Asia Pacific Smart Manufacturing Market Outlook to 2028

Asia Pacific Smart Manufacturing Market Overview

• The Asia Pacific Smart Manufacturing Market was valued at USD 52.9 billion in 2023. The growth is driven primarily by the increasing adoption of Industry 4.0 technologies, including IoT, AI, and big data analytics. These technologies have enabled manufacturers to enhance productivity, reduce operational costs, and improve product quality.
• The market is dominated by several key players, including Siemens AG, Honeywell International Inc., Schneider Electric, Mitsubishi Electric Corporation, and ABB Ltd. These companies have established a strong foothold in the market through continuous innovation, strategic partnerships, and investments in research and development.
• In December 2023, Mitsubishi Electric inaugurated a new manufacturing plant in Maharashtra, India, valued at INR 2,200 million. This state-of-the-art facility spans 40,000 sq.m and focuses on advanced Factory Automation Systems. The plant supports the growing demand for smart manufacturing solutions in India and aligns with the government's "Make in India" initiative, enhancing local production and innovation.
• China remains the dominant force in the market because of its large manufacturing base, strong government support, and early adoption of Industry 4.0 technologies. The Chinese government's focus on transforming the country into a global manufacturing leader has led to significant investments in smart factory initiatives and industrial automation.

Asia Pacific Smart Manufacturing Market Segmented

The market is segmented into various factors like technology, industry vertical, and region.

By Technology: The market is segmented by technology into Industrial IoT, Artificial Intelligence, Cloud Computing, and Big Data Analytics. In 2023, Industrial IoT held the largest market share due to its widespread adoption across various industries, including automotive, electronics, and pharmaceuticals.

By Industry Vertical: The market is segmented by industry vertical into Automotive, Electronics, Food & Beverage, and Pharmaceuticals. In 2023, the Automotive sector dominated the market with the adoption of smart manufacturing technologies, particularly in countries like Japan and South Korea, which has contributed to this dominance.

By Region: The market is segmented by region into China, South Korea, Japan, India, Australia, and the Rest of APAC. In 2023, China held the largest market share by its large-scale manufacturing capabilities, government support, and early adoption of smart manufacturing technologies.

Asia Pacific Smart Manufacturing Market Analysis

Market Growth Drivers

• Growing Adoption of Predictive Maintenance: Predictive maintenance has gained traction in the Asia Pacific manufacturing sector in 2024. Companies in Japan and China have increasingly adopted predictive maintenance solutions to minimize downtime and reduce maintenance costs. In 2024, Japanese manufacturers implementing predictive maintenance systems, which utilize AI and IoT to monitor equipment health and predict failures before they occur.
• Rising Demand for High-Quality Production: The demand for high-quality production processes has accelerated the adoption of smart manufacturing technologies in the Asia Pacific region. In 2024, South Korea's electronics sector upgraded its manufacturing facilities with advanced automation systems to meet the stringent quality standards required for export markets. This trend is particularly evident in sectors like semiconductor manufacturing, where precision and reliability are critical, thereby driving the adoption of smart manufacturing solutions.
• Increased Investment in Automation Technology: In 2024, the Asia Pacific region has seen a surge in investments in automation technology, particularly in China and Japan. The Chinese government development of industrial automation systems, leading to a significant boost in demand for smart manufacturing solutions. These investments are aimed at enhancing production efficiency and reducing operational costs across various sectors, including automotive and electronics, thus driving the market growth for smart manufacturing in the region.

Market Challenges

• Skills Gap in the Workforce: The shortage of skilled labor to operate and maintain advanced manufacturing systems is a significant challenge in the region. In 2024, a report highlighted that over 40% of manufacturing companies in China faced difficulties in finding qualified personnel to manage their smart factories.
• Cybersecurity Risks: The increasing reliance on interconnected systems in smart manufacturing has raised concerns about cybersecurity risks in 2024. The Asia Pacific region has seen a rise in cyberattacks targeting industrial control systems, with a notable incident in Japan where a major electronics manufacturer reported losses due to a ransomware attack on its smart manufacturing facilities.

Government Initiative

• China's "Made in China 2025" Program: The "Made in China 2025" initiative, launched in 2015, aims to elevate China's manufacturing sector by increasing domestic content of core materials to 40% by 2020 and 70% by 2025. The government has committed approximately $1.4 trillion to enhance high-tech industries, focusing on AI, robotics, and advanced manufacturing technologies.
• Japan's "Society 5.0" Vision: Japan's government has been actively promoting its "Society 5.0" vision, which integrates physical and digital spaces to create a highly advanced society. In 2024, the Japanese government allocated JPY 300 billion to support the development of smart manufacturing solutions as part of this initiative. The focus is on creating smart factories that utilize AI, IoT, and robotics to enhance productivity and address labor shortages, particularly in the aging population.

Asia Pacific Smart Manufacturing Market Future Outlook

The future trends in the Asia Pacific smart manufacturing industry include the widespread adoption of AI and machine learning, the expansion of 5G-enabled smart factories, the growth of sustainable manufacturing practices, and the rise of collaborative robots (cobots). These trends are expected to shape the market over the next five years.

Future Market Trends

• Expansion of Industrial IoT Networks: The integration of Industrial IoT (IIoT) networks will expand rapidly by 2028, with an estimated 1 billion new connected devices being deployed across the Asia Pacific manufacturing sector. These networks will facilitate real-time data collection and analysis, enabling manufacturers to optimize operations and improve decision-making processes.
• Shift Towards Circular Economy Models: By 2028, the Asia Pacific smart manufacturing sector will increasingly adopt circular economy models. These models will focus on reducing waste and promoting the reuse of materials, aligning with global sustainability goals and driving innovation in the manufacturing sector.