The global industrial communication market size was valued at USD 121.99 billion in 2022. It is estimated to reach USD 318.46 billion by 2031, growing at a CAGR of 11.25% during the forecast period (2023–2031).
Industrial Communication, also known as a communication protocol, is a network structure designed for the industrial sector. An industrial communication network is the backbone of any automation system architecture because it provides robust data exchange, data controllability, and device connectivity flexibility. Automation in manufacturing units is possible due to an efficient industrial communication network, which also boosts safety, efficiency, and connectivity while consuming less energy and paying less labor.
The objective of industrial communication is the dependable transfer of data to the control level from the field. Consistent solutions leveraging Industrial Ethernet, cutting-edge wireless technologies, and cybersecurity improve the availability and security of the networked systems in this location. Communication is made efficient via network protocols and Fieldbus systems such as PROFINET, OPC UA, PROFIBUS, and INTERBUS.
Industrial Ethernet is essential for accomplishing complete transparency within an industrial plant and between the plant and enterprise networks. A consistent communication network is the core of the Industry 4.0 concept. Both industrial automation and industrial communication networks are thoroughly dependent on real-time operational requirements. Therefore, they must be able to handle information in a deterministic and redundant method. Furthermore, the networks must be scalable across an extensive range of equipment operating on multiple standards with various interfaces.
A factory system should provide faster response times, better efficiency, and greater reliability. Moreover, to achieve these benefits, designers must select the best communication technology, navigate a multiprotocol environment, and cover a broad range of industrial equipment. Industrial Ethernet offers several advantages, such as no terminal resistance requirement, large distances coverage, and high transmission speeds. This makes industrial Ethernet preferable compared to traditional connectivity solutions. Therefore, industrial Ethernet's scalability and interoperable protocols will drive the market in the coming years.
Machine-to-machine (M2M) communication is one of the central themes of Industry 4.0. As per the Congressional Research Service, more than 35 billion IoT devices with M2M capabilities are estimated to be installed worldwide by the end of 2021. Out of these IoT devices, more than 25% are estimated to be used for industrial applications. Superior connectivity for smooth communication and low power requirements are the key aspects of the increased adoption of novel machine-to-machine (M2M) technologies.
In order to achieve effective M2M communication, the existing capacity of mobile networks must handle billions of nodes that are anticipated to be deployed in the next couple of years. Similarly, the M2M communication technology will be extensively used in the coming years in heavy manufacturing industries and process industries, such as the food industry, to increase the efficiency of different processes and condense human intervention for machines. Therefore, such factors drive market growth.
The foremost hurdle facing digitized manufacturing is standardization. Standards are crucial to protect data exchange between devices, systems, and software in a networked value chain as a product progresses through an intelligent, connected factory to completion. Similarly, industrial equipment or devices communicate through numerous interfaces, technologies, and protocols. The lack of standardization in these communication interfaces and protocols could cause data to be misrepresented.
In addition, the absence of standardization complicates the integration of systems and hampers the usage of plug-and-play features for unrelated systems. For example, most equipment manufacturers use their proprietary interface protocols for communicating with their devices, which results in communication difficulties for the devices developed by other manufacturers, hampering the market.
The governments of different nations globally are supporting the development of industries to ensure the complete development of the country. This has resulted in the adoption of numerous automation and communication components and technologies for the structural development of industries. Governments internationally are focusing on processes and discrete industries. For example, the Government of Singapore partnered with several associations, such as the Singapore Food Manufacturing Association (SFMA) and the Food Innovation Resource Centre, to adopt the latest automation solutions, comprising SCADA, PLC, DCS, robots, and cables, in the food and beverages industry.
Furthermore, the United Kingdom, for instance, launched its industrial strategy focused on pushing the boundaries of artificial intelligence and renewable energy. The strategy will see investment in numerous new technology areas, counting a promised EUR 400 million investment in electric vehicle charging infrastructure and EUR 176 million in 5G mobile connectivity. All these factors are expected to offer lucrative opportunities for the global market.
The global market is segmented by component, communication protocol, and application.
Based on components, the global market is bifurcated into hardware, software, and services.
The hardware segment is the most significant contributor to the market share and is anticipated to expand at a CAGR of 9.77% over the forecast period. Hardware components include switches, gateways, power supply devices, routers and WAP, controllers and connectors, communication interface and converter, and others. The high adoption of physical networks infrastructure components, such as switches, routers, controllers, and communication interface devices, drives the demand for the hardware segment. Moreover, switches are the most often used hardware segment due to the quick digitalization of industrial processes. In the overall operation of the network architecture for industrial communication, switches are essential. Hardware components such as routers, gateways, and switches provide infrastructure for connectivity-enabled business strategies such as Industry 4.0, the Industrial Internet of Things (IIoT), and convergence of IT/OT. Moreover, the innovation in switches to endure harsh industrial environments also accelerates their demand in the market.
The software segment consists of software that links various industrial devices, including robot controllers, sensors, programmable logic controllers (PLCs), and other hardware. Digital communication networks like LAN and WAN computer networks, wireless communication systems, electronic mail, FAX, and audio and video networks are all set up and managed using communications and network software. In addition, the market has experienced significant growth in the previous years due to the growing adoption of employee communication software products in all types of organizations. The increasing adoption of communication software for web conferences amongst organizations is likely to propel the growth of employee communication software during the forecast period.
Based on communication protocol, the global market is divided into industrial Ethernet, Fieldbus, and wireless.
The industrial Ethernet segment dominates the global market and is predicted to exhibit a CAGR of 11.44% over the forecast period. Industrial Ethernet is the largest protocol segment due to its superior performance and integration with office networks. Industrial Ethernet consists of Ethernet TCP/IP, PROFINET, EtherNet/IP, Modbus TCP/IP, POWERLINK, EtherCAT, Sercos III, HSE, CCLink IE, CCLink IE TSN, MECHATROLINK-III, Hart IP, EtherNet/IP G, and others. In addition, industrial Ethernet has surpassed traditional field buses regarding newly installed nodes in factory automation. The Industrial Internet of Things (IIoT) is becoming increasingly popular in the manufacturing and process industries, growing demand for the industrial Ethernet market.
Wireless communication includes WLAN, ISA100.11a, Wireless HART, Bluetooth, Cellular, and Zigbee. Wireless communication solutions help increase coverage and clarity, optimize production, and minimize downtime for reliable industrial communications. Technologies such as LTE, LTE-Advanced, WCDMA, HSPA, GSM, CDMA, WLAN, and Bluetooth are part of wireless communication systems. The automotive industry is among the major industry boosting the adoption of wireless communication as the future of the automotive industry lies in connecting vehicles with almost every physical thing in their surroundings and to the cloud.
Based on application, the global market is segmented into automotive and transportation, aerospace and defense, food and beverages, electrical and electronics, industrial manufacturing, and others.
The industrial manufacturing segment owns the highest market share and is estimated to grow at a CAGR of 11.44% during the forecast period. The industrial manufacturing industry applies various wired and wireless communication technologies, from license band radio communications to serial buses to open Ethernet standards. The largest integrated telco in India, Bharti Airtel (Airtel), stated in March 2020 that it would partner with Cisco to introduce the country's first 100G IP and integrated optical network that is 5G-ready and intended to increase network availability, capacity, and scale. The rollout is a component of Airtel's ambition to develop a 5 G-ready network to meet the nation's increasing demand for high-speed data services. This new IP over Ethernet Fiber network is India's largest hyper-complex brownfield network transformation.
Industrial communication technology holds great promise in the food and beverage industry. As efficient networking becomes a key to improving control and management across food and beverage manufacturing industrial networks, the facilities are rapidly implementing SCADA networks via more reliable and cost-effective Ethernet communications. With large volumes of products and escalated demand to produce high-quality and consistent products, leading players in the segment have gradually started implementing automation in their plants, which will propel industrial communication technology.
The global market is bifurcated based on region into North America, Europe, Asia-Pacific, and RoW.
North America is the most significant global market shareholder and is anticipated to exhibit a CAGR of 10.44% during the forecast period. The expanding adoption of cutting-edge technology and the thriving end-user sectors are primarily responsible for North America's dominance in the worldwide industrial communication industry. Higher adoption of connected devices, automation, and industry 4.0 technologies for industrial application in North America is driving the growth of industrial communication in the region. As per a report by the Congressional Research Service, there were 4.8 billion enterprises and automotive IoT devices in the U.S. The growing end-user industries in North America are further anticipated to boost the growth of industrial communication. The U.S. manufacturing sector added USD 2.4 billion in 2018, 11 percent of the American economy.
Additionally, the rise in the initiatives by the government to promote the adoption of advanced technologies is anticipated to expedite the market in North America. For instance, the Federal Government in the U.S. founded the National Institute of Standards and Technology (NIST) in 1988. One of the major missions of NIST is to promote U.S. innovation and industrial competitiveness by advancing measurement science, standards, and technology. Such initiatives are anticipated to support the growth of the market.
Europe is estimated to exhibit a CAGR of 11.67% over the forecast period. A flourishing automotive industry and a growing focus on industry 4.0 technologies are contributing to the growth of the market in Europe. One of the major end-users of industrial communication and the market's primary driver in Europe is the sizeable automobile industry. According to the European Automobile Manufacturers Association, European Union exported about 5 million passenger cars in 2019, valued at over EUR 124 billion. In the same year, the value of EU car imports substantially increased by about 15.6%, with a total of EUR 53 billion. Moreover, the growing emphasis on developing and adopting industrial automation and Industry 4.0 technologies by the governments is expected to further boost the market in Europe. Similarly, the rise in the funding from public and private sectors into industry 4.0 technologies is augmenting the growth of the industrial communication market in Europe.
In Asia-Pacific, improving economic conditions, rapid industrialization, and initiatives to promote industrial digitalization are the major factors stimulating the expansion of the market. The improving economic conditions and growing industrialization augmented industrial communication adoption in the Asia-Pacific. Moreover, a rise in government initiatives to promote automation and digitalization in the industrial sector is anticipated to boost the growth of the Asia-Pacific. For instance, the Government of India's Ministry of Heavy Industries and Public Enterprises' SAMARTH Udyog Bharat 4.0 is an Industry 4.0 initiative. The program focuses on embracing I4.0 technology with the latest technological advancements. Moreover, the increasing deployment of 5G technologies in the major Asia-Pacific nations is anticipated to hasten the growth of the market during the forecast period.
The Rest of the world, consisting of the Middle East and South America, is developing slowly in the market. The relatively stable and growing economy in the Middle East and Latin America is majorly influencing the industrial output and driving the market in these regions. Due to the expansion of the main GCC nations and the industrialization of African nations, the Middle East and Africa area is predicted to experience the highest growth in the industry.
Additionally, the increasing manufacturing sector and growing integration of the region in the global value chains, coupled with infrastructure development for industrial agglomeration, is anticipated to boost the adoption of industrial communication technologies in Africa. In South America, the patterns of industrialization in Argentina, Brazil, Chile, and Colombia show favorable growth prospects for the market.
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