According to IDC, artificial intelligence (AI) solutions have become an essential part of improving business processes and decision-making
SINGAPORE, September 27, 2022 – Spending in Asia/Pacific* for AI systems (including hardware, software and services) will increase from $20.6 billion in 2022 to around $46.6 billion in 2026, according to the latest guide IDC’s global artificial intelligence spend. Artificial intelligence (AI) solutions have become an essential part of process improvement and business decision-making, helping organizations maintain 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 been a major contributor to the 1st wave of adoptions. It’s time for more organizations to leverage their own data asset and start managing the lifecycle ‘from data to intelligence.’ This will become one of the differentiators for businesses to be competitive in the digital age,” says Jessie Danqing Cai, Associate Research Director, Artificial Intelligence, IDC Asia/Pacific.
Reliance on online services and their use, as well as customer support enabled by AI, professional services have improved in the rankings. The banking industry will continue to invest in AI solutions as market risks and threats increase; AI-enabled applications that enhance threat intelligence and fraud analysis will help reduce risk. Due to the current economic volatility and increasing resource scarcity, discrete manufacturing will be the next big industry to invest in AI solutions to maintain production quality and minimize errors. State/local and federal/central government is the second largest spender on AI solutions, focusing on public safety and emergency response, defense, terrorism, investigations, and intelligence systems governmental.
“Companies that have already invested and plan to increase their investment in AI solutions will get the most out of it to outperform the market,” says Vinayaka Venkatesh, Principal Market Analyst, IT Spending Guides, IDC Asia/Pacific. “Addressing skills gaps will be one of the important steps towards harnessing the power of AI solutions,” he added.
By 2026, spending on the top 5 use cases will have doubled from $8.3 billion to $18.5 billion. With the current industrial digitization, the adoption of AI in all sectors has become necessary for competitive advantage. For example, augmented customer service agents reduce the time and resources needed to resolve customer issues. Smart business innovation and automation optimize and streamline complex business tasks, enabling better decisions by incorporating more data into the decision-making process. Sales process recommendations and improvements will help smooth the sales process and IT optimization to automate time-consuming software maintenance tasks. Augmented threat intelligence and prevention systems help identify threats to the digital business setup and take preventative action to avoid critical data threats.
Hardware will be the leading technology, accounting for more than 54.2% of AI spending; the largest areas of investment will be servers, accounting for over 86% of total spend, while the rest will go to storage. Software is the second leading technology with 29% of AI spending. 52% of total AI spending on software goes to AI applications and artificial intelligence platforms. The rest of AI spending goes to services technology, 77% of total AI spending in services goes to IT services, and the rest is under business services.
China is the leading country in AI spending in Asia/Pacific*, which is expected to reach nearly $26.6 billion by 2026. Business demand for AI solutions has increased significantly. One of the factors driving the rise of AI-based industries is digital transformation and policies.
Australia is the second leading country in AI spending, with $5.7 billion expected by 2026. The use of AI solutions in businesses is growing as they are critical to business decision-making and improving data processes.
India is the second leading and fastest growing country with a projected CAGR of 33.5% in AI spending of $3.4 billion. Digital transformation, government initiatives, customer experience, and cloud adoption are some of the factors influencing the adoption of AI solutions by businesses.
South Korea will be the next biggest spender on AI solutions, which is expected to reach $2.9 billion by 2026. The South Korean government is constantly helping companies adopt AI technologies by establishing AI centers. AI and education and training programs to develop AI skills.
The Worldwide Artificial Intelligence Spending Guide assesses spending on technologies that analyze, organize, access and deliver advisory services based on a range of unstructured information. The spend guide quantifies the AI opportunity by providing data for 29 use cases across 19 industries across nine regions and 32 countries. Data is also available for categories of hardware, software and related services.
Note on taxonomy: IDC’s Global AI Spending Guide uses a very specific definition of what constitutes an AI application in which the application must have an AI component that is critical to the application – without this AI component, the application will not work. This distinction allows the Spend Guide to focus on software applications that are heavily 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 not application-centric, or not fundamental, to the application. This allows for the inclusion of vendors that have built AI capabilities into their software, but the apps are not exclusively used solely for AI functions. In other words, the application will work without the inclusion of the AI component.
*Asia/Pacific excluding Japan
About IDC’s Spending Guides
IDC’s Spend Guides provide a granular view of top technology markets from a regional, industry vertical, use case, buyer, and technology perspective. Spend Guides are delivered via a pivot table format or a custom query tool, allowing the user to easily extract meaningful insights into each market by visualizing data trends and relationships.
For more information on IDC’s spending guides, please contact Vinay Gupta at [email protected]
Click here to learn more about IDC’s full suite of data products and how you can leverage them to grow your business.
International Data Corporation (IDC) is the world’s leading provider of business information, consulting services and events for the information technology, telecommunications and consumer technology markets. With more than 1,300 analysts worldwide, IDC offers global, regional, and local expertise on technology and industry opportunities and trends in more than 110 countries. IDC’s analysis and insight help IT professionals, business executives, and the investment community make fact-based technology decisions and achieve their key business goals. Founded in 1964, IDC is a wholly owned subsidiary of International Data Group (IDG), the global leader in technology media, data and marketing services. To learn more about IDC, visit www.idc.com. Follow IDC on Twitter at @IDCAP and LinkedIn. Subscribe to the IDC-Blog for industry news and insights.