The fourth industrial revolution, or Industry 4.0, is reshaping the manufacturing sector. Industry 4.0 refers to the transformation of manufacturing processes to enhance efficiency and reduce costs, by integrating digital technologies like artificial intelligence (AI), robotics, and the Internet of Things (IoT). The Asia Pacific (APAC) region stands at the center of this transformation, leveraging its immense manufacturing capacity and rapid technological innovation.

The APAC region already accounts for over 50% of the world’s manufacturing value-added and 75% of its manufacturing labour force, giving it a massive foundation for growth. This transformation is built on several key technology pillars:

• Artificial Intelligence (AI): AI is transforming traditional manufacturing into smart processes powered by intelligent, data-driven systems. Valued at USD 54.0 billion in 2024, the APAC AI market is projected to reach over USD 279.0 billion by 2029, fueled by the rapid rollout of 5G and cloud infrastructure.
• Internet of Things (IoT): By creating interconnected "smart factories," IoT links machines and sensors to exchange real-time data. This market is valued at over USD 336.0 billion in 2024 and is projected to expand to USD 578.0 billion by 2029.
• Robotics: As robots become more intelligent and connected through AI and big data, their adoption is accelerating. The APAC robotics market was valued at USD 14.0 billion in 2024, and the need to offset rising labour costs and aging workforces will continue to spur its expansion.

Figure 1: APAC’s share of the global AI market

Source: Statista, October 2025
Notes: Market sizes are estimates based on the funding amount of AI companies.
North Asia includes Japan, Korea and Taiwan, SEA includes Indonesia, Malaysia, Philippines, Singapore, Thailand & Vietnam

Alongside its technological momentum, the APAC region is navigating a period of strategic realignment in global trade and technology flows, driven by evolving policy frameworks and corporate supply chain risk assessments.

In response to shifting regulatory environments and national security considerations, companies are reassessing the geographic concentration of critical technology supply chains. A good example of this is the semiconductor industry. APAC accounts for 60% of global chip sales, with Taiwan, South Korea, and China responsible for nearly 90% of advanced manufacturing. This concentration has prompted stakeholders across the value chain to prioritize supply chain diversification and resilience.

Multinational firms are adopting several key strategies to enhance operational agility:

• Supply chain diversification: Companies are expanding production beyond single geographies, directing investment toward emerging manufacturing hubs in Southeast Asia and India.
• Dual-track supply chains: Firms are developing parallel operational networks optimised for different regulatory environments, ensuring continuity and compliance while maintaining trade access to major markets.
• Market-specific product design: Businesses are tailoring product configurations to align with regional technical standards and sourcing requirements.

Figure 2: APAC’s share of the global semiconductor market

Source: Statista, October 2025
Note: Market size reflects semiconductor revenues at the manufacturer level across electronics applications

This strategic shift toward geographically diversified production footprints has profound implications for commercial real estate. As companies establish new manufacturing and assembly facilities in markets such as India, Malaysia, and Vietnam, demand is growing for efficient transportation networks and modern logistics infrastructure.

The result is a surge in demand for high-specification industrial and logistics properties—warehouses equipped with automation, connectivity, and sustainability features that align with Industry 4.0 standards. This convergence of technological advancement and supply chain restructuring is creating significant new opportunities for real estate investors and developers across the APAC region.

To read more on the forces driving the transformation of APAC manufacturing and the key growth industries to look out for, please read the latest JLL report: Growth industries in manufacturing.