Global Encoder Market Estimated To Witness High Growth Due To Rising Industrial Automation & Increasing Demand For Precision Measurement
The global encoder market is estimated to be valued at US$ 3.19 Bn in 2024 and is projected to grow at a CAGR of 7.8% over the forecast period (2024-2031). The market is witnessing high growth owing to the rising adoption of industrial automation across various manufacturing industries. Furthermore, the increasing demand for precision measurement in various end-use industries, such as automotive, electronics, healthcare, aerospace & defense, and packaging, is further propelling the market growth.
Market Dynamics:
Industrial automation has witnessed significant growth over the past few years due to digitization and need for minimizing production costs. This has propelled the demand for encoders that are necessary components for industrial automation systems. Additionally, encoders are increasingly finding applications in precision measurement equipment used across industries like semiconductor manufacturing, medical devices assembly lines, and robotic automation. The growing complexities in production processes have augmented the requirement for precision measurement, thereby driving the demand for encoders.
Growing Demand for Precision Machinery is Driving Growth in the Global Encoder Market
The increasing demand for precision machinery across industries, such as manufacturing, automotive, electronics, and aerospace, is a major driver for the growth of the global encoder market. Precise motion control and feedback are critical requirements for modern precision machinery. Encoders provide high resolution digital or analog output signals corresponding to the position, velocity or rotation of mechanics. This enables precise control and monitoring of machinery operations. The growing automation and digitalization of manufacturing processes has increased the use of computer numerical control machines, robots, and other automated equipment which heavily rely on encoder feedback for precision. The aerospace, electronics, and automotive industries also require precise machining and manufacturing which is driving the higher adoption of encoders.
Increasing Investments in Industrial Automation are Accelerating the Demand for Encoders
Automation has become a major trend across industries aiming to improve productivity and efficiency through robotics, IoT technologies and smart manufacturing applications. This is positively impacting the encoder market. Modern manufacturing processes involve the increased use of robotics, motor control systems, industrial machinery, and other automated equipment which require high performance encoders for motion control, feedback, and positioning accuracy. The adoption of Industry 4.0 standards is also promoting automation initiatives through technologies like predictive maintenance, advanced robotics, big data analytics, etc. This is boosting investments in industrial automation systems which heavily rely on encoders. As more manufacturing moves towards automated flexible production lines and smart factories, the demand for encoders integrated with control systems and industrial IoT devices will continue growing at a rapid pace.
High Cost of Precision Encoders Acts as a Restraint
While precision encoders provide critical benefits for automation and high accuracy applications, their high manufacturing cost makes them unsuitable for low-cost commodity products and cost-sensitive industries. Precision encoders require highly calibrated components, multi-stage manufacturing processes, and more complex electronics which increases their costs. This poses a challenge for their adoption in low-cost and mass-market products. Price-sensitive industries may also hesitate in upgrading to premium encoder models due to budget constraints. The high costs associated with precision encoders remains a key restraint for their widespread adoption across all application segments.
Lack of Expertise Hinders Complex Encoder Installations
The technical complexities involved in selecting, integrating, and commissioning encoders, especially for challenging industrial applications, requires expert knowledge and troubleshooting skills. However, there is a lack of sufficient expertise resources especially in emerging economies and less developed regions. This hinders the adoption of advanced encoders in complex automation systems which require integrated engineering design and validation. Small organizations also find it difficult to take up new encoder installations due to the expertise constraints. This knowledge gap acts as a restraint until universal standards and simplified engineering practices become established in the industry.
Industry 4.0 Will Open New Application Opportunities
Emerging technologies driving the fourth industrial revolution such as IIoT, additive manufacturing, cobots, AI, AR/VR, big data, and cloud computing offer vast new application opportunities for encoders. Technologies like predictive maintenance, advanced robotics, intelligent machinery, smart manufacturing, teleoperation, and autonomous robotics will heavily rely on highly integrated motion control, sensory feedback, and positioning capabilities that encoders provide. As factory digitization grows through Industry 4.0 initiatives, the demand for integration of encoders with smart sensors, control systems and IIoT technologies will open new revenue streams. The adoption of advanced manufacturing technologies and increasing digitization of factory operations will unlock new domains for encoder applications over the coming years.
Rising Adoption of Autonomous Systems & Electric Vehicles to Open New Markets
Autonomous technologies are revolutionizing mobility with self-driving vehicles, delivery bots, and service robots. This will boost the demand for high-performance rotary and linear encoders integrated into precision control systems for guidance, navigation and obstacle detection capabilities. Electric vehicles are also gaining prominence to replace combustion engines due to environmental concerns. EVs heavily rely on motor control systems integrated with encoders for efficiency, feedback and battery management. The rapid growth of autonomous technologies and electric mobility will open vast new application areas for encoders over the next decade. This presents a major opportunity for encoder manufacturers to tap new verticals beyond traditional industrial markets.
Link: https://www.coherentmarketinsights.com/market-insight/encoder-market-5218
Key Developments:
- In January 2024, Suzuki Motor Corp., a major global automaker renowned for its innovative vehicles, revealed its intention to significantly expand its operations in Gujarat, India. The expansion aims to nearly double the company's automotive manufacturing capacity, with a goal of producing 4 million units annually. The new plant, set to commence operations in fiscal 2028, is expected to boost its production capacity to 1 million units per year.
- In November 2023, Baumer, a leading global manufacturer of sensor and encoder solutions, introduced the absolute encoder EAM580RS. Engineered to ensure safety and high performance in demanding applications such as mobile machinery and outdoor environments, this safety-certified encoder offers a cost-effective and easy-to-implement solution for safe automation. The EAM580RS features a robust stainless-steel casing, providing protection against harsh conditions and resilience to industrial factors like vibrations and shocks.
- In August 2023, Dynapar, a prominent manufacturer of high-precision encoders, unveiled the HS35iQ Encoder featuring PulseIQ Technology. This advanced programmable hollow shaft encoder integrates self-diagnosing capabilities with color-coded LEDs and digital output. It provides OEMs and end-users in heavy-duty machine applications with a new method for real-time troubleshooting, offering immediate access to the encoder's health status.
- In June 2023, SICK AG, a leading provider of sensors and sensor solutions for industrial automation, introduced a new linear encoder product family. Designed for high-precision detection of piston positions in hydraulic cylinders and monitoring linear movements in machines, this innovative product line offers versatile applications across various industries.
Market Players:
Baumer Group, Dynapar Corporation (Fortive Corporation), FAULHABER Drive Systems, HEIDENHAIN, Hengstler GMBH (Fortive Corporation), Honeywell International, Maxon Motor AG, Omron Corporation, Panasonic Corporation, Pepperl+Fuchs International, POSITAL FRABA Inc. (FRABA BV), Renishaw PLC, Rockwell Automation Inc., Schneider Electric, and Sensata Technologies
