While Asia-Pacific (APAC) organisations are increasing investment in AI and Industry 4.0 capabilities, many overestimate their actual maturity and struggle with fundamental challenges in holistic adoption.
This stark disconnect highlights a pressing opportunity: With the right focus, many enterprises can turn ambition into action and accelerate their journey from Industry 4.0 towards Industry 5.0.
This is from a study commissioned by IBM and conducted by tech research firm Ecosystm in March 2025, the study provides comprehensive insights into challenges and opportunities of Industry 4.0 adoption in the region, covering countries including China, India, South Korea, ASEAN, and Australia.
The report showed that many enterprises have invested early in digital tools, especially in areas such as design and supply chain. However, to unlock true value, they now need end-to-end visibility, stronger coordination, and a more AI-driven digital backbone.
Although 85% of respondents rated themselves as “Data-Driven” or “AI-First,” the study’s objective assessment found only 11% were in higher-maturity stages (9% Data-Driven; 2% AI-First).
This gap suggests that strategic investments could be misaligned if leaders overestimate their level of maturity, potentially leading to missed bottlenecks and stalled progress in their transformation efforts.
Key barriers include strategic misalignment. Only 10% of organisations have a fully embedded Industry 4.0 strategy, while 70% have strategies without execution, siloed plans, or isolated pilots, risking fragmented and ineffective progress.
There are also blind spots that involve people and adoption, with 19% worrying about employee resistance, and only 26% run formal upskilling or change-management programs, leaving only 16% confident in their in-house expertise. Without focused investment in capability development and engagement, AI pilots risk stalling.
Further, there is siloed executionl. Around 67% pursue ad hoc, department-level use cases, and 73% lack mechanisms for cross-team knowledge sharing, hampering collaboration and innovation. This decentralised approach hinders collaboration and slows the pace of innovation.
Moreover, there is slow core modernisation. Only 40% have broadly adopted predictive maintenance, and just 37% enjoy real-time supply-chain visibility, exposing organisations to downtime and disruptions.
In addition, there is limited AI integration. Although 63% focus AI on isolated processes, only 10% treat AI/ML as a strategic pillar, leaving end-to-end, intelligent operations largely unrealised.
Looking ahead, moving from Industry 4.0 to Industry 5.0—where human-centricity, sustainability, and resilience become core—remains a major hurdle.
Only 23% of organisations have customer feedback loops that inform strategic decisions in functions like Product Design and Operations.
Aoso, 28% have invested in real-time sustainability tracking, and only a quarter of those can measure and report progress effectively.
Cyber-resilience readiness is narrowly focused. Half (50%) of organisations rely solely on basic controls (firewalls and endpoint security), with limited adoption of advanced practices such as vendor-risk assessment, SIEM or AI-driven governance.
Despite the challenges, the whitepaper highlights several leading examples of Industry 4.0 in practice.
Dongjin Semichem (South Korea) is implementing a secure, on-premises GenAI platform called ASK, powered by IBM watsonx.ai, to accelerate AI-driven decision-making across R&D and operations.
SMART Modular Technologies (Malaysia) is leveraging IBM Maximo Visual Inspection to automate quality assurance, enabling speed and precision in high-stakes manufacturing.
Volkswagen FAW Engine (China) is demonstrating the impact of structured, data-led leadership, achieving a 40% reduction in lead times through 5G integration, AI, and autonomous robotics.
“With strong national strategies, active public-private collaboration, and a willingness to experiment, the region continues to advance through rapid innovation and real-world deployment,” said Ong Tun Kim, general manager of IBM Manufacturing Solutions. “The winners will be those who establish secure, adaptable digital foundations, and those who empower their people to turn bold ideas into action.”
