White Paper: Industrial Network Security

Issued by: MOFIU

Relevant Product: SG100 Industrial Secure Gateway Series

Executive Summary

As Industry 4.0 deepens and IT/OT convergence accelerates, industrial control systems are facing an unprecedented dual crisis of security and compliance. Past attacks focused on data exfiltration; today, they have evolved into direct disruption of physical continuity. According to the latest Dragos report, ransomware attacks targeting industrial organizations have surged 87% year-over-year, with a staggering 75% of these attacks directly causing catastrophic OT system downtime. IBM reports further indicate that unplanned downtime costs in the industrial sector have reached $125,000 per hour.

Simultaneously, the global regulatory landscape is undergoing dramatic transformation. 'Security by Design' has shifted from a marketing slogan to a mandatory legal threshold determining market access. For equipment suppliers targeting the European market, the EU Cyber Resilience Act (CRA) vulnerability disclosure obligations will take effect in September 2026, with violations subject to fines of up to EUR 15 million or 2.5% of global annual turnover. Combined with the implementation of EN 18031 standards and the NIS2 Directive, devices lacking proof of underlying security capabilities face the risk of being excluded from supply chains entirely.

With security breaches attributed to third parties reaching 30%, traditional purely software-based protection architectures have exposed fundamental limitations. Key storage based on system memory and software trust anchors vulnerable to high-privilege tampering can no longer withstand modern threats including physical memory extraction, firmware tampering, and device cloning. This white paper argues that reconstructing the trust chain through underlying chip-level physical isolation—introducing a Hardware Root of Trust—is the inevitable direction for industrial network security evolution. It enables the establishment of absolutely unique, unforgeable device identities for industrial network components, completely eliminating risks of device cloning and unauthorized node access. Furthermore, hardware-level verification enables secure authorized firmware management that rejects malicious firmware tampering while accommodating industrial requirements for operational flexibility.

This white paper is written for enterprise security decision-makers (CISOs, CTOs), industrial control system managers, and compliance professionals. We provide in-depth analysis of the technical logic evolving from software to hardware, actionable compliance implementation recommendations covering EN 18031, CRA, and NIS2 for equipment manufacturers entering the European market, and forward-looking discussions positioning IEC 62443 as the core blueprint for technical evolution—helping enterprises avoid compliance penalties and capture market opportunities.

Chapter 1: Industrial Network Security Landscape

As Industry 4.0 deepens and IT/OT (Information Technology/Operational Technology) fully converge, industrial control systems are undergoing unprecedented security challenges. In the past, cyberattacks focused on stealing data; today, attackers' objectives have shifted to disrupting the continuity of the physical world. Driven by both increasingly severe threat landscapes and increasingly stringent international regulations, traditional software-layer security protection has exposed significant limitations. Reconstructing the trust chain from the underlying hardware has become the inevitable direction for industrial network security evolution.

1.1 Global Attack Trends: From Data Exfiltration to Physical Downtime

Multiple authoritative industry studies from 2025 to 2026 indicate that attacks targeting industrial infrastructure have not only shown explosive growth in quantity, but their commercial destructive impact has also reached historical extremes.

OT Systems Become Ransomware Epicenter: According to the authoritative industrial security agency Dragos' '2026 OT Cybersecurity Report,' ransomware attacks targeting industrial organizations have surged 87% year-over-year. Even more critically, among these targeted attacks, a striking 75% directly caused partial or complete OT system downtime. Attackers increasingly understand that downtime-induced production losses are the most effective leverage to force industrial enterprises to pay ransoms.

Economic Impact of Security Incidents Reaches Historic Highs: IBM's latest 'Cost of a Data Breach 2026' report shows global average data breach costs have climbed to $4.88 million. In industrial manufacturing and critical infrastructure sectors, unplanned downtime costs caused by ransomware or destructive attacks have reached an astounding $125,000 per hour.

Supply Chain Attacks Double: Verizon's 'DBIR 2025' data reveals that security breaches introduced by third parties (supply chain) have doubled year-over-year, accounting for 30% of all confirmed security vulnerabilities. This indicates attackers are shifting their focus from well-defended network perimeters to relatively weakly protected equipment suppliers and underlying firmware.

Table 1: Industrial Security Statistics 2025-2026

1.2 Typical Attack Case Studies: Firmware and Protocol Failures

Recent landmark security incidents demonstrate that Advanced Persistent Threats (APTs) and professional ransomware groups are changing tactics—bypassing traditional network firewalls and antivirus software to launch direct strikes against the underlying systems of industrial equipment.

Fuxnet and Firmware-Level Destruction (2024-2025): As one of the most destructive targeted ICS malwares in recent years, Fuxnet's attack logic is no longer simple file encryption, but directly targets the firmware layer of sensors, gateways, and other edge devices. By overwriting and tampering with underlying firmware, Fuxnet can cause permanent physical damage to devices (bricking). Such attacks expose the severe deficiencies in current industrial equipment's anti-firmware-tampering and secure boot mechanisms.

FrostyGoop: Protocol-Level Attacks Bypassing Traditional Security: This malware directly utilizes industrial control protocols (such as Modbus TCP) to interact with OT devices. Since it does not rely on traditional vulnerability exploitation methods, conventional Endpoint Detection and Response (EDR) systems are completely ineffective against it. This further proves the limitations of relying solely on software-layer protection.

Long-term Lessons from SolarWinds Supply Chain Attack: Although occurring several years ago, the issue of 'trusted update mechanisms being hijacked' that it exposed remains a pain point for industrial supply chains. When software signing and distribution channels are compromised, only an immutable 'Root of Trust' based on hardware isolation can provide the ultimate security baseline for devices.

Edge Gateways as APT Attack Beachheads: Industrial routers, serving as boundary gateways between IT and OT networks, are increasingly becoming the primary breach point for Advanced Persistent Threats (APTs). In recent years, nation-state hacker organizations have specifically targeted enterprise VPN gateways and industrial router firmware vulnerabilities. Since routers sit at network boundaries, once their firmware is implanted with persistent backdoors (Rootkits), attackers can not only monitor all transiting traffic—including encrypted communications within VPN tunnels, SCADA control commands, and industrial protocol packets—but also use this as a stepping stone for lateral movement into protected OT internal networks. This attack pattern has been evidenced in operations by APT groups such as Volt Typhoon and Sandworm. For industrial networks, compromise of boundary gateways means exposure of the entire industrial control system.

1.3 Regulatory Evolution (European Market Focus): Compliance Deadlines Approaching

Faced with increasingly rampant underlying attacks, global regulators led by the European Union are forcing equipment manufacturers to sink security capabilities to the lowest level of product design through stringent legislation. For equipment suppliers targeting the European market, 'Secure by Design' is no longer a marketing slogan, but a mandatory legal threshold determining market access.

EN 18031: Cornerstone of IoT Device Network Security. The ETSI EN 18031 series standards officially published in 2024 establish a clear cybersecurity baseline for consumer and industrial IoT devices. This standard directly supports the EU Radio Equipment Directive (RED) cybersecurity delegated regulation. EN 18031 explicitly sets requirements for data encryption, secure storage, unique device identity, and code integrity verification. These requirements technically rely heavily on the encryption isolation and anti-tampering capabilities provided by underlying hardware (i.e., Hardware Root of Trust)—pure software-level encryption can no longer meet its advanced security assessment.

CRA (Cyber Resilience Act): September 2026 Reporting Obligations Sound the Alarm. The EU Cyber Resilience Act is currently the world's strictest horizontal cybersecurity legislation for hardware and software products, with violations subject to fines up to EUR 15 million or 2.5% of global annual turnover. Although CRA's full mandatory enforcement (product security design requirements under Article 10) is set for 2027, the vulnerability handling and reporting obligations (Article 11) will take effect in September 2026. With only months until reporting obligations become effective, manufacturers will then need to report to ENISA within 24 hours of discovering actively exploited vulnerabilities. Devices lacking underlying security audit trails and rapid security update channels will expose enterprises to significant compliance breach risks.

NIS2 Directive: Transmission of Supply Chain Pressure. Since taking effect in October 2024, NIS2 has greatly expanded the security obligations of critical infrastructure operators (energy, transportation, manufacturing, etc.). One of NIS2's cores is 'supply chain security.' To transfer compliance risk, critical infrastructure operators will mandate suppliers to provide proof of compliance with standards such as CRA or EN 18031 when procuring equipment. Whether devices possess hardware-level protection has become a key factor in B2B procurement bidding.

IEC 62443: The Ultimate Blueprint for Industrial Network Security. IEC 62443 is an internationally widely recognized security standard system for Industrial Automation and Control Systems (IACS). Meeting the aforementioned European mandatory regulations is merely the starting point for compliance. This white paper positions IEC 62443 as the core blueprint for future product security capability evolution. Moving from Security Level SL1 to SL3 requires systems to upgrade from preventing accidental violations to withstanding attacks by professional hackers with specific skills and tools. This leap must rely on powerful hardware security technology as a foundation.

Table 2: European Regulatory Timeline

Chapter 2: Deep Dive into Technical Challenges

2.1 Inherent Limitations of Software Security

Traditional industrial equipment security architectures rely primarily on software-layer implementation, which has fundamental security vulnerabilities. Software runs on top of operating systems, and its security state completely depends on the integrity of the underlying environment—once the underlying layer is compromised, upper-layer security mechanisms fail.

Key Storage Risks: Software security solutions store encryption keys in system memory or storage media. These keys can be extracted through multiple pathways:

• Cold Boot Attacks: By physically cooling device memory to extend data retention time, keys in memory can be extracted

• DMA Attacks: Using Direct Memory Access mechanisms to bypass operating system protection and directly read memory contents

• Memory Scraping: Malware scanning and extracting sensitive data from memory during runtime

• Physical Extraction: Directly reading storage contents through JTAG, UART, and other debug interfaces

Trust Chain Breakage: Software-level trust anchors can be modified by privileged software. Once attackers gain system's highest privileges, they can tamper with security verification logic, allowing malicious code to pass verification. This attack is particularly common in firmware implant scenarios—malicious firmware can disguise itself as legitimate updates, gaining persistent control once installed.

2.2 Supply Chain Security Risks

Supply chain attacks have become a major threat vector for industrial equipment security. According to Verizon's 'DBIR 2025' data, security breaches introduced by third parties account for 30% of all vulnerabilities, showing a doubling trend.

Firmware Tampering Attack Path Analysis:

• Manufacturing Stage: Firmware implanted with backdoors on production lines, devices compromised from factory

• Distribution Stage: Firmware replaced or modified during warehousing or transportation

• Update Stage: Attackers hijack update servers or signing keys to distribute malicious firmware

• Maintenance Stage: Field technicians use contaminated tools or media to update devices

Third-Party Component Risks: Modern industrial equipment relies on numerous third-party software components (operating systems, drivers, protocol stacks, etc.). Security vulnerabilities in any component can become an attack entry point. Due to complex component sources and numerous versions, equipment manufacturers often find it difficult to comprehensively track and promptly fix all vulnerabilities.

2.3 Device Identity and Trust Chain Issues

Industrial equipment lacks reliable hardware-level identity identifiers, leading to multiple security risks:

Device Cloning Risks: Devices without hardware-level identity binding can have their configurations and credentials completely copied to another device. Attackers can gain unauthorized network access through cloned devices, and systems cannot distinguish between genuine and fake.

Consequences of Configuration File Theft: Router configuration files contain sensitive information (VPN credentials, firewall rules, network topology, etc.). If configuration encryption relies only on software keys, attackers can decrypt configurations after extracting keys, gaining cognition and control of the entire network infrastructure.

Impact of Missing Identity Authentication: In industrial networks, mutual authentication between devices is the foundation for establishing secure communications. If device identities can be forged, threats like man-in-the-middle attacks and data injection cannot be effectively defended against.

Cost Dilemma of Scaled Deployment: For industrial routers, a major pain point for customers is the large-scale deployment of massive edge devices. In traditional models, enterprises must dispatch senior engineers to remote substations, offshore oil fields, or factory floors to configure routers one by one with network parameters, security policies, and VPN tunnels. This manual deployment model is not only extremely costly—single on-site service can reach thousands of euros—but also lengthy in cycle, making it difficult to meet rapid business expansion needs. Devices lacking hardware-level identity identifiers cannot achieve secure automated deployment because the forgeability of device identities means configuration delivery processes could be hijacked by man-in-the-middle attacks.

Table 3: Software Security Risk Summary

Chapter 3: Evolution of Hardware Security Technology

3.1 From Software Security to Hardware Root of Trust

Facing the inherent limitations of software security, the evolution direction for security architecture is to reconstruct the trust foundation from the underlying hardware. Hardware Root of Trust is a security mechanism implemented at the chip level, establishing an immutable identity identifier and security baseline for devices.

Technology Evolution Timeline:

• Early 2000s: TPM (Trusted Platform Module) concept proposed, mainly for PC platforms

• 2010s: ARM TrustZone, Intel SGX and other hardware isolation technologies proliferated

• 2020s: Dedicated security chip integration became standard for IoT devices

• Current Trend: Hardware Root of Trust deeply integrated with secure boot chains, forming complete trust systems

Evolution Drivers: The frequent failures of software security solutions, increasing complexity of supply chain attacks, and increasingly stringent regulatory requirements (such as EN 18031, CRA) are jointly driving security capabilities to sink to the hardware layer. Hardware-level protection is not a replacement for software security, but provides a reliable trust foundation for it.

3.2 Hardware Root of Trust Technical Principles

Hardware Root of Trust operates based on three core principles, fundamentally solving the limitations of software security:

Immutability: The trust anchor is permanently written into hardware during device manufacturing. This writing process occurs in a controlled production environment, and after writing, it cannot be modified, erased, or overwritten by any software means. Even if attackers gain the system's highest privileges, they cannot tamper with the hardware-layer trust root.

Isolation: Security keys are stored in dedicated storage areas physically separated from the main processor and system memory. This physical isolation means keys never enter address spaces directly accessible by software. Even if the device is physically obtained, attackers cannot read key contents through conventional debug interfaces.

Verifiability: Every security operation is cryptographically verified based on the hardware root. At device startup, hardware verifies the signature of the first-stage boot code; the boot code verifies the signature of the next-stage components—forming a complete trust transmission chain. Any code without proper signatures cannot pass verification.

3.3 Secure Boot Chain Technology

Secure Boot Chain extends the verification capability of Hardware Root of Trust to the entire boot process, ensuring every stage from power-on to application execution is in a trusted state.

Multi-Stage Verification Process:

• Stage 1 (BootROM): Boot code on chip verifies the signature of first-stage bootloader, signing keys originate from Hardware Root of Trust

• Stage 2 (Bootloader): Verified bootloader verifies the signature of operating system kernel image

• Stage 3 (Kernel): Kernel verifies the integrity of critical system components and drivers

• Stage 4 (Application): Runtime verification ensures only authorized applications and configurations are loaded

Secure Authorized Version Management: In practical industrial operations scenarios, firmware version management needs to balance security and flexibility. Attackers often use old firmware versions with known vulnerabilities for malicious downgrade attacks, attempting to bypass new firmware's security protections. However, completely prohibiting version rollback creates operational dilemmas—when new versions introduce compatibility issues, operations teams may need to temporarily revert to stable versions to ensure business continuity.

Hardware Root of Trust provides an elegant solution to this contradiction: the system allows operations personnel to flash old firmware versions to ensure business stability, but firmly rejects any malicious old versions or tampered versions not signed by the manufacturer's private key. Specifically:

• All firmware versions (whether new or old) must carry the manufacturer's valid digital signature

• Hardware Root of Trust verifies firmware signatures at startup; unsigned or invalid-signature firmware is rejected from execution

• Version information is recorded in security logs, supporting audit trails

• Operations personnel can safely downgrade to authorized old versions, but attackers cannot implant maliciously tampered firmware

This 'both flexible and secure' design directly addresses the pain points of industrial operations teams: ensuring operational flexibility while guaranteeing that every line of executing code has been authorized by the manufacturer.

3.4 Configuration Binding and Device Identity

Based on Hardware Root of Trust, each device can establish a unique identity identifier. This identifier is cryptographically bound to all security operations, achieving device-level identity authentication and configuration protection.

Unique Device Identity: Hardware Root of Trust generates or writes a unique device identifier during manufacturing (typically 128 bits or longer). This identifier is bound to the device's physical chip and cannot be copied or transplanted to other devices. Device identity certificates (DevID) compliant with IEEE 802.1AR standard provide globally unique, cryptographically verifiable identity proof for devices.

Configuration Binding Encryption: Device configuration files are encrypted using keys derived from Hardware Root of Trust. Since keys are bound to specific hardware, even if configuration files are stolen, they cannot be decrypted and used on other devices. This effectively prevents configuration cloning and device forgery.

Anti-Cloning Mechanism: The binding relationship between hardware identity and configuration means:

• Configurations exported from Device A cannot be used on Device B

• Device identities cannot be forged by software means

• Configuration tampering can be detected by integrity verification mechanisms

• Backup configuration restoration is limited to the original device

3.5 Technology Selection Methodology

When evaluating and selecting hardware security solutions, enterprises should systematically consider the following dimensions:

Deployment Considerations:

• Environmental Adaptation: Impact of temperature, humidity, electromagnetic interference in industrial environments on hardware stability

• Lifecycle Management: Security capabilities must remain effective throughout the device's 10-15 year operational cycle

• Supply Chain Security: Source credibility and supply chain transparency of hardware components

• Cost-Benefit: Balance between hardware security investment and potential risk reduction

Table 4: Hardware Security Evaluation Framework

Chapter 4: Implementation Recommendations and Best Practices

4.1 Organizational Security Strategy Recommendations

Successful deployment of hardware security requires organizational-level strategic support. Enterprises should establish systematic security governance frameworks ensuring security capabilities align with business objectives.

Security Governance Framework:

• Executive Commitment: Management must incorporate cybersecurity into corporate strategy, providing necessary resource support

• Role Definition: Clarify ownership of security responsibilities, establish cross-departmental collaboration mechanisms

• Risk Assessment: Conduct regular security risk assessments, identify critical assets and threats

• Continuous Improvement: Establish security metrics, continuously monitor and improve security posture

Cross-Departmental Collaboration: Hardware security involves R&D, supply chain, operations, compliance, and other departments. Enterprises should establish cross-departmental security committees or working groups ensuring security requirements are implemented throughout the product lifecycle.

4.2 Technical Deployment Strategy

Deployment of hardware security capabilities should follow phased, progressive principles, balancing risk reduction with business continuity.

Phased Deployment Recommendations:

• Pilot Phase: Select low-risk scenarios for technical validation, accumulate experience

• Expansion Phase: On successful pilot basis, gradually extend to more product lines or sites

• Full Deployment: Establish unified hardware security standards and processes across the organization

Risk Assessment Process: Before deployment, enterprises should conduct comprehensive risk assessments including:

• Gap analysis of existing security architecture

• Applicability assessment of hardware security solutions

• Risk identification and mitigation plans for deployment processes

• Business continuity assurance measures

4.3 Compliance Path Recommendations (European Market)

EN 18031 Compliance Preparation:

• Clause Mapping: Inventory the correspondence between EN 18031 requirements and hardware security capabilities

• Technical Documentation: Prepare technical documentation and test reports meeting standard requirements

• Testing and Verification: Conduct independent security testing to verify compliance

• Continuous Compliance: Establish change management processes ensuring ongoing standard compliance

CRA Compliance Path:

Table 5: CRA Compliance Timeline

NIS2 Compliance Considerations: As suppliers of critical infrastructure equipment, enterprises should prepare:

• Supply chain security certification documents

• Product security compliance declarations

• Vulnerability disclosure and remediation processes

• Security incident response capability proof

IEC 62443 (Planning Path): Meeting European mandatory regulations is the starting point for compliance; IEC 62443 represents higher security capability targets. Enterprises should:

• Clarify current security level (SL assessment)

• Develop roadmap for evolution from SL1 to SL2/SL3

• Identify capability gaps and develop improvement plans

• Plan certification timeline and resource investment

4.4 Personnel and Training

Effective utilization of hardware security capabilities requires personnel with corresponding skills. Enterprises should prioritize security talent development and capability building.

Security Awareness Training: Security awareness training for all employees is the foundation for establishing a security culture. Training content should include:

• Current threat landscape and security importance

• Corporate security policies and operational procedures

• Security incident identification and reporting processes

• Individual roles and responsibilities in the security system

Technical Personnel Capability Requirements: Technical personnel responsible for hardware security should possess:

• Embedded system security architecture knowledge

• Cryptography principles and application capabilities

• Security testing and assessment skills

• Understanding and application of regulatory standards

External Resource Utilization: For SMEs with limited resources, consider leveraging external professional resources:

• Security Consulting Firms: Provide compliance assessments and technical guidance

• Testing Laboratories: Conduct independent security testing and certification

• Industry Alliances: Participate in standard development and best practice sharing

Appendix

A. Glossary of Technical Terms

B. Regulatory and Standards Index

EU Regulations:

• ETSI EN 18031 series: IoT device network security standards (published 2024)

• EU Regulation CRA: Cyber Resilience Act (adopted 2024, effective 2027)

• EU Directive 2022/2555: NIS2 Network and Information Security Directive

International Standards (Reference/Planning):

• IEC 62443 series: Industrial automation and control systems security standards

• ISO/IEC 27001: Information security management system

• NIST Cybersecurity Framework: Identify, Protect, Detect, Respond, Recover

C. Complete Reference Citations

• Dragos, '2026 OT Cybersecurity Report', 2026

• IBM Security, 'Cost of a Data Breach 2026', 2026

• Verizon, 'Data Breach Investigations Report 2025', 2025

• ETSI, 'EN 18031-1/2/3: Cyber Security for Consumer Internet of Things', 2024

• European Commission, 'Cyber Resilience Act', Regulation (EU) 2024/xxxx, 2024

• European Parliament, 'NIS2 Directive', Directive (EU) 2022/2555, 2022