Physical AI may transform various industries as integration picks up

PHYSICAL artificial intelligence (PAI) is expected to transform various industries and boost their competitive advantage, professional services company Deloitte said.

In a new paper, Deloitte said physical AI, or the merger of physical systems with AI, is now shifting towards large-scale deployment from experimentation, although the level of integration remains low among enterprises.

“Physical AI marks the moment when intelligence moves off the screen and into the real world, transforming factories into learning systems that sense, decide and improve continuously. Organizations that are acting now will shape the operating models, skills and standards that define industrial leadership for the next decade,” said Chris Lewin, Deloitte Asia Pacific AI lead.

The company said just 5% of firms say physical AI is already transforming their operations, but 41% expect it will within three years.

“The gap between current impact and future expectations and the fact that only 3% of firms have PAI extensively integrated into operations today, a figure forecast to reach 18% within two years, highlights the urgency for early movers to build the capabilities that will define their operational edge and organizational learning underpinning their competitive advantage over the next decade,” Deloitte said.

The paper showed that industrial robotics has become the “proving ground” or test bed for physical AI.

“Business leaders around the world are now looking seriously at how to integrate PAI into their operations. Over 500,000 industrial robots were deployed in 2024, with annual installations forecast to reach 700,000 by 2028, and collaborative robots comprising a growing share at almost 65,000 installations in 2024,” Deloitte said.

“PAI is not simply a technology installation but a capability requiring disciplined operations and organizational learning. Leadership will depend on the ability to align operational maturity with technology readiness.”

Deloitte expects physical AI adoption to be the highest in the consumer and life sciences and healthcare sectors (22% apiece); technology, media and telecommunications (18%); and energy, resources and industrials (16%).

However, the main barriers to adoption are cost and resource requirements (41%), challenges identifying use cases (36%), talent and skills gaps (33%), and technology or data availability (31%).

“There are internal readiness factors that determine how effectively businesses can deploy and scale any PAI solution, today or tomorrow and critically, they are in the organization’s control. Successful PAI implementation is as much about adapting as it is adopting,” Mr. Lewin said.

Deloitte said technology application maturity determines what is possible, while operational maturity determines what is executable.

“[E]ven the most sophisticated PAI system will deliver little value if deployed into an organization lacking the foundational discipline, flow, and human architecture to absorb it. The cost of moving too slowly is not just missed efficiency, but the loss of the organizational learning that comes from being an early mover.” — Bettina V. Roc