Optical Encoder ic Market Report 2025 (Global Edition)

Global Optical Encoder ic Market Report 2025 Market Size Split by Configuration (Shafted, Hollow-Shaft, Absolute, Multi-turn, Incremental), by Application (Healthcare Equipment, Consumer Electronics a...

Optical Encoder ic Market Report Description

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Imapct of Trumph Tariff on Electronics and Electrical Industry

In 2025, global trade has entered a period of renewed volatility as the U.S., under President Donald Trump, introduced sweeping tariffs known as the Liberation Day Tariffs. Aimed at addressing trade imbalances and foreign supply chain dominance, the tariffs range from 10% on allies like Australia and the UK to 46% on Vietnamese goods and 34% on Chinese imports. A 25% universal tariff on steel, aluminum, and auto parts has further strained global trade ties. The electronics sector is among the hardest hit, particularly due to the escalating U.S.China trade war. Tariffs on Chinese goods now reach up to 145% in sectors like semiconductors and consumer electronics, while China has retaliated with up to 125% duties and restrictions on critical mineral exports. This has disrupted just-in-time supply chains and increased component costs.

Specific tariffs include 25% on semiconductors, 20% on lithium-ion batteries, and 10–15% on consumer electronics like laptops and tablets, leading to higher retail prices and reduced consumer demand. Sub-sectors such as home automation, computer hardware, communication electronics, medical devices, and industrial electronics are all under pressure due to rising input costs and supply chain delays. Companies are revisiting suppliers, shifting sourcing to countries like India, Mexico, and Vietnam, and redesigning products to avoid high-tariff components.

China remains a key player, contributing USD 119 billion in electronics exports to the U.S. in 2023. Even components routed through countries like Malaysia and Vietnam often rely on Chinese subparts, making the ripple effect of tariffs widespread. U.S. electronics firms operating on thin margins are seeing input costs rise 18–25%, with contract manufacturers in alternative regions facing capacity constraints.

Market research is now critical. It helps companies identify new suppliers, analyze cost trends, optimize product design, forecast demand shifts, and track regulatory changes. Tools like supplier mapping, BOM optimization, and scenario planning support strategic responses to ongoing disruptions. Leading firms like Apple and Dell are expanding production outside China, while others invest in digital supply chain tools and redesign products for cost resilience. In this evolving trade environment, firms that leverage research-driven strategies are better positioned to adapt and thrive.

Competitive Landscape of the Optical Encoder IC Market

The competitive landscape of the optical encoder IC market is characterized by a diverse range of players competing to gain market share through product innovation, strategic partnerships, and aggressive marketing efforts. Key players in the market include established manufacturers, specialized companies, and emerging start-ups aiming to disrupt the market with innovative solutions.

In June 2023, the new E6B2-CWZ6C incremental encoder from Omron Corporation was released. It is intended to be used in severe conditions. Temperature tolerance for the IP68-rated E6B2-CWZ6C incremental encoder is -40°C to 85°C.

(Source: https://www.ia.omron.com/product/item/2450/)

Top Companies Market Share in Optical Encoder ic Industry: (In no particular order of Rank)

• Broadcom (US)
• New Japan Radio (Japan)
• SEIKO NPC (Japan)
• IC-Haus (Germany)
• PREMA Semiconductor (Germany)
• Hamamatsu (Japan)
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*List of Second Tier Companies, List of Third Tier/ Start-up Companies (Inquire with sales executive) Request Any Company Profile for Preview Purpose OR Data Validation!

If any Company(ies) of your interest has/have not been disclosed in the above list then please let us know the same so that we will check the data availability in our database and provide you the confirmation or include it in the final deliverables.

Regional Analysis of the Optical Encoder IC Market

Which Region Dominates the Optical Encoder IC Market in 2024?

According to Cognitive Market Research, North America dominated the market in 2024 and accounted for around 40% of the global revenue. Leading the way in industrial automation, which mostly depends on accurate motion control, is something that the US has long been known for. In order to achieve this precision for operations like robots and assembly lines, optical encoders are essential. Manufacturers in North America are renowned for their emphasis on efficiency and good quality. Surface Mount Technology (SMT) is an essential procedure for mounting electronic components on circuit boards, and optical encoders are part of it. Encoders that provide precise positioning lower mistake rates and contribute to quality assurance.

Which Region is Expanding at the Fastest CAGR?

Asia-Pacific stands out as the fastest-growing region in the optical encoder IC market due to several compelling reasons. The region's manufacturing, robotics, and transportation sectors are expanding rapidly, and all of them significantly depend on accurate motion control. In these kinds of applications, optical encoders are indispensable. The production of consumer electronics is heavily concentrated in Asia Pacific. More and more of these devices have capabilities like gesture recognition and cellphones with high-resolution cameras that need optical encoders. A number of emerging nations in the area are putting policies into place to support technological breakthroughs and manufacturing. As a result, the market for optical encoder integrated circuits is well-positioned to grow. One further important factor is the car industry. The need for encoders in automobiles is growing, with China emerging as the global leader in this regard.

The current report Scope analyzes Optical Encoder ic Market on 5 major region Split (In case you wish to acquire a specific region edition (more granular data) or any country Edition data then please write us on info@cognitivemarketresearch.com

• North America (United States, Canada, Mexico)
• Europe (United Kingdom, France, Germany, Italy, Russia, Spain, Sweden, Denmark, Switzerland, Luxembourg, Rest of Europe)
• Asia Pacific (China, Japan, South Korea, India, Australia, Singapore, Taiwan, South East Asia, Rest of APAC)
• Latin America (Brazil, Argentina, Colombia, Peru, Chile, Rest of South America)
• Middle East (Saudi Arabia, Turkey, UAE, Egypt, Qatar, Rest of Middle East)
• Africa (Nigeria, South Africa, Rest of Africa)

The above graph is for illustrative purposes only.

North America Optical Encoder ic Market Analysis

According to Cognitive Market Research, the global Optical Encoder IC Market size was estimated at USD 225.2 Million, out of which North America held the major market of more than 40% of the global revenue with a market size of USD 90.08 million in 2024 and will grow at a compound annual growth rate (CAGR) of 4.4% from 2024 to 2031.

• According to Cognitive Market Research, the US had a major share in the Optical Encoder IC Market, with a market size of USD 71.07 million in 2024, and is projected to grow at a CAGR of 4.2% during the forecast period. The need for optical encoder integrated circuits is being driven by the US's robust expansion in these application sectors.
• The Canada Optical Encoder IC Market had a market share of USD 10.81 million in 2024 and is projected to grow at a CAGR of 5.2% during the forecast period. Canada makes up a particular percentage of this market. However, precise market data for Canada isn't easily accessible.
• The Mexico Optical Encoder IC Market is projected to witness growth at a CAGR of 4.9% during the forecast period, with a market size of USD 8.20 million in 2024.

Europe Optical Encoder ic Market Analysis

According to Cognitive Market Research, the global Optical Encoder IC Market size was estimated at USD 225.2 Million, out of which Europe held the market of more than 30% of the global revenue with a market size of USD 67.56 million in 2024 and will grow at a compound annual growth rate (CAGR) of 4.7% from 2024 to 2031.

• The United Kingdom Optical Encoder IC Market had a market share of USD 11.35 million in 2024 and is projected to grow at a CAGR of 5.5% during the forecast period. In the UK, there is a growing need for high-precision motion control across a range of sectors, including renewable energy, manufacturing, and healthcare.
• The France Optical Encoder IC Market is projected to witness growth at a CAGR of 3.9% during the forecast period, with a market size of USD 6.22 million in 2024.
• According to Cognitive Market Research, the Germany Optical Encoder IC Market size was valued at USD 13.38 million in 2024 and is projected to grow at a CAGR of 4.9% during the forecast period. In Germany, Leading the way in optical encoder technology innovation are German firms.
• The Italy Optical Encoder IC Market is projected to witness growth at a CAGR of 4.1% during the forecast period, with a market size of USD 5.81 million in 2024.
• The Russia Optical Encoder IC Market is projected to witness growth at a CAGR of 3.7% during the forecast period, with a market size of USD 10.47 million in 2024.
• The Spain Optical Encoder IC Market is projected to witness growth at a CAGR of 3.8% during the forecast period, with a market size of USD 5.54 million in 2024.
• The Luxembourg Optical Encoder IC Market is projected to witness growth at a CAGR of 4.8% during the forecast period, with a market size of USD 2.09 million in 2024.
• The Portugal Optical Encoder IC Market is projected to witness growth at a CAGR of 4.5% during the forecast period, with a market size of USD 1.42 million in 2024.
• The Greece Optical Encoder IC Market is projected to witness growth at a CAGR of 5.0% during the forecast period, with a market size of USD 0.81 million in 2024.
• The rest of Europe Optical Encoder IC Market is projected to witness growth at a CAGR of 3.4% during the forecast period with a market size of USD 10.47 million in 2024. 

Asia Pacific Optical Encoder ic Market Analysis

According to Cognitive Market Research, the global Optical Encoder IC Market size was estimated at USD 225.2 Million, out of which Asia Pacific held the market of around 23% of the global revenue with a market size of USD 51.80 million in 2024 and will grow at a compound annual growth rate (CAGR) of 8.2% from 2024 to 2031.

• According to Cognitive Market Research, the China Optical Encoder IC Market size was valued at USD 23.31 million in 2024 and is projected to grow at a CAGR of 7.7% during the forecast period due to the manufacturing industry automating quickly; there is an increasing need for encoders in CNC machines, industrial robots, and other automated equipment.
• The Japan Optical Encoder IC Market is projected to witness growth at a CAGR of 6.7% during the forecast period, with a market size of USD 7.15 million in 2024.
• The India Optical Encoder IC Market had a market share of USD 6.22 million in 2024 and is projected to grow at a CAGR of 10.0% during the forecast period. Indian enterprises are embracing automation solutions at a rapid pace as they aim to increase productivity and efficiency.
• The South Korea Optical Encoder IC Market is projected to witness growth at a CAGR of 7.3% during the forecast period, with a market size of USD 5.18 million in 2024.
• The Australia Optical Encoder IC Market is projected to witness growth at a CAGR of 7.9% during the forecast period, with a market size of USD 2.69 million in 2024.
• The South East Asia Optical Encoder IC Market is projected to witness growth at a CAGR of 9.2% during the forecast period, with a market size of USD 3.57 million in 2024.
• The Rest of the Asia Pacific Optical Encoder IC Market is projected to witness growth at a CAGR of 8.0% during the forecast period, with a market size of USD 3.68 million in 2024. 

South America Optical Encoder ic Market Analysis

According to Cognitive Market Research, the global Optical Encoder IC Market size was estimated at USD 225.2 Million, out of which Latin America market of more than 5% of the global revenue with a market size of USD 11.26 million in 2024 and will grow at a compound annual growth rate (CAGR) of 5.6% from 2024 to 2031.

• According to Cognitive Market Research, the Brazil Optical Encoder IC Market size was valued at USD 4.82 million in 2024 and is projected to grow at a CAGR of 6.2% during the forecast period. The market for optical encoder integrated circuits (ICs) is mostly driven by Brazil's expanding industrial sector, especially in sectors like manufacturing, automotive, and renewable energy.
• The Argentina Optical Encoder IC Market had a market share of USD 1.89 million in 2024 and is projected to grow at a CAGR of 6.5% during the forecast period. Optical encoder integrated circuits are driven primarily by industrial automation worldwide, and Argentina is no different.
• The Colombia Optical Encoder IC Market is projected to witness growth at a CAGR of 5.4% during the forecast period, with a market size of USD 1.00 million in 2024.
• The Peru Optical Encoder IC Market is projected to witness growth at a CAGR of 5.8% during the forecast period, with a market size of USD 0.92 million in 2024.
• The Chile Optical Encoder IC Market is projected to witness growth at a CAGR of 5.9% during the forecast period, with a market size of USD 0.81 million in 2024.
• The Rest of the Latin America Optical Encoder IC Market is projected to witness growth at a CAGR of 4.7% during the forecast period, with a market size of USD 1.81 million in 2024. 

Middle East Optical Encoder ic Market Analysis

According to Cognitive Market Research, the global Optical Encoder IC Market size was estimated at USD 225.2 Million, out of which the Middle East and Africa held the major market of around 2% of the global revenue with a market size of USD 4.50 million in 2024 and will grow at a compound annual growth rate (CAGR) of 5.9% from 2024 to 2031.

• The GCC Countries Optical Encoder IC Market is projected to witness growth at a CAGR of 6.7% during the forecast period, with a market size of USD 1.93 million in 2024. Optical Encoder IC Market sales flourish due to Saudi Arabian, Kuwait, the United Arab Emirates, Qatar, Bahrain, and Oman being the nations that make up the GCC.
• The Egypt Optical Encoder IC Market is projected to witness growth at a CAGR of 6.2% during the forecast period, with a market size of USD 0.47 million in 2024.
• The South Africa Optical Encoder IC Market is projected to witness growth at a CAGR of 6.9% during the forecast period, with a market size of USD 0.71 million in 2024. Optical Encoder IC Market sales flourish in South Africa due to the escalating need for automation across various sectors, including manufacturing.
• The Turkey Optical Encoder IC Market is projected to witness growth at a CAGR of 5.4% during the forecast period, with a market size of USD 0.39 million in 2024.
• The Nigeria Optical Encoder IC Market is projected to witness growth at a CAGR of 5.0% during the forecast period, with a market size of USD 0.47 million in 2024.
• The Rest of the MEA Optical Encoder IC Market is projected to witness growth at a CAGR of 4.9% during the forecast period, with a market size of USD 0.53 million in 2024. 

Optical Encoder ic Market Analysis

Optical Encoder IC Market Configuration Segment Analysis

According to Cognitive Market Research, Incremental Configuration stands out as the dominating category. Compared to absolute encoders, incremental encoders have a more straightforward and affordable construction, which makes them suitable for a range of applications. They are less expensive since their design is simpler than that of absolute encoders. They are a desirable alternative for many applications that need basic motion control functionality without going over budget because of their cheaper cost. Because of their cost and durability, incremental encoders are used in a variety of applications, including wind turbines, motor feedback systems, heavy-duty machinery, and factory automation.

Hollow-shaft configuration emerges as the fastest-growing category in the optical encoder IC market. The benefits provided by hollow-shaft encoders and the growing need for dependable, high-precision motion control systems across a range of industrial applications are the main drivers of this expansion. The benefits provided by hollow-shaft encoders and the growing need for dependable, high-precision motion control systems across a range of industrial applications are the main drivers of this expansion. Hollow-shaft encoders are more space-efficient and compact since they don't require extra couplings or mounting gear. The through-bore design minimizes setup time and any alignment problems by facilitating simpler installation and alignment with the shaft.

The above Chart is for representative purposes and does not depict actual sale statistics. Access/Request the quantitative data to understand the trends and dominating segment of Optical Encoder ic Industry. Request a Free Sample PDF!

Optical Encoder IC Market Application Segment Analysis

According to cognitive market research, the dominating category is Test & Measurement Equipment. Optical encoders must undergo extensive testing during the manufacturing process to guarantee they fulfill performance requirements because they are essential parts for motion control and precision applications. Instrumentation for testing and measuring is essential to this quality assurance procedure. Engineers utilize test and measurement tools when designing and developing new optical encoders to assess prototypes, gauge encoder performance parameters like resolution, accuracy, and speed, and make sure the devices work as intended.

The fastest-growing category in the Optical Encoder IC Market is Robotics Equipment. Robots mostly depend on their arms, legs, or manipulators to move and position precisely. When it comes to giving precise feedback on rotational or linear motion, optical encoders are excellent. Robots need this info in order to function properly. The increasing automation of numerous industries, such as manufacturing, logistics, and healthcare, is driving the need for robots. Optical encoders are becoming more and more necessary to regulate the movements of deployed robots.

The above Graph is for representation purposes only. This chart does not depict actual Market share.

Optical Encoder ic Output Signal Format Segment Analysis

According to Cognitive Market Research, the dominating category is digital as a result of the growing need across numerous industries for durable, high-precision, low-noise digital encoding systems. Applications requiring precise motion control and positioning can benefit from the higher resolutions and more accurate position monitoring that digital optical encoders can offer. Compared to analog signals, digital signals are less prone to noise and interference, which leads to more dependable and stable performance in industrial settings. System integration is made easier by the ease with which programmable logic controllers (PLCs), contemporary digital control systems, and other digital devices can interact with the digital outputs of optical encoder ICs.

The fastest-growing category in the optical encoder IC market is analog. In general, analog encoders have a simpler design than digital ones. Lower costs and maybe wider applicability in a variety of applications result from this. Because analog encoder integrated circuits are a well-established technology, they are dependable and easily accessible. It's critical to take into account both the expansion of the analog segment and general market trends. The whole optical encoder integrated circuits market is being driven by factors such as growing automation and the need for high-precision motion control systems.

• Analog
• Digital

Optical Encoder ic End User Segment Analysis

According to Cognitive Market Research, the dominating category is the Manufacturing Industry. For a variety of applications, including computer numerical control (CNC) machines, industrial robots, assembly lines, and automated material handling systems, the manufacturing sector significantly depends on accurate motion control and positioning systems. Digital optical encoder integrated circuits (ICs) are the recommended option for these demanding applications because they provide higher resolution and accuracy than analog encoders. Harsh temperatures, vibrations, and electrical noise can all be common in manufacturing operations. Compared to analog encoders, digital optical encoder integrated circuits (ICs) are less prone to noise and interference, guaranteeing dependable and steady performance in these industrial environments. For constant production quality to be maintained and downtime to be minimized, this enhanced reliability is essential.

The fastest-growing category in the Optical Encoder IC Market in Public Sector. A large number of governments and public sector organizations are funding the construction and upkeep of transport infrastructure, including roads, bridges, tunnels, and train networks. For these kinds of operations, accurate motion control and positioning systems are needed for specialized machinery such as tunnel boring machines and construction equipment. These applications heavily rely on optical encoder integrated circuits (ICs), which in turn fuels the need for dependable and highly precise encoders. Wind farms and solar power plants are just two examples of renewable energy projects in which numerous governments and public sector organizations are investing. Optical encoder integrated circuits (ICs) are essential components for assuring optimal energy generation and efficiency in wind turbine and solar panel array positioning and tracking systems, which are the foundation of these projects.

• Public Sector
• Manufacturing Industry
• IT and Telecommunication Industry
• Others

Author's Detail

Kalyani Raje

Senior Research Analyst at Cognitive Market Research

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ResearchGate Profile: https://www.researchgate.net/profile/Kalyani-Raje

An optimistic Senior Research Analyst with years of experience in competitive assessment and business consulting. A seasoned professional and subject-matter expert (SME) in the Automobile and transportation vertical.

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