IDC says AI spending in Asia-Pacific to reach $6.2 billion in 2019

Asia-Pacific spending on artificial intelligence (AI) systems will reach $6.2 billion in 2019, recording an increase of almost 54% when compared to 2018, according to analyst firm IDC.

Evidently, as industries invest aggressively in projects that utilize AI software capabilities, IDC expects spending on AI systems will increase to $21.4 billion by 2023 with a compound annual growth rate (CAGR) of 39.6% over the 2018-23 forecast period.

“Artificial intelligence having an impact across many industries with widespread utilization but still at nascent stage in Asia-Pacific. From providing chat bots for better customer service to improve the efficiency of operations and tasks for their business models, industries like banking, retail and professional services are spending in this technology at scale says,” Ritika Srivastava, associate market analyst at IDC Asia-Pacific.

In 2019, Asia-Pacific spending on AI systems will be led by the banking industry with 10.7% share of the total, followed by retail with a 10.2% share. Banking will predominantly use AI/cognitive systems for fraud analysis and investigation, as well as automated customer service agents.

Close behind is retail in terms of investments in AI-enabled solutions with use cases such as expert shopping advisors and product recommendations and merchandising for omni channel operations – shaping the industry, representing 45.1% of the overall retail industry spend in 2019.

The industries that will experience the fastest growth in AI/cognitive systems spending over the forecast (2018-23) are telecommunications (CAGR 56.6%), and process manufacturing (CAGR 47.1%) respectively.

The AI use cases that will have significant investment this year includes automated customer service agents ($758.4 million) followed by sales process recommendation and automation ($529.1 million). The fastest growth will be seen in pharmaceutical research and discovery, and digital twin/advanced digital simulation with highest CAGR’s.

Asia-Pacific hardware spending in infrastructure largely supports AI development. Hardware will be the largest area of AI systems spending in 2019 with nearly $4 billion allocated to server and storage, while software will be the fastest growing category for regional AI spending with a five-year CAGR of 71.3%.

Companies will also invest in IT services to help with the development and implementation of their AI systems and business services, such as consulting and horizontal business process outsourcing related to these systems.

China will deliver more than 71% of the Asia/Pacific regional spending on AI systems in 2019, led by the state/local government and retail industries.

However, other countries in Asia-Pacific (excluding Japan and China) like Korea with 5.4% share, followed by Australia with 5.1% share, are slowly gaining momentum in adoption of AI-enabled solutions and deployment.

“Not surprisingly, China is the primary source of AI investment in Asia, as it remains a priority very much for government and state organizations as well as a small number of aggressive digital native enterprises like Tencent, Baidu and Alibaba. Elsewhere in Asia, although experimentation is common, enterprise deployment of AI is still relatively rare, and much remains to be done if Asia-Pacific companies hope to compete with major players in China and the US,” said Dr. Christopher Marshall, associate vice president at IDC Asia-Pacific.

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