KUALA LUMPUR: A new study commissioned by IBM revealed that 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.
The report Apac AI-Driven Industry 4.0: Building Tomorrow’s Industries, assesses the readiness of large enterprises in the manufacturing and energy & utilities sectors across Apac. The report showed that many have invested early in digital tools, especially in areas such as design and supply chain. But 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.
> People and adoption blind spots: Just 19% worry about employee resistance, and only 26% run formal upskilling or change-management programmes, leaving only 16% confident in their in-house expertise. Without focused investment in capability development and engagement, AI pilots risk stalling.
> Siloed execution: 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.
> 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.
> 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; just 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: 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 and strengthening these areas will be essential to future-proof industrial transformation and build trust, adaptability, and long-term value.
Despite the challenges, the whitepaper highlights several leading examples of Industry 4.0 in practice:
> SMART Modular Technologies (Malaysia) is leveraging IBM Maximo Visual Inspection to automate quality assurance, enabling speed and precision in high-stakes manufacturing.
> 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.
> 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.
“Across Apac, the momentum for AI-driven transformation is undeniable, and Malaysia is rising as a key driver of that change. With strong government vision, private-sector collaboration, and a generation ready to innovate, the nation is poised to lead. Success will belong to those who empower their people, embrace collaboration, and build digital foundations ready for the next decade of growth, said IBM Malaysia country general manager and technology leader Dickson Woo.
To bridge the gap between ambition and reality – and set the stage for Industry 5.0 – organisations must adopt a holistic, strategic approach:
> Establish a value-driven tech strategy: Align technology adoption with measurable business outcomes and ROI.
> Leverage core tech for cross-functional impact: Start by strengthening core platforms to enable end-to-end visibility and knowledge sharing.
> Treat data as a strategic asset: Break down silos and integrate cross-functional data to build an AI-ready foundation that powers enterprise-wide insights.
> Prepare for rapid technology integration: Develop agile approaches to integrate new technologies efficiently with existing infrastructure.
> Embed Industry 5.0 thinking today: Centre transformation on human-centricity, sustainability, and resilience to build a future-ready enterprise.
The report highlights the vital role of cutting-edge technologies in advancing Malaysia’s Industry 4.0 goals.
Reflecting this, the Malaysia Semiconductor Industry Association (MSIA) points to strong industry collaboration as key to accelerating AI, automation, and smart tech adoption – cementing Malaysia’s position as a high-tech manufacturing hub.
“Malaysia is charging ahead in the Industry 4.0 revolution, with the semiconductor sector at the forefront. Powered by data, automation, and AI, we’re unlocking speed, precision, and innovation like never before, transforming manufacturing and redefining what’s possible across the value chain. This is our moment. With bold innovators, agile manufacturers, visionary policymakers, and committed industry leaders like MSIA, we’re shaping Malaysia into a global E&E powerhouse. The future isn’t coming; we’re defining and shaping it now,” said MSIA director of technology Duncan Lee.
