APAC spending on AI systems to hit $6.2bn in 2019

Organisations across the Asia-Pacific region are expected to spend $6.2bn on artificial intelligence (AI) systems this year, almost 64% more compared to 2018, according to IDC.

The growth in spending is being led by the banking industry, which has been deploying AI systems to detect and investigate fraud, as well as to improve customer service.

This is followed by the retail sector which is harnessing AI capabilities to power expert shopping advisors, product recommendation engines and merchandising for omni-channel operations.

According to IDC, the industries that will see the fastest growth in spending on AI systems between 2018 and 2023 are telecommunications and process manufacturing.

The AI momentum will continue unabated over the next four years, with spending on AI systems set to grow to $21.4bn by 2023, with a compound annual growth rate (CAGR) of 39.6%.

“Artificial intelligence is having an impact across many industries with widespread utilisation, but it is still at nascent stage in Asia-Pacific,” said Ritika Srivastava, associate market analyst at IDC Asia-Pacific.

“From providing chatbots for better customer service to improving operational efficiency, industries like banking, retail and professional services are spending on this technology at scale,” she added.

Not surprisingly, China will account for over 71% of the region’s spending on AI systems this year, led by the government and retail sectors. This is followed by Korea and Australia, with a market share of 5.4% and 5.1% respectively.

Noting that China remains the primary source of AI investments in Asia, Christopher Marshall, associate vice-president at IDC Asia-Pacific, said AI “remains a priority for government and state organisations, 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,” he added.

The surge in interest for AI in Asia-Pacific is boosting the demand for infrastructure hardware, which already accounts for the bulk of spending on AI systems in 2019, with nearly $4bn allocated to server and storage.

Software, on the other hand, will be the fastest growing category for regional AI spending with a five-year CAGR of 71.3%. IDC said companies will also invest in IT services to help with the development and implementation of their AI systems.

Earlier in October, AI Singapore, a national programme to bolster Singapore’s AI capabilities, said it is setting up an on-premise high-performance computing (HPC) infrastructure to crunch workloads that used to be run on the cloud.

The infrastructure, comprising a range of Dell EMC PowerEdge servers, as well as switches built for applications in high-performance datacentres, will address data privacy requirements of organisations that will not allow sensitive projects to be run from the cloud, according to Laurence Liew, director for AI industry innovation at AI Singapore.