Market Introduction

The global quantum encryption market was valued at USD 550 million in 2024 and grew at a CAGR of 33% from 2025 to 2034. The market is expected to reach USD 9,525.31 million by 2034. The rising applications of quantum computing will drive the growth of the global quantum encryption market.

Quantum encryption makes use of the basic ideas of quantum mechanics to make communication much safer than current methods. Essentially, quantum encryption depends on Quantum Key Distribution (QKD). With QKD, two parties are able to make and exchange a cryptographic key across a quantum channel. Quantum superposition and the no-cloning theorem make sure that the process is secure, as stated by quantum physics laws. When a third party tries to get the key using a quantum system, the key will be affected and the intrusion would be instantly noticed. Two communication parties use quantum bits (qubits), sent using photons’ polarization or phase, in QKD. Among QKD protocols, BB84 and E91 are the leading examples, made to stop hackers from reading any shared keys. When the key is safe, it is possible to use conventional encryption like the one-time pad for encrypting messages with total privacy. More and more attention is being given to quantum encryption because the rise of quantum computers may break most of today’s classical encryption schemes. The ability of quantum computers to compute certain problems very quickly makes today’s cryptography code easily breakable. The technology has come up with a new kind of security that depends on nature and not on computing, so quantum encryption can withstand all future risks.

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Recent Development

• To counter the impending threat of quantum computers that are relevant to cryptography, CISOs have been asked to insist on transparent post-quantum cryptography (PQC) preparation roadmaps from partners and vendors.  Though they have not yet been created, quantum computers that can launch massive cryptographic attacks are becoming a serious threat, perhaps as soon as five years from now.  Experts called for security professionals to start the PQC transition as soon as possible and to concentrate on supply chain readiness during a panel at this week's Infosecurity Europe conference.

Market Dynamics

Drivers

New developments in quantum computing – Businesses can use quantum encryption more easily and confidently because of new developments in quantum computing and communication which encourages them to adopt it. The increasing number of cyberattacks and data breaches have encouraged companies to use quantum encryption for better protection of their data. By investing a lot in research and development, both private organizations and government groups have quickly brought quantum encryption technologies to a point where they are useful and accessible outside of research. Since finance, defence, healthcare, and government sectors deal with secret information, they are motivated to use quantum-safe encryption methods. Besides, the increasing ability to integrate quantum encryption with standard cryptography systems lowers the main barriers to its implementation inside companies. All in all, the main motivations for adopting quantum encryption are technological growth, stronger security awareness, dedicated R&D work, unique needs for data protection in different sectors, compatibility with present systems, and cost benefits.

Restraints

Technological, financial and personnel problems – Challenges that limit the use of quantum encryption are mostly due to problems with technology, finances, and personnel. High costs are still a big obstacle when it comes to using quantum encryption. Research, setting up, and carefully maintaining the equipment and special software are all expensive, and this can restrict small and medium businesses from using them. Quantum encryption is complex, and few businesses are willing to adopt it because it has not been demonstrated in big or complex settings. It is difficult to merge quantum encryption systems into existing IT networks and legacy security protocols, since this usually requires the organization to make major changes and have qualified engineers. It is difficult to overcome this challenge because there are few experts who know about both quantum technologies and cybersecurity. Since it’s challenging for organizations to manage these systems due to the lack of experts, many are not motivated to start using them. On top of this, organizations not in sensitive fields usually believe their current protection is enough against existing dangers. The combination of high expenses, technology’s complexity, lack of skilled personnel, integration limits, and the priorities of various industries result in many organizations not adopting and implementing quantum encryption.

Opportunities

The increasing incidence of cyberattacks – The constant rise in advanced cyberattacks and threat of quantum computers breaking existing ways of encryption forces companies and governments to apply quantum encryption to ensure their security. Governments across the world are increasing their cybersecurity rules, which forces organizations to put in place advanced technology such as quantum encryption. People are now much more interested in keeping their data safe, so companies are working to prove they care about people’s privacy by improving their security systems. More and more devices and platforms are joining the online world, which makes securely transferring data even more important, leading to the increased demand for quantum-safe encryption. Also, the increase in geopolitical issues and the threat of data theft from espionage around the world ensure that unbreakable encryption methods are needed even more urgently. As a result of all these forces, companies and industries are encouraged to introduce quantum encryption to ensure their data is safe from new threats.

Segment Analysis

Regional segmentation analysis

The regions analyzed for the market include North America, Europe, South America, Asia Pacific, the Middle East, and Africa. North America emerged as the most significant global quantum encryption market, with a 34% market revenue share in 2024.

Many important companies, research institutes, and governmental organizations in the region work to advance and improve the accessibility of quantum encryption. Quantum technology has become so important in the U.S. that it has become a national priority, and large amounts of money are being spent through the National Quantum Initiative Act to fast-track the research, building, and commercialization of these systems. North America has big companies, growing startups, and research centres in these two fields which augments the market’s growth. Furthermore, both businesses and government organizations in this area are working actively to put in place advanced security technologies to safeguard important data from the evolving nature of cyberattacks. Also, the advanced telecommunications system across North America makes it easy to set up quantum encryption systems for experiments and trials.

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• In order to create cryptographic standards that can withstand the possible threats posed by quantum computers—which are predicted to be able to crack many of the cryptographic systems currently in use—the U.S. National Institute of Standards and Technology (NIST) published a status report on the fourth round of its post-quantum cryptography standardisation process.  The agency also described HQC, a new post-quantum encryption method that will be used as a fallback for the primary general encryption algorithm, ML-KEM, or Module-Lattice-Based Key-Encapsulation Mechanism. NIST has chosen the Hamming Quasi-Cyclic (HQC) algorithm for standardisation following a comprehensive and in-depth assessment of numerous cryptographic algorithms submitted by scholars and specialists worldwide.

Component Segment Analysis

The component segment is divided into quantum key distribution (QKD) systems, quantum random number generators (QRNG), quantum cryptographic protocols and software & services. The quantum key distribution (QKD) systems segment dominated the market, with a market share of around 35% in 2024. The majority of the world’s quantum encryption market is led by Quantum Key Distribution (QKD) due to its basic role in providing trustworthy and exclusive key exchange. Unlike earlier ways of sharing keys that depend on complicated algorithms, QKD is based on quantum mechanics and ensures security by using the ideas of the no-cloning theorem and behaviour of quantum particles. Added to that, QKD is gaining popularity because it is now technically advanced and widely available in the market. In the last decade, improvements in photon sources, detectors, and quantum communication protocols have increased how far and how reliably QKD systems can be used in today’s telecom systems. The first places QKD is used most are in governments, agencies, and businesses, thanks to their vital need for strong data security. In addition, many projects are currently deploying quantum networks to boost security for communication locally and all over the nation, which helps improve QKD’s dominant place. One more reason for QKD’s dominance is that it is the main technology behind several quantum encryption methods.

• To ensure the safety of vital information and communications in the quantum-enabled future, the European Telecommunications Standards Institute (ETSI) unveiled the first post-quantum cyber security standard.  Large-scale quantum computers, which are expected to be able to solve the complex math required by current asymmetric public key cryptography (PKC), pose a potentially existential threat to current encryption techniques. To help ensure that only authorised users can access sensitive data, ETSI has developed specification TS 104 105, or Efficient quantum-safe hybrid key exchanges with hidden access policies. ETSI asserts that the standard's Covercrypt method for Key Encapsulation Mechanisms (KEMs) with Access Control (Kemac) will provide pre- and post-quantum security through hybridisation.

Application Segment Analysis

The application segment is divided government & defence, banking & financial services, healthcare, telecommunications, IT & data centres and energy & utilities. The government and defence segment dominated the market, with a market share of around 37% in 2024. Since governments and military groups handle a lot of classified details, they are very likely to benefit from quantum encryption and choose services like Quantum Key Distribution (QKD). Due to its ability to break regular cryptography, quantum computers represent a major danger to national protection, making these bodies speed up the development of quantum-safe encryption software. Besides, it is common for government bodies and dedicated agencies to take the lead in developing and applying quantum encryption because they have the funds and strategies to keep their systems advanced and secure. Regulations and policies have been set in both defence and government industries, requiring use of advanced encryption to secure important data, and this increases the demand for such services. In addition, governments work together with universities and technology companies to invent top-notch quantum encryption technologies, which plays a role in encouraging innovation and building a strong market.

• The Third International Quantum Communication Conclave was held in New Delhi by the Department of Telecommunications' (DoT) technical arm, the Telecommunication Engineering Centre (TEC), in association with the Centre for Development of Telematics (C-DOT).  With a strong emphasis on standardisation, research, and secure digital transformation, this high-level meeting brought together national and international professionals, researchers, and policymakers to discuss the future of quantum communication.

Deployment type Segment Analysis

The deployment type segment is divided into on-premises and cloud-based. The on-premises segment dominated the market, with a market share of around 58% in 2024. Control, security, and customizing capabilities are major reasons why the on-premises deployment segment leads the world’s quantum encryption market. Essentially, on-premises environments require installing and managing quantum encryption systems on the organization’s network, which greatly aids in controlling and connecting them to other IT systems. Using quantum encryption on company servers allows organizations to adjust the solutions for their own security needs, something that usually is not possible with cloud deployments. As a result, firms are equipped to work more efficiently, deal with risks in a better way, and meet all the necessary rules within their organization and those set by outside authorities. Also, many companies still hesitate to move their most valuable encryption keys and sensitive data to the cloud because of the possibility of weaknesses on the part of third parties and their questions about who owns the data. As currently, quantum communication networks are limited to specialized channels and tools that most companies don’t have access to, it is more useful to deploy such systems locally.

• In the global race to secure digital infrastructure before existing encryption techniques become outdated, a Chinese state-owned company has formally unveiled what it claims is the first distributed cryptography system designed to withstand quantum computer attacks. According to several South China Morning Post stories, China Telecom Quantum Group launched the commercial product last week.  According to the company, it integrates two fundamental strategies—quantum key distribution and post-quantum cryptography—into a single architecture to safeguard sensitive data from potential quantum decryption threats, authenticate users, and protect real-time communications.

End-user Segment Analysis

The end-user segment is divided large enterprises and small and medium enterprises (SMEs). The large enterprises segment dominated the market, with a share of around 67% in 2024. Many organizations cover all kinds of sensitive data in industries like finance, healthcare, telecommunications, and government payments, so the use of advanced encryption makes cyber security much safer for them. Many large enterprises have what it takes to pay for the high prices of quantum encryption systems, as well as purchase new hardware, update their networks, and train workers. The use of skilled people and special teams in cybersecurity helps businesses manage and combine quantum encryption with their current security setup. Also, because big companies must obey strict rules in data protection, they are driven to choose better encryption. Since they are usually first to adopt new technologies, big companies team up with technology firms and research institutes to guide changes in the market. Overall, these points secure their dominance in quantum encryption since they are at the forefront of moving toward safer data protection in the future.

• Leading cybersecurity provider NordVPN reports that all of its VPN apps now offer post-quantum encryption (PQE).  Last year, the NordVPN Linux software introduced the first version of post-quantum cryptography.  Additionally, NordVPN launched its PQE functionality for iOS, Android, Windows, macOS, and Android TV and tvOS in 2025.

Some of the Key Market Players

• Beijing Qasky Quantum Technology
• Crypta Labs
• Huawei Technologies
• ID Quantique
• Infineon Technologies
• ISARA Corporation
• MagiQ Technologies
• Qasky
• QuantumCTek
• QuintessenceLabs
• SK Telecom
• Toshiba Corporation

Report Description