Firms embrace physical AI but struggle to scale, report says

Capgemini finds 76% engagement, MOM data shows most firms still early-stage users.

About 76% of organisations in Singapore are already engaging with physical artificial intelligence (AI), with 21% in early real-world use and 15% in scale deployment, according to a report by the Capgemini Research Institute.

In the report Physical AI: Taking human-robot collaboration to the next level, fCapgemini found that Singapore’s adoption is broadly in line with regional peers, but with a different set of constraints compared with other markets.

Integration challenges were cited by 28% of respondents in Singapore, below the global average of 47%, whilst 21% pointed to data infrastructure gaps versus 43% globally.

Cybersecurity and governance-related concerns were more prominent. About 67% of respondents cited cybersecurity risks, compared with 53% globally, whilst 33% flagged sovereignty concerns versus 16% globally.

Across Asia-Pacific, adoption is highest in South Korea and Japan at 84%, followed by China at 82%, Australia at 80%, and Singapore at 76%. Around 15% of APAC organisations reported deploying physical AI at scale, compared with 11% globally.

The report also found that 79% of organisations globally are engaging with physical AI, with two-thirds ranking it as a high priority over the next three to five years.

Pascal Brier, Chief Innovation Officer at Capgemini and Member of the Group Executive Committee, said physical AI reflects a shift in how systems operate, from describing the world to acting within it.

In Singapore, broader AI adoption patterns show a similar early-stage trajectory across the wider economy. According to the Ministry of Manpower’s (MOM) inaugural report on AI adoption, 71.5% of firms have yet to adopt AI, whilst 28.5% have started.

Amongst firms using AI, 70.7% reported productivity gains, whilst 13.3% reported better decision-making and 11.9% saw improvements in innovation. However, only 3.8% of firms have integrated AI into core processes, with most still in planning or pilot stages.

The MOM report also found that adoption remains uneven by firm size and sector. Larger firms reported higher adoption rates and deeper integration, whilst digitally intensive sectors such as information and communications, professional services, and financial and insurance services led uptake.

Barriers to adoption included high implementation costs (44.9%) and lack of in-house expertise (42.4%), particularly amongst smaller firms, whilst larger firms cited integration complexity and data security concerns.

The report noted that across sectors, interest in physical AI is driven largely by workforce constraints and operational efficiency needs, with robotics applications expected to expand in logistics, manufacturing, and inspection use cases.