Embedded Systems Market Opportunities and Strategies to 2034

This report describes and explains the embedded systems market and covers 2019-2024, termed the historic period, and 2024-2029, 2034F termed the forecast period. The report evaluates the market across each region and for the major economies within each region.

The global embedded systems market reached a value of nearly $110.89 billion in 2024, having grown at a compound annual growth rate (CAGR) of 5.28% since 2019. The market is expected to grow from $110.89 billion in 2024 to $158.45 billion in 2029 at a rate of 7.40%. The market is then expected to grow at a CAGR of 7.00% from 2029 and reach $222.28 billion in 2034.

Growth in the historic period resulted from rising demand for consumer electronics, expansion of smart city initiatives, expansion of the automotive industry and adoption of 5G technology. Factors that negatively affected growth in the historic period were regulatory and compliance challenges and lack of skilled workforce.

Going forward, increasing adoption of IOT, rise in demand for medical devices, increased adoption in avionics and defense technologies and growth of industrial automation will drive the growth. Factor that could hinder high initial investment and cost sensitivity, limited upgrade and scalability options and impact of trade war and tariff.

North America was the largest region in the embedded systems market, accounting for 36.59% or $40.57 billion of the total in 2024. It was followed by Asia Pacific, Western Europe and then the other regions. Going forward, the fastest-growing regions in the embedded systems market will be Asia Pacific and South America where growth will be at CAGRs of 11.11% and 8.80% respectively. These will be followed by Africa and Middle East where the markets are expected to grow at CAGRs of 8.32% and 8.07% respectively.

The global embedded systems market is fairly fragmented, with large number of small players operating in the market. The top ten competitors in the market made up to 16.43% of the total market in 2024. Intel Corporation was the largest competitor with a 2.11% share of the market, followed by Texas Instruments Incorporated with 1.83%, NXP Semiconductors NV with 1.82%, Renesas Electronics Corporation with 1.75%, STMicroelectronics N.V with 1.68%, Microchip Technology Inc. with 1.59%, Infineon Technologies AG with 1.53%, Qualcomm Incorporated with 1.44%, Analog Devices Inc. with 1.40% and Broadcom Inc. with 1.30%.

The embedded systems market is segmented by component into hardware, software and services. The hardware market was the largest segment of the embedded systems market segmented by component, accounting for 58.70% or $65.09 billion of the total in 2024. Going forward, the software segment is expected to be the fastest growing segment in the embedded systems market segmented by component, at a CAGR of 9.68% during 2024-2029.

The embedded systems market is segmented by system size into small size, medium size and large size. The small size market was the largest segment of the embedded systems market segmented by system size, accounting for 45.68% or $50.65 billion of the total in 2024. Going forward, the small size segment is expected to be the fastest growing segment in the embedded systems market segmented by system size, at a CAGR of 8.59% during 2024-2029.

The embedded systems market is segmented by function into real-time, standalone, mobile and networked. The standalone market was the largest segment of the embedded systems market segmented by function, accounting for 38.89% or $43.12 billion of the total in 2024. Going forward, the real-time segment is expected to be the fastest growing segment in the embedded systems market segmented by function, at a CAGR of 9.16% during 2024-2029.

The embedded systems market is segmented by end-use industry into automotive, consumer electronics, aerospace and defense, healthcare, telecommunication, industrial and other end-use industries. The automotive market was the largest segment of the embedded systems market segmented by end-use industry, accounting for 24.32% or $26.97 billion of the total in 2024. Going forward, the automotive segment is expected to be the fastest growing segment in the embedded systems market segmented by end-use industry, at a CAGR of 9.02% during 2024-2029.

The top opportunities in the embedded systems markets segmented by component will arise in the hardware segment, which will gain $23.17 billion of global annual sales by 2029. The top opportunities in the embedded systems markets segmented by function will arise in the real-time segment, which will gain $17.67 billion of global annual sales by 2029. The top opportunities in the embedded systems markets segmented by system size will arise in the small size segment, which will gain $25.82 billion of global annual sales by 2029. The top opportunities in the embedded systems markets segmented by end-use industry will arise in the automotive segment, which will gain $14.56 billion of global annual sales by 2029. The embedded systems market size will gain the most in China at $12.07 billion.

Market-trend-based strategies for the embedded systems market include focus on integration of AI-enabled systems, focus on developing technologically advanced solutions, such as developer-centric embedded software tools, develop embedded kits to enhance system performance and focus on evolving security solutions to protect embedded devices and systems from cyber threats.

Player-adopted strategies in the embedded systems market include focus on expanding operational capabilities through technology innovation and focus on enhancing business capabilities through the launch of new products.

To take advantage of the opportunities, the analyst recommends the embedded systems market companies to focus on AI-Enabled system integration for intelligent automation, focus on developer-centric embedded software tools for downstream applications, focus on embedded kits to streamline development and improve security, focus on strengthening embedded system security against cyber threats, focus on software to maximize growth in embedded systems, focus on real-time systems to capture high-growth opportunities, focus on small size systems to accelerate scalable growth, expand in emerging markets, focus on expanding direct and strategic distribution channels, focus on structuring tiered and value-based pricing models, focus on targeted content and industry-specific engagement, focus on strengthening sales and partner enablement programs and focus on automotive systems to capture largest and fastest growing market.