Artificial Intelligence (AI) in Manufacturing Market Size - By Component, By Deployment Model, By Technology, By Application, By End Use, Growth Forecast, 2025 - 2034

AI in Manufacturing Market Size

The global artificial intelligence in manufacturing market size was valued at USD 4.2 billion in 2024 and is estimated to register a CAGR of 31.2% between 2025 and 2034. The growing demand for automation in the manufacturing industry is key drivers for AI adoption. With the need to increase efficiency, reduce operational costs, and improve production rates, manufacturers are leveraging AI to automate processes such as production line monitoring, quality control, and inventory management.
 

For instance, in December 2023, Mitsubishi Electric India launched smart manufacturing facility for advanced factory automation systems in India. This manufacturing facility is driven by the best industry practices to deliver the product of the highest quality and reliability. Furthermore, advancements in AI hardware and software make AI-driven solutions more accessible to both large and SME businesses in the manufacturing industry.

Governments across the world are prioritizing AI research and development to enhance the competitiveness of their manufacturing industries. Governments are introducing funding programs, tax incentives, and regulations to encourage the integration of AI technologies into manufacturing processes. These initiatives aim to improve productivity, reduce operational costs, and boost innovation across industrial sectors.
 

For instance, in October 2024, Biden-Harris Administration invested up to USD 100 million to accelerate AI technologies for sustainable semiconductor materials. This support plays a crucial role in overcoming the barriers to AI adoption, such as high costs and a lack of skilled workforce, making AI solutions more accessible to manufacturers of all sizes.
 

AI in Manufacturing Market Trends

• Technological advancements in machine learning (ML) and artificial intelligence (AI) are significantly driving the artificial intelligence in manufacturing market growth. The continuous development of deep learning algorithms, reinforcement learning, and neural networks enhances the capabilities of AI systems in analyzing large datasets and making real-time decisions.
   
• Moreover, the evolution of edge computing and AI chips has allowed manufacturers to deploy AI applications on the production floor without relying solely on centralized cloud systems. According to GMI, the edge computing market size was valued at USD 13.4 billion in 2023 and is estimated to register a CAGR of over 28% between 2024 and 2032.
   
• This shift in AI deployment enhances operational speed, reduces latency, and allows real-time decision-making. The availability of advanced AI tools, coupled with increased computing power, makes AI more accessible and practical for manufacturers across various industries.
   
• AI systems often require access to sensitive data, including intellectual property, employee information, and production data, which can make them vulnerable to cybersecurity threats. According to Statista, in 2022, Approximately 80 percent of manufacturing companies in the U.S. expect a cyber-attack, compared to 64 percent in 2018.
   
• A breach in AI system security can lead to significant financial losses, data theft, and damage to a company’s reputation. Furthermore, ethical issues regarding the use of AI, such as biases in algorithms or the displacement of human workers, can result in resistance from employees, customers, or regulatory bodies.
   
• Manufacturers must ensure that AI systems are transparent, fair, and secure to mitigate these risks. They also need to address concerns around job displacement and retraining, ensuring that AI adoption does not lead to negative social impacts.
   

AI in Manufacturing Market Analysis

• Based on component, the artificial intelligence in manufacturing market is divided into hardware, software, and service. In 2024, the hardware segment held a market share of over 55% and is expected to cross USD 32 billion by 2034.
   
• The hardware segment growth is driven by the increasing demand for high-performance computing systems. AI applications in manufacturing, such as predictive maintenance, industrial robotics, and quality control, require powerful hardware solutions to process large volumes of data in real time.
   
• Advanced hardware is essential for supporting machine learning and deep learning algorithms. As manufacturers look to integrate AI into their operations, the demand for more efficient, faster, and reliable hardware solutions continues to rise.
   
• Additionally, innovations in hardware that enable faster data processing and improve system efficiency contribute to better automation, increased productivity, and optimized decision-making.
   
• For instance, in September 2023, Intel introduced next-generation AI solutions with the launch of Xeon 6 and Gaudi 3. The Xeon 6 is designed to handle compute-intensive workloads with exceptional efficiency. Also, Gaudi 3 AI accelerators offer up to 20 percent more throughput and 2x price/performance vs H100 for inference of LLaMa 2 70B.
   

• Based on deployment model, the artificial intelligence in manufacturing market is categorized into on-premises and cloud. The cloud segment held a market share of around 43% in 2024. Cloud platforms enable manufacturers to access advanced AI tools and resources without heavy upfront investments in on-premise infrastructure.
   
• As more companies embrace digital transformation, the demand for cloud solutions is expected to grow, providing manufacturers with a competitive edge. The flexibility, scalability, and reduced operational costs associated with cloud deployment continue to accelerate its adoption in the sector.
   
• Furthermore, cloud deployment offers enhanced data storage and processing capabilities, which is critical for AI systems that require large datasets for training algorithms. Cloud-based solutions also facilitate real-time collaboration and data sharing between manufacturing units, suppliers, and customers, improving decision-making and efficiency.
   

• Based on technology, the AI in manufacturing market is segmented into machine learning, computer vision, natural language processing, and context-aware computing. The machine learning segment dominated the market and is expected to hold around USD 19 billion revenue by 2034.
   

• Machine learning segment growth is its ability to enable advanced data-driven decision-making and automation. Machine learning algorithms can analyze vast amounts of data generated during manufacturing processes, identify patterns, and make predictions, improving efficiency and productivity.
   
• Additionally, machine learning algorithms can be applied to quality control, enabling manufacturers to detect defects in products with high accuracy, leading to fewer production errors and waste.
   
• The growing adoption of IoT devices and sensors in factories is also fueling the need for ML to process and analyze the data they generate, further driving growth in the AI-powered manufacturing market.
   
• For instance, according to Statista, the manufacturing sector will have approximately 198.7 million IoT-connected devices by 2030, with the number of connected devices in this sector expected to continue growing.
   

• Based on application, the artificial intelligence in manufacturing market is divided into quality management, predictive maintenance, inventory management, energy management, industrial robotics, and others. The predictive maintenance segment dominated the market with around 25% AI in manufacturing market share in 2024.
   

• Predictive maintenance leverages AI and machine learning algorithms to monitor and analyze equipment performance in real-time. By identifying potential failures before they occur, manufacturers can schedule maintenance only when necessary, avoiding unnecessary downtime and reducing maintenance costs.
   
• As industries continue to push for higher productivity, minimizing disruptions in production lines becomes critical. Predictive maintenance systems also contribute to extending the lifespan of equipment and reducing unexpected breakdowns.
   
• Moreover, with industries increasingly adopting the IoT and smart sensors, the integration of real-time data into predictive maintenance applications is becoming more viable and effective. For instance, according to GMI, smart sensor market size was valued at over USD 45.4 billion in 2022 and is anticipated to grow at a CAGR of over 15.7% between 2023 and 2032.
   

• U.S. dominated the North America artificial intelligence in manufacturing market with a major share of around 75% in 2024. The U.S. market is expected to grow due to the strong government support for smart manufacturing initiatives.
   
• The U.S. government has launched several programs to encourage the adoption of AI and advanced technologies in manufacturing. These initiatives aim to modernize the manufacturing sector through automation, AI, and digital technologies to enhance productivity, efficiency, and competitiveness.
   
• For instance, in September 2023, U.S. government and eight companies launched the partnership for global inclusivity on AI. This partnership brings together the Department of State, Amazon, Anthropic, Google, IBM, Meta, Microsoft, Nvidia, and OpenAI.  Together they committed more than USD 100 million leveraging their combined expertise, resources, and networks to unlock AI’s potential. 
   

The increasing focus on reshoring production and creating more resilient supply chains further fuels the demand for AI solutions in the industry. AI technologies, such as machine learning and predictive maintenance, are seen as critical to improving operational efficiency and reducing costs. 

The AI in manufacturing market in the UK is expected to experience significant and promising growth from 2025 to 2034.
 

• A key growth driver for the UK market is the government's commitment to boosting Industry 4.0 technologies through its "Made Smarter" initiative. This program focuses on integrating digital technologies, including AI, into manufacturing processes to improve productivity, reduce waste, and increase competitiveness in global markets.
   
• Additionally, the UK’s robust manufacturing sector, including automotive, aerospace, and pharmaceuticals, is increasingly integrating AI solutions to optimize supply chains, enhance product quality, and enable predictive maintenance.
   
• The growing demand for automation and digital transformation in manufacturing, coupled with the government’s support, is fueling the rapid growth of AI adoption in the UK manufacturing sector.
   

The artificial intelligence (AI) in manufacturing market in China is anticipated to witness lucrative growth between 2025 to 2034.
 

• The Chinese government has set ambitious goals through its "Made in China 2025" initiative, which emphasizes the modernization and digitalization of its manufacturing industries. AI is at the forefront of this transformation, with a strong push toward integrating machine learning, automation, and data analytics into production processes.
   
• Additionally, in March 2024, China launched an "AI Plus" initiative to promote the innovative development of digital economy. This initiative aims to deepen the connection between AI and various industries. This involves boosting research in practical AI applications, encouraging businesses to adopt AI.
   
• The rapid industrialization and expansion of industries such as electronics, automotive, and consumer goods are driving demand for AI-powered solutions that optimize production efficiency, enhance product quality, and streamline supply chain management.
   
• Additionally, China’s vast manufacturing base, combined with its growing emphasis on sustainability and energy efficiency, is accelerating the adoption of AI in manufacturing.
   

AI in Manufacturing Market Share

IBM and Microsoft hold a market share of around 15% in the AI in manufacturing industry. IBM is focusing on advancing its AI-powered solutions through its IBM Watson platform, which is tailored for industries such as manufacturing. IBM leverages deep industry expertise to offer predictive maintenance, process optimization, and automation solutions. The company is also investing heavily in partnerships and acquisitions to expand its AI capabilities, such as its acquisition of The Weather Company, which aids in data-driven decision-making for manufacturers.
 

By offering cloud-based services, Microsoft facilitates seamless integration of AI tools into manufacturing workflows, driving digital transformation. Through strategic partnerships with leading manufacturers and a strong focus on AI-driven data analytics, Microsoft is enhancing its presence in the AI in manufacturing industry. Both companies are also heavily investing in research and development to innovate cutting-edge AI solutions.
 

AI in Manufacturing Market Companies

Major players operating in AI in manufacturing industry include:

• AWS
• GE
• Google
• IBM
• Intel
• Microsoft
• Nvidia
• Rockwell
• SAP
• Siemens

AI in Manufacturing Industry News

• In November 2024, GFT Technologies announced a partnership with NVIDIA to deliver advanced AI solutions to the manufacturing industry. This collaboration leverages GFT’s expertise in digitizing manufacturing processes alongside NVIDIA’s AI software tools and accelerated computing platform for generative AI, aiming to foster greater innovation and efficiency in the sector.
   
• In September 2024, Aizon introduced Aizon Execute, an innovative Electronic Batch Record (eBR) software. This new product is developed in partnership with Euroapi, a global leader in API manufacturing. The collaboration aims to digitize operations, moving toward more data-driven manufacturing processes.
   
• In October 2024, Lenovo launched a comprehensive new hybrid AI portfolio at Global Tech World Event. Lenovo showcased portfolio of AI solutions, services, and devices that delivers transformation and tangible return on investment to several industries.
   
• In April 2024, Microsoft unveiled new industrial AI innovations, extending from the cloud to the factory floor. These advancements offer manufacturers the opportunity to improve time-to-value, strengthen operational resilience, optimize factory and production costs, and achieve consistent, repeatable results.
   

The artificial intelligence in manufacturing market research report includes in-depth coverage of the industry with estimates & forecast in terms of revenue ($Bn) and from 2021 to 2034, for the following segments:

Click here to Buy Section of this Report

Market, By Component

• Hardware       
  • Processors
    • Central Processing Units (CPU)
    • Graphics Processing Units (GPU)
    • Field Programmable Gate Arrays (FPGA)
    • Application Specific Integrated Circuits (ASIC)
    • Tensor Processing Units (TPU)
  • Memory & storage
  • Networking hardware
• Software        
• Services          
  • Professional service
  • Managed service

Market, By Deployment Model

• On-premise
• Cloud

Market, By Technology

• Machine learning
• Computer vision
• Natural language processing
• Context-aware computing

Market, By Application

• Quality management
• Predictive maintenance
• Inventory management
• Energy management
• Industrial robotics
• Others

Market, By End Use

• Automotive
• Electronics
• Pharmaceuticals
• Heavy machinery
• Food & beverage
• Aerospace & defense
• Others

• The above information is provided for the following regions and countries:

• North America
  • U.S.
  • Canada
• Europe
  • UK
  • Germany
  • France
  • Italy
  • Spain
  • Russia
  • Nordics
• Asia Pacific
  • China
  • India
  • Japan
  • Australia
  • South Korea
  • Southeast Asia
• Latin America
  • Brazil
  • Mexico
  • Argentina
• MEA
  • UAE
  • South Africa
  • Saudi Arabia