Asia Pacific leads shift to software-defined manufacturing

Forrester has published a new forecast on global manufacturing technology spending, with Asia Pacific leading the shift to software-defined manufacturing and automation.

Global manufacturing technology spending is forecast to rise 41%, from USD $485.7 billion in 2024 to USD $683.6 billion in 2030. Within that total, commercial software spending is projected to increase 73%, from USD $110.0 billion to USD $190.5 billion, while industrial AI software spending is expected to more than triple, from about USD $908 million to USD $3.25 billion.

The figures point to a broader shift in how manufacturers are allocating capital as labour pressures and geopolitical strains reshape production models. Forrester identifies demographic change, workforce shortages, and economic fragmentation as key drivers of higher spending on robotics, industrial AI, smart factories, and digital manufacturing platforms.

Asia focus

Across Asia Pacific, manufacturers are increasing their use of software and automation in pursuit of productivity gains, more resilient operations, and a move into higher-value production. The region accounted for 74% of new industrial robot deployments in 2024, with China holding more than half of the global installed robotics base.

This concentration places Asia Pacific at the centre of the shift towards more automated factory systems. It also reflects a change in competition, away from lower-cost labour and towards production models that rely more heavily on data, automation, and digital tools.

China is expected to record one of the largest increases in spending. Manufacturing technology investment there is forecast to climb about 53%, from USD $52.7 billion in 2024 to USD $80.4 billion in 2030, representing a compound annual growth rate of 7.3%.

Forrester links the rise to China's shift towards more profitable and technology-intensive sectors, including semiconductors and electronics. It also points to a declining working population, with automation, AI adoption, and capital deepening seen as central to lifting revenue per worker and maintaining competitiveness.

Japan and South Korea are also expected to increase spending over the period. Japan's manufacturing technology spending is forecast to rise about 28%, from USD $31.8 billion in 2024 to USD $40.6 billion in 2030, while South Korea's is projected to increase about 26%, from USD $12.5 billion to USD $15.8 billion.

In Japan, the report points to high electricity costs, a weaker yen, and an ageing workforce as pressures behind technology investment. In South Korea, the manufacturing-intensive economy is driving demand for systems that cut downtime, improve efficiency, and support more advanced production.

Workforce strain

The report also highlights diverging but persistent labour pressures across the region. China's manufacturing workforce is forecast to decline from 211.3 million in 2024 to 207.6 million in 2030, while Japan's is expected to fall from about 10.1 million to 9.8 million over the same period.

These trends are strengthening the case for automation and AI in factory settings while also creating demand for more skilled roles in advanced production, data analysis, clean technology, and supply chain management. Manufacturers will need structured upskilling programmes so workers can use AI safely and effectively in operational environments where mistakes can disrupt output.

"Asia Pacific remains the center of global manufacturing, but the basis of competition is changing. As workforce growth slows across major economies, manufacturers are increasingly turning to software, AI, robotics, and advanced automation to drive productivity and support higher-value production. The most successful manufacturers will not simply automate existing processes. They will build intelligent, software-defined operations that can continuously adapt to changing customer demand, supply chain conditions, and geopolitical uncertainty. The ability to combine AI with operational data at scale will become a defining differentiator for manufacturing leaders across the region," said George Lawrie, Vice President, Principal Analyst, Forrester.