IDC Expects Significant Growth in AI Spending in Asia Pacific, Led by China

IDC report said AI spending, encompassing software, services, and hardware for AI-centric systems, in Asia Pacific is expected to reach a projected value of $78.4 billion by 2027.
Top industries in Asia Pacific AI Spending
This reflects a paradigm shift towards leveraging cutting-edge technology to reimagine operations, enhance customer experiences, and maintain a competitive edge in an ever-evolving market.

The IDC report forecasts an impressive Compound Annual Growth Rate (CAGR) of 25.5 percent for the period spanning 2022 to 2027, underscoring the region’s enthusiasm for embracing AI technologies. Among the industries leading this charge is the professional services sector, securing a market share of 28.5 percent in 2023 and displaying a commendable CAGR of 22.4 percent from 2022 to 2027.

Within this sector, a major area of investment is AI infrastructure provisioning, where infrastructure service providers create and manage the necessary IT infrastructure for AI systems. This enables end-users to access critical resources essential for AI system development or the provision of AI services.

In the banking industry, AI is revolutionizing customer experiences by personalizing financial recommendations and efficiently detecting fraudulent activities, thus ensuring secure transactions and enhancing decision-making processes.

The retail industry is also leveraging AI to transform customer interactions through AI-enabled customer service agents, personalized recommendations, and dynamic pricing strategies. Moreover, Generative AI (GenAI) has gained significant momentum, with organizations in Asia/Pacific either investing in or exploring its potential.

While China remains at the forefront of AI adoption, accounting for a significant 50 percent of the total AI spending in Asia Pacific, other regions like APeJC (Asia/Pacific excluding Japan and China) and Japan are also making substantial strides.

APeJC, comprising countries like India, Australia, and Korea, is emerging as a vibrant hub of AI innovation, contributing 34 percent of the total AI spending in the region and anticipated to grow at a CAGR of 26.8 percent.

Japan, though slightly behind China, is a prominent investor in AI solutions, committing $12 billion by 2027 with a CAGR of 25 percent. The country’s dedication to cutting-edge research is yielding breakthroughs in AI-powered automation and analytics, significantly impacting productivity, quality control, risk management, and customer experiences.

In summary, as AI systems continue to evolve, Asia Pacific is positioning itself as a global AI powerhouse, with significant investments and advancements paving the way for transformative changes across various industries.