Friday, October 4, 2024
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AI Spending in to Reach $49 Billion by 2026

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The spending in Asia/Pacificon Artificial Intelligence (AI), including software, services, and hardware for AI-centric** systems, will grow to $49.2 billion in 2026, with a compound annual growth rate (CAGR) of 24.5% from 2021 to 2026. AI assists organizations in developing improved operational efficiency through an optimized and robust risk management environment. It further helps enterprises make better decisions in today’s highly competitive market.

“This technology market is fast approaching, if not already at the crossroad of development, depending on how well it can navigate the associated trustworthiness, accountability, and IP matters, now exacerbated by the revolutionary progress of and surged demand to try out generative AI,” said Jessie Cai Danqing, Associate Research Director, Big Data & Analytics, IDC Asia/Pacific.

In 2023, Professional services will continue to be the leading industry in terms of adoption and investment in AI solutions. The increased reliance on the digital environment and the internet has increased spending on AI solutions in Professional services. China accounts for 83% total market share of Professional service Industry in Asia/Pacific*. Spending by banks will continue to increase with a five-year CAGR of 26.6%. AI solutions will help banks reduce the risks of financial fraud and threats and optimize process and customer service to improve the customer experience. Discrete manufacturing is the next largest spending industry, growing with a CAGR of 27.9% from 2021 to 2026. Federal/central and state/local governments are the next major investors in AI solutions, with a focus on public safety and emergency response, defense, government intelligence, and threat intelligence and prevention systems.

Mr. Vinayaka Venkatesh, Senior Market Analyst at IDC

“Despite the challenges organizations face in implementing AI solutions, such as cost, AI governance, trustworthiness, and a shortage of skilled personnel, majority of organizations say that AI adoption has met up to their expectations, indicating that investment in AI solutions will continue to grow further,” says Vinayaka Venkatesh, Senior Market Analyst at IDC IT Spending Guides, Customer Insights & Analysis.

Augmented customer service agents, recommendation and augmentation of sales processes, smart business innovation and automation, IT optimization, and fraud analysis and investigation will continue to be the leading use cases of Artificial Intelligence in 2023-2026. AI Spending on these top five AI use cases will nearly double from $9.8 billion in 2023 to $18.6 billion by 2026. Artificial intelligence has become an essential component of digital organizations. IT Optimization is one of the fastest growing use cases, with a CAGR of 27.5%, focusing on optimizing, streamlining, predicting, and automating core IT processes and back-end IT operations. Financial institutions account for 92% of total AI spending in fraud analysis and investigation AI systems, which use rule-based learning to identify transactions that indicate fraudulent activity or a heightened risk of fraud in various areas of an organization.

In 2023, hardware will be the leading technology, accounting for more than 47% of AI spending. A major area of ​​investment is servers, which account for 86% of total AI hardware technology spending, with the rest being spent on storage. Software is the second leading technology, accounting for 34% of all AI spending. 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 under business services.

China ranks first in Asia/Pacific* in terms of AI spending, accounting for 58% of total AI spending Asia/Pacific*, which is expected to reach nearly $26.4 billion by 2026 at a CAGR of 20.6%. Increased digital transformation deployment, development of AI chips, 5G, other technological innovations, resulting in increased demand for and adoption of AI.

Australia is the second-highest investing country in AI solutions, which is expected to be a $6.4 billion by 2026. To face the strong competition and a rapidly changing digital economy, organizations are increasingly adopting AI to remain digitally resilient and innovative.

India is the next leading and fastest AI adopting country, with a CAGR of 34.3% in AI spending of $3.6 billion. Increased quality (of product, production, supply chain, service, etc.), customer service, business competitiveness, new product development, and improved risk management are some of the key factors in AI solutions adoption.

South Korea will be the next leading country in AI spending, with $3.5 billion expected by 2026. The demand for AI-based automation technology to simplify repetitive tasks, AI contact centers to improve customer service, and increasing business productivity and work efficiency are some of the factors driving the domestic AI market’s growth.

 

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