Smart Signaling Market Size & Share, Hardware (Display Boards, Sensors, Surveillance Cameras); Software; Services; Region - SWOT Analysis, Competitive Strategic Insights, Regional Trends 2025-2037

Smart Signaling Sector: Growth Drivers and Challenges

Growth Drivers

• Integration of vehicle-to-infrastructure (V2I) communication in the urban traffic systems: A major catalyst of the global smart signaling market is the rising demand and sales of connected and autonomous vehicles. Their growth is intrinsically tied with a rising deployment of smart signaling as a foundational technological for a safer vehicle experience. Additionally, vehicle safety has emerged as a major segment promoted throughout the broader automotive industry, keeping pace with the shifting consumer trends demanding safer cars. In terms of regional initiatives, in 2024, the Ministry of Land, Infrastructure, and Transport in South Korea expanded its V2X pilot zones across the cities of Pangyo and Sejong, where smart signals are integrated with the connected vehicle platforms to broadcast signal phase and timing data.  To highlight the lucrativeness of the market, similar deployments are underway in the U.S., promising to provide greater opportunities for vendors.

• Enforcement-as-a-Service (EaaS) is repositioning smart signaling from infrastructure to recurring revenue: The gradual shift from outright ownership of traffic enforcements systems to outsourced smart enforcement contracts has positively reinforced the sector’s growth. In 2023-2024, multiple municipalities in Western Europe and North America started the shift. The arrangement bundles smart traffic signals, automated license plate readers, AI-powered violation detection, etc., into subscription-based payment models. Additionally, the shift has led to CAPEX-heavy infrastructure turning to an OPEX model. To quantify the impact, Verra Mobility signed a multi-year EaaS contracts with multiple cities in the U.S. in the fourth quarter of 2023. Moreover, to map the future outlook, the smart signaling vendors with pay-per-enforcement models are slated to displace traditional signal manufacturers in tenders, and companies that do not adapt risk obsolescence.

Impact of Technological Advancements in the Smart Signaling Market

The global smart signaling market is impacted by technological advancements improving the use cases. For instance, the integration of AI and IoT to traffic management has bolstered the performance of adaptive signal control systems leading to improved traffic management. For instance, in the U.S., more than 150 traffic signals across New Jersey and New York City have been integrated to these systems, with the estimated impact measured at benefiting more than 2 million vehicles every day. The table below highlights the key metrics and impact scales of technological advancements on the global market:

Supply Chain Resilience Strategies of the Smart Signaling Market

The supply chain of the smart signaling market is dependent on critical raw materials, such as photovoltaic cells, rare earth metals, and semiconductors. Since, the supply chain remains dependent of these materials, the vulnerability factor to global fracases increases. For instance, the ongoing U.S.-China trade disputes can be detrimental to flow of the supply chain. To mitigate the impact. companies are diversifying supplies to bolster resilience in the supply chain and actively investing in automation. The table below highlights vital supply chain resilience strategies of key players:

Challenges of the Smart Signaling Market

• Obsolescence threat due to not being able to keep pace with the technological advancements: An ongoing challenge plaguing the growth of the smart signaling market is the rapid rate of technological advancements and vendors being unable to keep pace. Although, the advent of these advancements assists the market’s growth, but the frequent entry of new technologies poses a risk of the current products becoming obsolete. Additionally, the implementation of 5G networks has added to the cost of investing in new infrastructure. The challenge is particularly prominent on SMEs operating in the smart signaling market.