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Asia/Pacific IoT Spending Soars to $277.5 Billion in 2023

The bulk of the investment is fueled by 5G infrastructure, demand for remote operations, and digital transformation of supply chains.

The Asia-Pacific region will spend $277.5B on IoT by the end of 2023.
Creator: nmlfd | Credit: Getty Images

TOKYO, JP – A new report from IDC highlights a multitude of factors propelling this growth, including the rising demand for remote operations, enhanced supply chain efficiency, deployment of commercial 5G infrastructure, and the continuous expansion of the digital footprint across the region.

The ongoing digital revolution and the adoption of cutting-edge technologies are driving enterprises across Asia/Pacific to embrace IoT solutions to optimize their operations and enhance customer experiences. According to IDC's projections, this upward trajectory is set to continue, with IoT investments forecasted to reach an impressive $435 billion by 2027. This reflects a compound annual growth rate (CAGR) of 11.7% between 2023 and 2027.

IoT Spending Report

Bill Rojas, Adjunct Research Director for IDC Asia/Pacific, highlights the pivotal role of IoT connectivity technologies, both fixed and wireless, in catalyzing IoT adoption. Rojas anticipates the introduction of power-saving IoT devices integrated with 5G's Machine Type Communications technologies, such as the innovative 5G Reduced Capacity (RedCap). This advancement is poised to gradually replace older LTE Cat 3/4 devices, resulting in a proliferation of video-enabled endpoints and advanced analytics capabilities.

Moreover, the report points to the emergence of 5G Non-Terrestrial Network satellite connectivity, which is expected to extend the IoT's reach to remote and underserved areas. This development holds immense potential for various sectors, including disaster recovery, oil & gas, mining, and resource monitoring.

IoT applications are widespread and diverse, with sectors like manufacturing, transportation, and utilities harnessing the power of 5G-enabled mobile private networks. These networks leverage mid-band and mmWave IoT device connectivity, enabling high-quality video streaming and ultra-low latency for tasks like automated mobile robotics.

State and local government entities, as well as professional services, are among the leading industries making substantial IoT investments. The potential to enhance the quality, efficiency, and customer experiences associated with their products and services serve as the driving force behind their commitment to IoT adoption.

Growth Patterns

The report further underscores that Discrete and Process Manufacturing will lead IoT investments in 2023 and maintain this momentum throughout the forecast period. Manufacturing operations, production asset management, supply chain resilience, inventory intelligence, and public safety and emergency response are the top IoT use cases in terms of spending. These use cases align with the growth patterns observed in their respective industries.

Sharad Kotagi, Market Analyst at IDC IT Spending Guides, Customer Insights & Analysis, emphasizes the shift towards data-driven operations in the pursuit of specific business objectives and customer-centric solutions. The majority of enterprises, as per an IDC survey, are either collecting or planning to collect data types like biometric, video, and transactional data to achieve these goals.

IoT Hardware Market and Investment

From a technological perspective, the largest portion of IoT spending in 2023 is expected to be directed towards services, accounting for approximately 40% of the total. IT/OT convergence has prompted organizations to rely more heavily on system integrators and outsourcing partners. Meanwhile, the hardware market for IoT, including modules and sensors, will constitute the second-largest technology group.

Intriguingly, software is projected to be the fastest-growing technology category, with a five-year CAGR of 13%. This growth will primarily focus on application and analytics software purchases. Connectivity spending is also set to experience steady growth, with a CAGR of 7.6% during the forecast period, contributing 7.9% to total spending in 2027.

China Dominates IoT Spending

China (PRC) maintains its dominance in the region, accounting for over 60% of IoT spending in 2023, followed by South Korea and India. Countries like China, Singapore, and Hong Kong are poised for accelerated IoT spending growth due to the rapid advancement of Smart Factories, Industry 4.0 initiatives, and robust government-led IoT programs.

IDC's Worldwide Internet of Things Spending Guide (V1 2023) provides invaluable insights into IoT spending across various industries, technology categories, and use cases. This comprehensive guide equips technology stakeholders with a holistic understanding of IoT's myriad applications, necessitating diverse connectivity types to cater to differing latency, bandwidth, and data frequency requirements.



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