Physical AI set to transform industrial operations: report

Deloitte’s latest report says that the combination of artificial intelligence with physical machines is quickly moving to widespread implementation across industries.

Deloitte’s paper, ‘Physical AI: The moment of acceleration’, outlines how Physical AI (PAI) is shifting from experimentation to large-scale deployment across a wide range of business sectors and applications. The report underscores why industrial robotics has become PAI’s proving ground, and how early adopters in manufacturing, logistics and related sectors are already building the foundations needed to scale intelligent systems across the value chain.

Today, just 5% of firms say PAI is transforming their organisation, yet 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 the organisational learning underpinning their competitive advantage over the next decade.

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. According to a Citi GPS report, there are currently around 405 million robots of all kinds in production globally, a figure projected to reach 1.3 billion by 2035. Increasingly, the number of these robots will be augmented with some form of PAI.

“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,” said Chris Lewin, Deloitte Asia Pacific AI Lead. “Organisations that are acting now will shape the operating models, skills and standards that define industrial leadership for the next decade.”

As PAI becomes more widely adopted and its value more tangible, its application will expand rapidly across sectors and value chains. Deloitte says its paper provides a structured, practical framework for business leaders navigating PAI adoption — where to start, how to sequence investment, and what organisational foundations must be in place for technology to deliver its potential.

To access the full report and learn more about the findings, click here.

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