Hardware is evolving faster than ever. Complexity is rising, innovation cycles are becoming shorter and expectations around quality, sustainability and industrialisation continue to grow. Companies that build physical products, from young ventures to established organisations, will face a very different landscape in 2026.

Based on what we observe in our work across Europe and Asia, these are the eight trends that will shape how hardware is developed, industrialised and scaled in the coming years.

small batch production

  1. Integrated innovation replaces fragmented development

The traditional model of working with separate partners for design, engineering, prototyping and production is reaching its limits. Every handover introduces delays, increases risk and breaks continuity, especially for organisations without deep experience in hardware development.

In 2026, the industry will shift decisively toward integrated ecosystems where product innovation and industrialisation operate as one continuous flow. Companies that continue to fragment their development process will lose speed and face higher technical and commercial risks. Those that embrace integrated partners will move faster and build products that are ready for real-world scale.

2. The industrialisation gap becomes the biggest bottleneck

The hardest part of hardware is no longer building a prototype. Almost anyone can do that.
The real challenge lies in the industrialisation gap, the stage where a promising prototype must become a stable, manufacturable and scalable product.

This is the moment where quality often falters, costs rise quickly and timelines begin to slip. In 2026 this gap will become even more significant. Companies that delay decisions about manufacturability, tooling, process stability and supply chain design will struggle to reach the market.

Industrialisation readiness will become a key requirement for investment and for forming strong partnerships.

3. Venture building in hardware accelerates

Hardware innovation is entering a new phase. Rather than working through isolated development paths, more organisations are adopting venture building models in which engineering expertise, investment and manufacturing knowledge come together from the start. These models create stronger foundations for complex physical products and reduce the distance between concept, industrialisation and market introduction.

In 2026 we will see the rise of specialised ecosystems around areas such as health technology and home diagnostics, mobility solutions, personal care products and smart monitoring applications. These ecosystems combine capital with deep technical knowledge and early access to production networks. Companies that participate in these collaborative environments tend to grow more quickly and bring more mature products to the market than companies that attempt to navigate the journey on their own.

4. Talent becomes the defining competitive advantage

Engineering and industrialisation talent is becoming even more scarce.
The organisations that succeed will not necessarily be the ones with the best ideas, but the ones with access to the most experienced specialists.

Without system engineers, mechatronics experts, compliance specialists and leaders in industrialisation, innovation stalls in the prototype phase.
The biggest risk many companies face is that they simply do not know what they do not know.

In 2026, talent becomes the ultimate differentiator and strategic partnerships become the most reliable way to access it.

5. Asia shifts from factory of the world to specialised manufacturing zone

While China remains an important manufacturing region, the landscape is diversifying rapidly. Malaysia, Singapore and Vietnam are emerging as key hubs for precision engineering, tooling, electronics production and high mix low volume manufacturing.

In 2026 the focus will no longer be on producing at the lowest possible cost but on producing with certainty, flexibility and reliability.
Companies that gain access to this more specialised and diversified network will scale faster and operate with greater security.

6. Hardware must be designed for compliance from day one

New European regulations, including ecodesign requirements, circularity measures and stricter medical device frameworks, are making hardware development more complex.

In 2026 compliance will no longer be something to check at the end of the process. It must be embedded from the earliest stages of product design.
Companies that address regulatory requirements only after building a prototype will face costly and time consuming delays.

Compliance by design will become a core capability for anyone developing physical products.

7. Speed becomes the main success factor

Innovation cycles are accelerating. Markets evolve quickly and competitors move faster than before. In this environment, speed is one of the strongest determinants of competitiveness.

AI will support engineering, simulation and validation, but it will not replace the experience needed to turn ideas into industrial reality. Companies that combine rapid iteration with early industrialisation and reliable manufacturing will lead the market.

In 2026 speed will no longer be a competitive advantage. It will be an essential condition for success.

8. The rise of hardware transformation partners

A new type of partner is emerging in the hardware industry, one that takes responsibility for the complete journey from concept to industrial realisation. This approach brings product innovation, engineering, industrialisation, sourcing and manufacturing together within one integrated environment.

These partners provide the continuity, multidisciplinary expertise and end to end accountability that modern hardware development increasingly requires. As complexity rises and development cycles shorten, more organisations are turning to integrated models that can deliver both speed and certainty.

In 2026 these hardware transformation partners will become an important force in the industry, helping companies bridge the gap between early ideas and real world production while reducing risk and improving time to market.

Tips for hardware ventures

Based on thirty years of experience and hundreds of innovation projects, these are the lessons Henco Pezij shares with new and growing hardware ventures.

1. You don’t need a prototype to validate the market

Many ventures feel pressure to build a prototype before engaging with potential users or investors. In reality a digital mock up or functional representation is often enough for early validation. This reduces cost, accelerates learning and prevents teams from locking themselves into an immature solution too early.

2. Function development is frequently underestimated

A product that looks good is not the same as a product that works. The success of many hardware ventures falters because core functions were not explored deeply enough. Poorly developed functionality cannot be rescued later in the process and it will always undermine business potential.

3. Hardware has two distinct development phases

The journey from first idea to validated concept is very different from the journey from concept to scalable product. Each phase demands different expertise, planning and decision making. Both require production specialists who understand how early choices influence manufacturability, cost and reliability.

4. Time to market is almost always underestimated

Start ups often need to promise ambitious timelines to attract funding. In practice these timelines slip because teams underestimate the complexity of industrialisation. Without experienced product innovation professionals ventures risk overpromising and underdelivering at critical moments.

5. Success in the market is the ultimate reward for engineers and designers

The most motivated teams are those that see their work enter real world use. Understanding this perspective helps ventures create stronger collaboration with the specialists who guide them through the technical and industrial journey.

6. In health technology most innovation is system innovation

New products rarely stand alone. They exist within connected systems of data, regulation, user workflows and infrastructure. MDR requirements strengthen these systems because they raise the design and quality standard across the industry. Ventures that embrace this reality build safer and more scalable solutions.

Closing thoughts

Hardware development is evolving quickly. The rise of hardware venture partners marks a new phase for the industry. These partners provide continuity, multidisciplinary expertise and end to end accountability for companies that need to innovate with speed and certainty.

For hardware ventures this model reduces risk, shortens development cycles and improves the likelihood of building products that succeed in the market.

In 2026 one thing becomes clear. The future belongs to organisations that combine rapid innovation with industrial discipline and that work with partners who can guide them from early idea to real world scale.