mobile Automation Group (MAG) in May 2024 to improve automation solutions, according to MHI.

The linear encoders segment is expected to see high growth owing to their increasing use in CNC machines, semiconductor manufacturing, and precision measurement applications. A perfect storm of growth prospects is emerging in both the tag chip space and encoder adoption in North America, as per the RAIN Alliance.

Analysis by Signal Type

By signal type, the market is divided into incremental and absolute.

The incremental encoders segment is expected to dominate as incremental encoders are frequently used for monitoring speed and position in automation and robotics applications.

Prototype testing for the absolute encoders is becoming common now, owing to the unique nature of their position values, which remain the same after power loss.

Analysis by Technology

By technology, the market is divided into magnetic, optical, inductive, and others.

It is estimated that magnetic encoders will capture a higher market share owing to their resistance against harsh environments and competency for high-speed applications. As 36% of rural Americans still lack advanced telecommunications, their demand is growing, opening up opportunities, as stated by the Federal Commissions Communication (FCC).

The optical encoder segment is estimated to witness high growth owing to the accuracy and resolution superiority, which makes them fit for application in fields such as robotics, medical imaging, and semiconductor manufacturing. One of the most notable segments of IBC2024 was the emphasis on AI-powered encoder optimizations, which indicates a continuing push toward improving efficiency.

Analysis by Application

By application, the market is divided into healthcare, automotive, consumer electronics, printing, textile, food & beverages, energy & power, and others.

The automotive segment may dominate the market, where they are an important part of electric vehicle (EV) drive systems, electronic power steering, and self-driving systems, respectively. The rapid growth in RAIN RFID adoption within the Asia Pacific region is also likely to drive encoder usage in automotive and industrial, according to the RAIN Alliance.

Rapid industrial growth is observed in sectors such as consumer electronics, with the increasing use of smart devices, gaming systems, and high-resolution displays necessitating advanced encoding solutions. VisualOn Launches AI-Driven Encoding Solutions at Broadcast Asia 2024, as reported by IABM (International Trade Association from Broadcast and Media).

Regional Analysis

Based on geography, the market has been studied across North America, Europe, Asia Pacific, Latin America, and the Middle East & Africa.

The encoder market is expected to be dominated by the Asia Pacific region, fast industrialization, investment in automation, and a booming automotive sector in China and Japan. Increasing RAIN RFID adoption in the region further supports the growth of the market.

The North American market experiences promising growth on account of rising technological advancement and early adoption of automation solutions. Demand for advanced encoder technologies is also driven by various FCC-sponsored broadband initiatives.

Europe commands a substantial market share, backed by an established manufacturing base, a strong emphasis on precision engineering, and widespread adoption of Industry 4.0 initiatives. Already earning one-third share of the 45.5 billion RAIN RFID tag shipments in 2023, the market seems poised for even further demand for the encoder technology.

Key Players Covered

The report includes the profiles of the following key players:

• Sensata Technologies (U.S.)
• Mitutoyo Corporation (Japan)
• Fortive (U.S.)
• HEIDENHAIN (Germany)
• Renishaw plc (U .K.)
• Maxon (Switzerland)
• Balluff Automation (Germany)
• Pepperl+Fuchs SE (Germany)
• Pilz GmbH & Co. (Germany)
• Omron Corporation (Japan)
• Honeywell International (U.S.)
• Rockwell Automation Inc. (U.S.)
• Schneider Electric (France)
• Panasonic Corporation (Japan)
• Faulhaber Group (Germany)
• Koyo Electronics Industries Co., Ltd (Japan)
• Kubler Group (Germany)

Key Industry Developments

• In September 2024, Fagor Automation came up with the H3 Angular Encoder Series with outside diameters varying from 90 to 200 mm, which was released for different industrial applications demanding precision measurement. It adds to the Fagor Automation product range when it comes to encoders.
• In January 2023, SICK rolled out a brand-new family of linear encoders engineered for very exact measurements of piston positions inside hydraulic cylinders. The same encoders can also be used to better monitor linear movements in other industrial machines. This is yet another innovation that just keeps reinforcing SICK's status in high-precision sensing solutions.
• In July 2022, Sensata Technologies announced that it had acquired Dynapower Company LLC for the expansion of its portfolio regarding energy storage and power control. The acquisition incidentally fulfills Sensata's ambitions in renewable energy and industrial applications. This augments the company's mission on renewable energy and sustainable power solutions.