Covering Disruptive Technology Powering Business in The Digital Age

Asia/Pacific spending on Artificial Intelligence (AI) systems (including hardware, software and services) will rise from USD $20.6 billion in 2022 to around USD $46.6 billion in 2026, according to IDC’s latest Worldwide Artificial Intelligence Spending Guide. Artificial Intelligence solutions have become an essential part of process improvement and business decision making, assisting organisations in keeping up with market viability. IDC forecasts a compound annual growth rate (CAGR) of 23.7% for 2021–2026.

“Pre-trained natural language and computer vision models have contributed largely to the 1st wave of adoptions. It’s time for more organisations to tap into their own data asset and start managing the “data to intelligence” lifecycle. This will become one of the differentiating capabilities for companies to compete in the digital-first era,” said Jessie Danqing Cai, Associate Research Director, Artificial Intelligence, at IDC Asia/Pacific.

Dependence on online services and their usage, as well as customer assistance enabled by AI, Professional Services has improved in the rankings. Banking will keep investing in AI solutions as market risks and threats increase; AI-enabled apps that boost threat intelligence and fraud analysis will help to reduce the risk. As a result of the current economic volatility and rising resource scarcity, discrete manufacturing will be the next major industry to invest in AI solutions to maintain production quality and minimise errors. State/Local and Federal/central government is the next biggest spender on AI solutions, focusing on public safety and emergency response, defence, terrorism, investigation and Government Intelligence Systems.

“Companies that have already invested in and plan to increase investment in AI solutions will make the best use of them to outperform the market,” said Vinayaka Venkatesh, Senior Market Analyst, IT Spending Guides, IDC Asia/Pacific. “Resolving skill gaps will be one of the important steps toward leveraging the power of AI solutions.”

By 2026, spending on the top 5 use cases will have doubled, rising from USD $8.3 billion to USD $18.5 billion. With the present industrial digitalisation, AI adoption across industries has become necessary for a competitive advantage. For example, augmented customer service agents reduce the time and resources required to resolve customer issues. Smart business innovation and automation optimise and streamline complex business tasks, enabling better decisions by incorporating more data into the decision-making process. Sales process recommendations and enhancements will aid in the smooth flow of the sales process and IT optimization to automate time-consuming software maintenance tasks. Augmented threat intelligence and prevention systems help to identify threats for the digital business setup and take preventive measures to avoid critical data threats.

Hardware will be the leading technology, accounting for more than 54.2% of AI spending; the most significant investment areas will be servers, accounting for more than 86% of total expenditure, while the rest will go toward storage. Software is the second leading technology with 29% of AI spending. 52% of total AI spending in software goes towards AI Applications and Artificial Intelligent Platforms. The rest of the AI spending goes to services technology, 77% of the total AI spending in services goes toward IT Services and the rest is under Business Services.

China is the leading country in AI spending in Asia/Pacific, expected to reach nearly USD $26.6 billion by 2026. Enterprises’ demand for AI solutions has increased drastically. Digital transformation and Policies is one of the factors for the rise in the AI-enabled industries.

Australia is the second leading country in AI spending, with USD $5.7 billion expected by 2026. The use of AI solutions in enterprises is increasing as it is critical in business decision making and data process improvement.

India is the next leading and fastest growing country, with an expected CAGR of 33.5% in AI spending of USD $3.4 billion. Digital transformation, government initiatives, customer experience and cloud adoption are some of the factors that influence enterprise adoption of AI solutions.

South Korea will be the next spender on AI solutions, which is expected to reach USD $2.9 billion by 2026. The South Korean government is constantly assisting businesses in adopting AI technologies by establishing AI Hubs and education and training programs for developing AI skills.

The Worldwide Artificial Intelligence Spending Guide  sizes spending for technologies that analyse, organise, access and provide advisory services based on a range of unstructured information. The Spending Guide quantifies the AI opportunity by providing data for 29 use cases across 19 industries in 9 regions and 32 countries. Data is also available for the related hardware, software, and services categories.

Taxonomy Note: The IDC Worldwide Artificial Intelligence Spending Guide  uses a very precise definition of what constitutes an AI Application in which the application must have an AI component that is crucial to the application—without this AI component the application will not function. This distinction enables the Spending Guide to focus on those software applications that are strongly AI-centric.

In comparison, the IDC Worldwide Semiannual Artificial Intelligence Tracker  uses a broad definition of AI Applications that includes applications where the AI component is non-centric, or not fundamental, to the application. This enables the inclusion of vendors that have incorporated AI capabilities into their software, but the applications are not exclusively used for AI functions only. In other words, the application will function without the inclusion of the AI component.

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