KPMG: AI is Already Delivering Value in Manufacturing

Nearly half of industrial manufacturing leaders say active AI use cases are already delivering business value, according to a new report from KPMG. 

This is significantly higher than the cross sector average of 28%. 

A majority reported unreliable data as a top AI risk and 48% plan to significantly increase cybersecurity investment in the next 12 months. 

Jonathon Gill, Global Head of Industrial Markets & Aerospace at KPMG International, says in the report: "Industrial manufacturers globally are accelerating technology investment while realigning business models to address shifting global dynamics.

"In markets where financial strategies and industrial strategies are aligning, we see some significant strides — as for example in the US where a whole new industry has effectively been erected around semiconductor production."

KPMG's Global Tech Report 2026 – Industrial Manufacturing draws on insights from 258 industrial manufacturing leaders across 22 countries and territories. 

The ROI of tech investment

Advanced technology will drive future competitive advantage, 87% of leaders agreed. Half are already reporting significant financial gains. 

A majority also reported that technology frequently or very frequently improves the value generated from investments. 

Adoption rates are rising across AI, cybersecurity, post-quantum cryptography and data analytics compared with 2024.

The aerospace and defence and metals and advanced materials sub-sectors are leading this growth. 

AI integration

AI is delivering business value according to 49% of leaders. 

Planned upgrades to production and R&D technologies over the next two years include predictive quality control, downtime reduction and generative AI for product customisation. 

Other growing uses include predictive maintenance, supplier negotiation and commodity forecasting. 

A centralised approach to AI governance is the choice for 70% of leaders surveyed, with the IT function leading implementation efforts. 

Cross-enterprise collaboration was also recognised as important. IT, security and risk teams are already working closely, 87% of leaders said. 

The risks of AI

Despite the excitement surrounding AI, the report says that poor data foundations threaten to derail progress.

While 83% of executives believe their organisation is building strong AI data foundations, 76% cite insufficiently reliable data among the top expected AI risks over the next two years.

AI can also pose risks to cybersecurity, allowing for potential automation, scaling and acceleration of attacks. 

Nearly half are planning for significant budget increases for cyber defences in the next 12 months and cybersecurity as a whole was cited as one of the biggest benefits of investment in technology.

Equipping humans for AI

A significant majority, 89%, of executives agree that managing AI agents will become an important workplace skill in the next five years.

However, 34% of leaders acknowledge that some employees are feeling left behind by the rapidly changing technology landscape.

Traditional KPIs will no longer suffice for tracking AI performance, 59% said. 

Many reported planning to move to a hybrid of human and digital workforce and 81% said their talent acquisition strategy includes AI-native roles. 

Beyond AI

While AI dominates headlines, manufacturers are combining it with a broader ecosystem of emerging technologies.

Organisations are adopting tools like digital twins, edge computing and software-driven automation.

These tools are expected to help address larger macroeconomic and demographic hurdles.

KPMG says many of these technologies hold the greatest potential when implemented alongside AI, generating predictive insights and process enhancements.