Post-Quantum Cryptography Market Projected for Significant Growth Until 2040

The global market for post-quantum cryptography (PQC) is set for substantial expansion, according to a new report by Roots Analysis. Market size is forecast to grow from USD 0.61 billion in 2026 to USD 9.93 billion by 2040, reflecting a compound annual growth rate (CAGR) of 22.05% during the forecast period.

Hardware is expected to lead the market in 2026, holding a 52.0% share. However, the services segment is projected to experience the fastest growth at a 26.7% CAGR through 2040, driven by the need for complex algorithmic migration support. Among the cryptography types, lattice-based cryptography is anticipated to dominate in 2026 with a 50.0% share and is poised for a 24.1% CAGR growth until 2040, as it anchors standardized cryptographic protocols.

In terms of deployment, on-premises solutions will capture a 57.4% market share in 2026. Cloud deployment, however, is expected to grow at a faster pace, with a 23.0% CAGR through 2040. For applications, network security is projected to hold the largest segment at 28.0% in 2026, but endpoint security is expected to grow most rapidly at a 24.5% CAGR by 2040.

Regionally, North America is expected to hold the largest market share at 42.5% in 2026. The Asia-Pacific region, however, is anticipated to exhibit the fastest growth at a 24.5% CAGR by 2040. Within end-user verticals, the BFSI sector is set to secure a 28.0% share in 2026, while government and defense sectors are projected to grow the quickest at a 25.0% CAGR due to increasing demands for digital sovereignty.

The PQC market is undergoing a rapid transition from theoretical research to operational deployment. Growth is being accelerated by stringent regulatory mandates and compressed compliance timelines, such as the EU directive requiring critical sectors to initiate transitions by late 2026. Advancements in hardware efficiency and cloud-based solutions, coupled with innovations like MIT's microchips for implantable medical devices, are further driving adoption.