01 The IoT security market is indirectly exposed to supply chain disruptions due to its dependence on semiconductor components, networking hardware, embedded security chips, and cloud infrastructure required for connected device deployments. Disruptions across the global electronics and semiconductor supply chain delayed IoT device production and deployment, slowing the implementation of new security solutions across manufacturing, healthcare, automotive, and industrial sectors. Rising component costs and extended procurement timelines increased deployment costs, prompting vendors to diversify supplier networks, regionalize manufacturing, and expand software-based security offerings that reduce reliance on specialized hardware. The market is witnessing a K-shaped recovery, with cloud-native IoT security platforms, managed security services, and software-based solutions recovering faster than hardware-dependent IoT deployments as enterprises continue prioritizing cybersecurity investments.
01 Emergence of Zero-Trust Security for Connected Devices Compared to conventional perimeter-based security models, zero-trust frameworks continuously verify users, devices, and applications before granting access, significantly reducing the risk of lateral cyberattacks. The increasing adoption of Industrial IoT (IIoT), remote asset management, and hybrid work environments is accelerating demand for zero-trust solutions.
02 Expansion of IoT Security for Critical Infrastructure Compared to conventional security approaches that primarily protect IT environments, According to the International Energy Agency (IEA), global investment in electricity grids reached approximately USD 400 billion in 2025, increasing the deployment of connected sensors and smart grid technologies that require advanced cybersecurity.
01 Investors are focusing on companies developing advanced device security platforms, zero-trust architectures, embedded cybersecurity solutions, and operational technology (OT) protection technologies that strengthen cyber resilience and safeguard connected infrastructure.
02 Key Investment and Funding Activities in IoT Security Market, 2025 Company Funding/Investment (USD) Details Armis USD 200 million In October 2025, Armis secured a USD 200 million funding round led by General Catalyst to accelerate the expansion of its cyber exposure management platform protecting IoT, OT, medical devices, and critical infrastructure worldwide. Exein USD 81 million (Series C) In September 2025, Exein raised USD 81 million in Series C funding to expand its embedded IoT cybersecurity platform, strengthen R&D capabilities, and scale partnerships with semiconductor manufacturers and device OEMs globally. Oligo Security USD 50 million (Series B) In January 2025, Oligo Security completed a Series B funding round to advance runtime application security solutions that protect connected applications, cloud workloads, and IoT environments from emerging cyber threats.
01 Growing Enforcement of Cybersecurity Regulations and Increasing Convergence of IT and Operational Technology Drives Market The growing enforcement of cybersecurity regulations for critical infrastructure and connected ecosystems is accelerating demand for IoT security solutions across industries. Governments are introducing stringent security requirements to protect connected devices used in energy, healthcare, transportation, manufacturing, and public infrastructure from evolving cyber threats. For instance, the European Union's Cyber Resilience Act (CRA) establishes mandatory cybersecurity requirements for products with digital elements throughout their lifecycle, while the US Cyber Trust Mark program promotes stronger security standards for consumer IoT devices.The increasing convergence of Information Technology (IT) and Operational Technology (OT) networks is creating substantial demand for advanced IoT security solutions. Industrial organizations are integrating connected sensors, industrial control systems, robotics, and edge devices with enterprise IT infrastructure to improve operational efficiency and enable real-time decision-making. As industries continue digital transformation initiatives under Industry 4.0, organizations are investing in comprehensive IoT security platforms to protect interconnected IT-OT environments, ensure business continuity, and maintain resilient industrial operations.
01 Legacy Infrastructure Integration and Device Lifecycle Management Restrains Market Expansion The integration of modern IoT security solutions with legacy industrial systems remains a significant restraint for the IoT security market. Many organizations in manufacturing, energy, utilities, and transportation continue to operate legacy operational technology (OT) assets that were not designed with built-in cybersecurity capabilities. Retrofitting these systems with modern authentication, encryption, and continuous monitoring solutions is often complex, costly, and may disrupt ongoing operations.Managing cybersecurity across the diverse lifecycle of connected IoT devices poses another major challenge to market expansion. IoT ecosystems often comprise devices from multiple vendors with varying hardware capabilities, software versions, and update mechanisms, making consistent security management difficult. issues increase operational complexity, prolong vulnerability exposure, and discourage organizations from rapidly scaling IoT deployments, thereby restraining market growth.
01 Expansion of Secure Edge Computing and Increasing Adoption of Connected Healthcare Offer Growth Opportunities to Market Players A key IoT security market growth opportunity stems from the rapid expansion of secure edge computing across industrial and enterprise environments. As organizations increasingly process data closer to connected devices, demand for integrated security solutions that provide real-time threat detection, encrypted communications, and secure device authentication is growing significantly. The accelerating deployment of edge computing across manufacturing, healthcare, transportation, and smart city applications is creating new requirements for distributed cybersecurity, secure device communication, and continuous threat monitoring.The growing adoption of connected healthcare is creating opportunities for advanced IoT security solutions that safeguard medical devices, remote patient monitoring systems, and hospital networks. Increasing digitalization of healthcare services and stricter patient data protection requirements are encouraging healthcare providers to invest in cybersecurity platforms designed for connected medical ecosystems. Companies such as Claroty are expanding healthcare-focused cybersecurity solutions to improve visibility, detect cyber threats, and secure connected medical devices across clinical environments.
01 Evolving Cyber Threat Landscape and Limited IoT Security Standardization Challenges Market Growth The rapidly evolving cyber threat landscape remains a major challenge for the IoT security market. Attackers continuously develop sophisticated ransomware, botnets, and zero-day exploits targeting connected devices, making it difficult for organizations to maintain effective protection. As threat vectors continue to evolve, security vendors must constantly update detection capabilities and threat intelligence, increasing operational complexity and development costs.The absence of universally accepted security standards across diverse IoT ecosystems presents another significant challenge for market expansion. Connected devices are developed using different hardware architectures, communication protocols, and operating systems, resulting in inconsistent security implementations and interoperability issues. This fragmented ecosystem complicates device onboarding, vulnerability management, and security policy enforcement across large-scale deployments.
June 2026 NTT DOCOMO BUSINESS, Transatel & Zscaler launched Cellular SASE for IoT, a SIM-based Zero Trust security solution integrating global IoT connectivity with cloud-delivered security to protect IoT devices without requiring endpoint agents or VPNs.
May 2026 OneLayer launched its Technology Alliance Program (TAP), establishing a certified ecosystem with partners including Check Point, Ericsson, Fortinet, Nokia, Digi International, Semtech, and Kigen to strengthen security for private LTE and 5G-enabled IoT networks.
May 2026 Armis introduced Armis Vulnerability Intelligence, a new capability within its cyber exposure management platform that enables organizations to prioritize and remediate vulnerabilities affecting connected IoT, OT, medical, and cyber-physical assets.
March 2026 Lantronix and Pairpoint signed an MoU to explore post-quantum security technologies for industrial IoT deployments, focusing on securing connected industrial assets against emerging quantum-era cyber threats.
January 2026 Afero partnered with Texas Instruments to develop an end-to-end secure IoT platform combining TI's Wi-Fi microcontrollers with Afero's cloud-based IoT security platform for connected smart home devices.
January 2026 Lantronix and Safe Pro Group signed a Memorandum of Understanding (MoU) and Master Services Agreement (MSA) to jointly develop Qualcomm-based embedded edge computing platforms with AI-driven threat detection for autonomous and IoT systems.