Homomorphic Encryption Market Size, Share, and Industry Analysis, By Type (Partial Homomorphic Encryption and Fully Homomorphic Encryption), By End-use (BFSI, Healthcare, Government, IT & Telecom, Manufacturing, and Others) and Regional Forecast till 2032

The global homomorphic encryption market is witnessing significant growth, driven by the growing need to protect data within organizations. Homomorphic encryption transforms data into cipher text that can be analyzed and worked with as if it were still in its original state. The rise in cybercrimes is fueling the need for homomorphic encryption, as it permits computations on encrypted data without the need for prior decryption.

In 2023, the Federal Bureau of Investigation reported that there were more than 2,285 complaints related to ransomware incidents, marking an increase of over 18% compared to 2022, with losses surging 74% from USD 34.3 million to USD 59.6 million.

Homomorphic Encryption Market Driver

Increasing Adoption of Homomorphic Encryption for Secure Data Transmission to Drive Market Growth

Sharing confidential data sets with external entities, such as cloud service providers or other businesses, poses difficulties due to data privacy laws, such as GDPR and CCPA. Non-compliance with these regulations can result in significant penalties and harm to a company's reputation. Traditional encryption techniques offer a reliable and secure way to keep sensitive information in cloud environments in an encrypted state. However, to carry out calculations on data encrypted through these methods, companies face the choice of either decrypting the data in the cloud, which may cause security risks, or downloading the data, decrypting it, and conducting computations, a process that can be expensive and time-consuming.

Homomorphic encryption allows businesses to securely share private data with external parties for computational services. With homomorphic encryption, the cloud service provider or outsourced firm only has access to the encrypted data and can perform operations on it. These services then send back the encrypted results to the data owner, who can decrypt them using a private key.

Homomorphic Encryption Market Restraint

High Initial Costs and Complexity to Hamper Market Growth

One major disadvantage of homomorphic encryption is its high computational demands and slow performance. The processes of encrypting, decrypting, and executing operations on cipher texts require significantly more resources and time compared to plaintexts. Depending on the specific type and degree of homomorphic encryption used, the overhead can range from a few orders of magnitude to several orders of magnitude. Consequently, homomorphic encryption isn't ideal for applications needing real-time processing or high throughput, and it may lead to considerable costs and delays.

Homomorphic Encryption Market Opportunity

Increasing Demand of Homomorphic Encryption in Cloud Computing is Expected to Boost Market Growth

Cloud computing has seen significant growth in recent years as businesses have shifted toward digital operations. The COVID-19 pandemic increased the demand for cloud-based data storage when companies worldwide had to shift to remote work.

While cloud computing offers easy access to corporate platforms from any location, it carries specific security vulnerabilities and homomorphic encryption can help address these concerns. When data is saved in the cloud, an encryption key is given to the user for the entire block of stored data. If a company or a third party needs to conduct analytics or computations on that data, the user can precisely control what others are permitted to see.

Homomorphic encryption enables users to decrypt only the specific part of a data block they require from the cloud. The sensitive information stays securely protected, while the analytics still provide accurate results. This is especially crucial for users accessing data in potentially untrustworthy settings, such as public clouds. By utilizing homomorphic encryption, the data remains encrypted throughout, minimizing the risk of data breaches. In other words, homomorphic encryption improves the security of cloud services.

Segmentation

Key Insights

The report covers the following key insights:

• Micro Macro Economic Indicators
• Drivers, Restraints, Trends, and Opportunities
• Business Strategies Adopted by the Key Players
• Consolidated SWOT Analysis of Key Players

Analysis by Type

By type, the market is divided into partial homomorphic encryption and fully homomorphic encryption.

In 2023, fully homomorphic encryption (FHE) dominated the market, as it facilitates achieving a zero-trust approach by allowing organizations to analyze data in untrusted environments without decryption. For instance, organizations can leverage fully homomorphic encryption to examine encrypted feeds of security footage from public areas. With homomorphic encryption, the footage can be decrypted, but a square around each individual's head remains inaccessible since the organization does not obtain the decryption key for that part. This enables them to observe individuals' actions without disclosing their identities.

Analysis by End-Use

By end-use, the market is divided into BFSI, healthcare, government, IT & telecom, manufacturing, and others.

The BFSI sector is projected to experience growth in the upcoming years due to the rise in cyber incidents. According to industry analysts, the financial sector experienced 3,348 cyber incidents in 2023, with financial motives driving 71% of data breaches. As the number of cyber incidents increases within the industry, the demand for homomorphic encryption is also rising, particularly for secure data processing in the cloud. Financial institutions can utilize cloud computing services to manage encrypted data without risking data privacy. This allows banks to take advantage of cloud computing's scalability and cost-effectiveness while ensuring the confidentiality of sensitive financial data.

Regional Analysis

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In terms of geography, the global market is segmented into North America, Europe, Asia Pacific, South America, and the Middle East & Africa.

North America held the largest market share in 2023, as organizations in the region are increasingly concerned about data breaches. Data breaches have been an issue for many years, and the growth of digital platforms has introduced new challenges, significantly increasing the importance and financial impact of these breaches. As a result, businesses in the region are implementing homomorphic encryption solutions to enhance security. The region's emphasis on innovation and the rapid adoption of new technologies facilitate the development and use of homomorphic encryption across various sectors, including finance, healthcare, and government. Furthermore, the U.S. government and defense sectors demand the highest levels of data protection. Homomorphic encryption enables secure handling of classified and sensitive data without disclosing it, addressing critical national security issues and fueling demand in these areas.

The U.S. is at the forefront of the region due to the rise in digital crimes targeting individuals and organizations. Cyber threats are evolving rapidly, with ransomware incidents leading to significant economic losses in the U.S.. In 2022, IBM reported that the average cost associated with a ransomware attack exceeded USD 4.5 million. A report from the FBI indicated that cyberattacks and fraud could result in potential losses surpassing USD 10.2 billion in the U.S. for the year 2022. The FBI’s Internet Crime Complaint Center reported more than 800,000 complaints in 2022. While this figure is a 5% decrease compared to 2021, the total monetary losses have surged by 49%. Consequently, there is an increasing demand for homomorphic encryption.

Asia Pacific is estimated to grow significantly in the coming years, owing to increasing cyberattacks in the countries including India, Malaysia, Thailand, Vietnam and others. According to a report by the online security firm and Symantec Corporation, India has been placed among the top 10 countries to witness the maximum cyber security breaches. Also, according to a global survey, India holds the 3^rd rank in terms of the number of internet users across the globe, followed by the U.S. and China. To cater to the rising demand for security solutions and services, several players in this region are focusing on developing and launching advanced cyber security solutions.

Europe also holds significant potential in the global homomorphic encryption market, as the region facing increasingly sophisticated and persistent cyber threats that pose the security of the private sector, public entities, and, ultimately, the privacy of individuals. Consequently, the government is taking steps to enhance cybersecurity measures and refine its overall technology governance approach.

Key Players Covered

The global homomorphic encryption market has presence of a large number of group and standalone providers.

The report includes the profiles of the following key players:

• CryptoExperts SAS (France)
• Enveil (U.S.)
• Google (U.S.)
• IBM Corporation (U.S.)
• Cybersixgill (Israel)
• Inpher, Inc. (U.S.)
• Intel Corporation (U.S.)
• Microsoft Corporation (U.S.)
• Thales (France)

Key Industry Developments

• In August 2024, Apple launched a new open-source package for its Swift programming language named “swift-homomorphic-encryption.” This groundbreaking technology marks the beginning of a new phase in privacy-focused cloud computing leveraging the capabilities of homomorphic encryption (HE).
• In April 2024, Mind Network collaborated with Io.net. Through this collaboration, Mind Network integrated its cutting-edge Fully Homomorphic Encryption (FHE) technology into Io.net's decentralized computing platform, enhancing Io.net's product security and increasing its capacity to address the global GPU shortage. This alliance greatly enhanced both security and efficiency in crypto AI computations.