A trusted execution environment (TEE) is a secure area inside a computer processor that runs sensitive code and handles private data separately from the main operating system, crucial for deploying private AI. It enables confidential tasks to occur in isolation, such as encrypting information or verifying user credentials.

Confidential computing is the broader field that protects data during active use, making TEEs a key privacy-enhancing technology that introduces hardware-based isolation to reduce exposure to malware or tampering. The urgency is clear: according to IBM, the global average cost of a data breach in 2024 reached $4.88 million — the highest ever recorded. 

In response, financial services rely on TEEs to secure payment systems and prevent attackers from manipulating fraud detection models. Healthcare providers use them to process medical data securely when working with AI diagnostic tools or remote consultations. 

How do trusted execution environments (TEE) work?

Trusted execution environments follow a defined process in order to run sensitive operations in isolation. It begins before the main operating system loads in order to operate securely and reliably.

Here is an overview of how it works:

Setting up the secure environment

Before a TEE is used, the hardware sets aside a protected section of memory during system startup — before the main operating system loads. The secure area is loaded with its own operating system, called the Trusted OS, and any Trusted Applications (TAs) approved to run inside the TEE. The memory used by the TEE is protected using built-in security features in the processor, which stop other parts of the system from accessing it.

Handling secure input and access

Most software runs in the main operating system — the Rich Execution Environment (REE). When REE software needs to perform a secure task, it makes a request to the TEE using a secure channel. The TEE checks the request identity and only accepts trusted inputs. Even within the TEE, Trusted Applications are kept separate from one another to avoid accidental data sharing.

Executing trusted operations

The TEE carries out sensitive tasks such as unlocking encrypted files in financial systems or authorizing a transaction in mobile banking, offering advantages over other secure computing methods, like homomorphic encryption, by providing a secure space that blocks outside access. Even if the rest of the device is compromised, the sensitive task remains protected.

Exiting and managing the lifecycle

Once the task is complete, the TEE passes control back to the main system. Any temporary data created inside the TEE is cleared for security purposes. When the TEE needs to send or receive data, it uses controlled pathways. Shared memory, which both the TEE and the main system can access, is used to exchange data — for example, between clinical applications and secure diagnostics in healthcare settings. Any sensitive content is verified before it enters or leaves the TEE to keep it secure during transfer.

Trusted execution environment (TEE) use cases 

The confidential computing market is expected to reach USD 59.4 billion by 2028, growing at a CAGR of 62.1% — reflecting the rising demand for hardware-based protection in high-risk environments.

Trusted execution environments help organizations to protect critical operations by isolating them from the rest of the system. Here are some examples of how TEEs are used in specific business scenarios:

Secure medical data analysis

Hospitals and digital health platforms often process highly sensitive information, such as medical histories or diagnostic results. TEEs allow this information to be analyzed securely, even when institutions use third-party tools or cloud services. For example, a diagnostic algorithm or large language model (LLM) can run inside the TEE, where patient data is only decrypted in that protected space. The rest of the system never sees the raw input, which maintains confidentiality and ensures companies comply with healthcare privacy regulations.

Confidential transaction processing

Banks use TEEs to protect operations such as transaction verification or digital signing, where data integrity and privacy are critical. A mobile banking app can carry out key security steps, such as checking account access or authorizing a payment inside the TEE. As these operations are isolated, they remain secure even if other parts of the device are compromised. 

Protected point of sale operations

In retail environments, TEEs help to secure actions such as processing card payments, validating loyalty credentials, or safely accessing recommendation systems powered by AI. The sensitive parts of the transaction, such as card details or account tokens, are handled inside the TEE. By preventing exposure to malware or unauthorized software — which may be present elsewhere on the device — companies reduce the risk of stolen payment details or third parties intercepting information during checkout.

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