Digital Twin Market Size, Share & Trends Analysis Report By Type (Parts Twin, Products Twin, Process Twin, System Twin), By Outlook (IoT And IIot, 5G, Big Data Analytics, Blockchain, AI), By End-User (Manufacturing, Agriculture, Automotive and Transport, Energy and Utilities, Healthcare and Life Sciences, Residential and Commercial, Retail and Consumer Goods, Aerospace, Telecommunication), By Solution (Component, Process, System), By Application (Manufacturing Process Planning, Product Design) and By Region(North America, Europe, APAC, Middle East and Africa, LATAM) Forecasts, 2023-2031

Market Overview

The global digital twin market was valued at USD 10.42 million in 2022. It is expected to reach USD 204.56 million by 2031, growing at a CAGR of 39.2% during the forecast period (2023–2031).

A virtual machine that offers a real-time online equivalent of a physical object or process is called a "digital twin." The performance of industrial assets is profiled, predicted, and optimized using simulation models and data intelligence. Digital twins are essential to the Industrial Internet of Things because they enable automatic vehicle control and monitoring of industrial assets and processes like product development, design and manufacturing planning, investment performance management, and business and operation optimization.

Digital twin solutions are expected to revolutionize the manufacturing processes and provide new, creative ways to cut costs, improve maintenance, keep assets in check, decrease downtime, and develop new connected products. Even though it is well-known, the digital twin model has been quickly advancing in manufacturing and other sectors. IoT and cloud-based platforms have played a major role in increasing the adoption of these solutions.

Market Dynamics

Market drivers

Rising Next-Generation Services Development

The main forces behind the global market's expansion and growth can be innovation, international competition, and technological advancements. Thanks to the digital twin, businesses have more tools to efficiently reduce costs and increase profits. Benefits from process automation, cloud computing, and social media, among other things, are also pushing companies to choose digital twins and increase the effectiveness of their operations.

Digital twin providers are expected to take advantage of the latest technological advancements to manage time-to-market issues effectively, boost the productivity of the current system, and optimize internal processes, product designs, and systems to cut down on energy use, improve the production layout, and lower investments. For instance, Hexagon AB introduced the HxGN SDx Asset Lifecycle Information Management (ALIM) solution in June 2018. The modular cloud-based solution enhances judgment, maximizes effectiveness, and guarantees safety throughout the industrial facilities. Such factors drive market growth.

Growing Technological Progress

The Internet of Things (IoT) is revolutionizing industries around the world. It is opening opportunities for the market for digital twins to meet changing consumer demands for creative means of providing ancillary services to consumers. Digital twin platform creators use IoT to boost operations, increase system productivity, and increase sales. In addition, the market for digital twins is currently undergoing rapid change. An enterprise's supply chain is being presented with new opportunities and challenges due to globalization. The benefits of cloud computing include easy access, quick solution deployment, scalability, standardized functionality, and lower hardware costs.

Additionally, the developers of digital twins prioritize security, cloud deployment, customization, and two-tier business models to expand their businesses. A network of internet-connected servers would be used in cloud computing to provide remote services for managing, storing, and processing data. The adoption of cloud computing by manufacturing companies has lagged behind that of digital twin developers due to connectivity and security concerns. In addition, manufacturers have gradually embraced cloud computing within their manufacturing units as it has grown more dependable and stable. This has enabled them to share data efficiently and quickly. Manufacturing companies benefit from cloud computing by improving quality control, increasing production speed, and cutting costs, driving market growth.

Market restraints

High Price in the Implementation of Digital Twin Technology

Implementing digital twin technology in a company comes at a hefty cost. The high implementation costs hamper the global market's expansion. It costs a lot of money to implement digital twins and related technologies like product lifecycle management (PLM), 3D CAD, manufacturing operations management (MOM), manufacturing process management (MPM), computer-aided design (CAD), enterprise resource planning (ERP), model-based system engineering (MBSE), and augmented reality (AR), virtual reality (VR), and XR. The cost of developing and implementing a digital twin technology will increase if the company or organization lacks the necessary support infrastructure and technological foundation. Therefore, the high implementation cost of digital twin technology is a barrier to adoption by organizations.

Market opportunity

Growing Adoption in the Automotive and Aerospace Sectors due to AI and ML

Machine learning (ML) and artificial intelligence (AI) are becoming more common in various sectors, including manufacturing, healthcare, defense and aerospace, and automotive. Incumbents in these industries are incorporating AI and ML into their current products to offer customers improved products. In addition, the increasing use of AI in self-driving cars and other electronic vehicles is visible in the automotive sector. For instance, Volkswagen Group and NVIDIA Corporation announced plans to incorporate AI into cars at the 2018 International CES. According to a Volkswagen Group industry expert, AI and deep learning can be crucial to autonomous driving, digital networking, and zero-emission transportation.

Additionally, the need to reduce carbon emissions, improve engine efficiency, and prevent product recalls have combined to drive the uptake of digital twin solutions in the automotive and defense and aerospace sectors. The development of many different design options and an improved design flow are made possible by cloud-based computing, AI, and generative design. For instance, General Electric announced in June 2018 that it would collaborate with Rolls-Royce Holdings PLC to add. These factors create opportunities for market growth over the forecast period.

Regional Analysis

Asia-pacific dominates the global market

By region, the global market is segmented into North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa.

Asia-Pacific is the most significant global digital twin market shareholder and is expected to exhibit a CAGR of 43.5% during the forecast period. End-users in China, India, Japan, South Korea, and other manufacturing processes are increasing their venture capital investment to adopt twin technologies. The region's abundance of industries, including those in the automotive and transportation, manufacturing, energy, and utility sectors, is also likely to support market growth. China is the nation that adopts technology the fastest. According to the United Nations Statistics Division, the manufacturing sector in China accounts for 28.7% of global manufacturing. In addition, the market in the region is being propelled by both the increasing demand for consumer goods and the number of initiatives aimed at creating smart cities in the area. The increasing number of Internet-enabled gadgets is anticipated to boost the regional market during the predicted time frame.

North America is expected to grow at a remarkable CAGR during the forecast period. The adoption of parts twin and product twin by end-users in the U.S. across various industries, including healthcare, home and commercial, will likely fuel market expansion. Important suppliers like IBM Corporation, Microsoft Corporation, Oracle Corporation, and Cisco Systems, Inc. are also concentrated in the U.S. and Canada. Market players collaborate and merge with technology providers to improve their product offerings and expand their clientele. In addition, modern manufacturing facilities in the U.S. use new technologies and innovations to produce products of significantly higher quality at lower costs. As a result of their early adoption of cutting-edge technologies like IoT, big data, DevOps, and mobility, American manufacturers intend to use digital twin technology to streamline their operations and benefit from its deeper insights.

Additionally, construction remains primarily a 2D industry that depends on technological innovation, whereas manufacturing has started to embrace digital twin technology. Off-site experts can now access on-site views into the specifics of projects beginning where Google Street View leaves off, thanks to 3D visual digital twin technology. For instance, the Orlando Economic Partnership (the Partnership) disclosed plans to finance a futuristic, fully realized digital twin that will showcase the entire area with input from various stakeholders in April 2022.

Europe is expected to expand significantly during the forecast period. The demand for virtual twin technology will likely increase due to the rising demand for advanced industrial technologies across European nations. The region's automotive and transportation sectors heavily integrate technology into their operations. For instance, in July 2021, Robert Bosch and the automaker Volkswagen will use a virtual twin model to enhance the performance of self-driving cars.

The Latin American market is currently in its emerging phase due to increased investments made by regional governments and significant international corporations in the energy and utility sectors. Major players in the market hope to increase their terrestrial presence across Caribbean countries by providing twin types equipped with cutting-edge technologies. The Middle East and Africa market is still developing due to an increase in domestic players like Vervelogic, XPLOR, and other start-ups. These businesses are making investments in the development of cloud-based twin types.

Segmental Analysis

The global market is segmented by end-user and solution.

Based on end-user, the global market is bifurcated into manufacturing, agriculture, automotive and transport, energy and utilities, healthcare and life sciences, residential and commercial, retail and consumer goods, aerospace, and telecommunication.

The automotive and transport segment is the highest contributor to the market and is expected to grow at a CAGR of 44.32% during the forecast period. The demand for 3D simulation and 3D printing software is expected to increase due to its growing use in fields like fleet management, vehicle design, and simulation. The expansion results from the increased use of automation technologies like Industry 4.0, robotic process automation (RPA), and others. Automotive and transport contributed over 18% of the total revenue in 2022, making up the largest revenue share. This is due to lean manufacturing techniques, electric vehicles, and increasing simulation technology. In addition, digital twin technology in the automotive industry aids engineers in obtaining behavioral and operational data about the vehicle, improving automobile design and lowering costs. The adoption of digital twin technology is also anticipated to rise due to future automotive trends like shared mobility, connected and autonomous vehicles, and connected and autonomous vehicles.

Based on the solution, the global market is bifurcated into components, processes, and systems.

The system segment owns the highest market share and is expected to grow at a CAGR of 38.11% during the forecast period. The adoption of a digital twin for designing workflows within an organization, supply chain procedures, smart city initiatives, and warehouse procedures, among other applications, can be credited with this growth. Organizations are concentrating more on reducing operational costs, which will improve coordination between operations. The development of workflow structures with the aid of digital twin technologies helps businesses improve customer engagement and departmental and supplier collaboration, which drives the market for digital twins to expand.

Recent Developments

• July 2023- Honeywell unveiled its new Honeywell Digital Prime solution, a cloud-based digital twin for tracking, managing, and testing process control and system changes. Digital Prime is a low-cost solution that enables users to test frequently for more accurate results while reducing overall reactive maintenance.
• June 2023- Unity partnered with the Vancouver Airport Authority (VAA) to deploy large-scale enterprise-grade digital twins to ensure success in environmental, social, and corporate governance (ESG) use cases.