The Smart Factory Market is expected to reach $245.2 billion by 2030, at a CAGR of 15.5% during the forecast period 2023 to 2030. The growth of this market is driven by the benefits of cloud-based smart factory solutions & services, increasing investments in Industry 4.0, and the growing adoption of robots in the manufacturing sector. However, high capital & operating expenses restrain the growth of the smart factory market. The implementation of smart factory in developing countries and technological advancements in industrial sensors are expected to create market growth opportunities. However, privacy, data security, and confidentiality concerns are major challenges for the players operating in this market. Additionally, the incorporation of IIoT, digital twins, and robotic process automation in smart factory and the proliferation of smart technologies for pharmaceutical manufacturing are prominent trends in the smart factory market.
The Impact of COVID-19 on the Smart Factory Market
The COVID-19 lockdowns severely impacted the manufacturing sector. Industries such as automotive, transportation, aerospace & defense, oil & gas, and energy & power witnessed a sharp decline in revenues. However, industries such as FMCG, packaged consumer goods, consumer electronics, medical equipment, food & beverage, and pharmaceuticals witnessed a boost in demand. Whether factory were increasing capacities or adjusting production in response to the demand, these changes had a major impact on equipment performance, maintenance schedules and practices, and the ability to meet the demand in a timely manner—especially in the case of medical equipment production, where demand skyrocketed at the peak of the pandemic.
The COVID-19 pandemic compelled the manufacturing industry to reduce its dependency on manual labor and adopt advanced technologies such as AI, machine learning, and IoT. Thus, there was significant growth in the adoption of smart manufacturing technologies among various industries. With smart manufacturing, factory observed improved productivity, higher quality, near-zero design errors, improved energy efficiency, leaner processes, flexibility in production scale, increased agility, improved predictability, and enhanced process monitoring. These benefits drove the adoption of smart technologies and smart factory solutions such as industrial robotics & automation systems, ASRS, AMHS, and industrial asset management solutions globally.
Smart manufacturing improved factory' productivity. It also facilitated remote factory monitoring with greater efficiency. It provided manufacturing units with the much-required flexibility to change product designs and quickly adapt to new processes as per clients’ demands. Digital twin technology drastically reduced the cost of designing products in a single go. It also offered benefits such as accelerated risk assessment and production time, improved OEE through reduced downtime and improved performance, reduced risk in areas such as product availability and marketplace reputation, new business opportunities such as mass customization, mixed manufacturing, small-batch manufacturing, improved product quality, and real-time insights into the performance of products in multiple applications and environments.
Leading smart factory solutions providers are focused on launching advanced offerings. For instance:
- In January 2022, Emerson Electric Co. (U.S.) launched its PACSystems Edge Solutions, a new portfolio of turnkey industrial edge hardware and software solutions. These solutions enable OEMs and end users to rapidly configure and implement advanced edge computing, visualization, and IIoT technology.
- In October 2021, ABB Ltd. (Switzerland) launched its ABB Ability Genix Asset Performance Management Suite. The Genix Asset Performance Management Suite brings next-generation AI-based predictive maintenance, asset reliability, and integrity insights to process and utility industries.
Smart factory solutions & services providers plan to move forward and capitalize on the lucrative growth opportunities that have resulted from the outbreak of the COVID-19 pandemic. The smart factory market is projected to transform drastically over the coming years.
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Increasing Investments in Industry 4.0 to Fuel Market Growth
The fourth industrial revolution, or Industry 4.0, has transformed the manufacturing sector with increased productivity, improved efficiency, increased knowledge sharing & collaborative working capabilities, flexibility, agility, and reductions in production costs. These factors have encouraged public & private sector players to invest in transforming their manufacturing facilities. Industry 4.0 has increased the use of digital technologies, such as automation, data analytics, and IIoT, transforming countries, production systems, and how goods and services are delivered to markets.
In March 2022, the World Economic Forum announced adding 13 new sites to its Global Lighthouse Network, a community of 103 world-leading manufacturing facilities and value chains using Fourth Industrial Revolution technologies to increase operational performance and environmental sustainability. Approximately 66% of the lighthouse companies in this network, including Janssen-Cilag SpA (Italy), Sanofi (France), BOE Technology Group (China), Schneider Electric SE (France), and Unilever (India), made sustainability improvements by reducing consumption, resource waste, and carbon emissions, increasing productivity by 82%.
In September 2021, the Indian government approved the PLI scheme worth INR 26,058 crores (USD 3.53 billion) for the automotive and drone industries to boost India’s manufacturing capabilities. According to the Department for Promotion of Industry and Internal Trade (DPIIT), India received a total foreign direct investment (FDI) of USD 58.77 billion in FY 2021–2022. Also, in 2021, the U.S. announced plans to invest around USD 6.0 million in AI research & development projects. Europe is expected to increase its spending on AI by 33% between 2020 and 2023.
Such investments in Industry 4.0 are expected to support the growth of the smart factory market.
Key Findings in the Smart Factory Market Study:
Based on Component, the Solutions Segment is Projected to Register the Highest CAGR
Based on component, the solutions segment is projected to register the highest CAGR during the forecast period. The increasing proliferation of smart factory solutions in discrete manufacturing, the increasing need to automate factory production with smart factory software, and the rising popularity of connected factory solutions are expected to drive the growth of this segment.
Based on Sector, the Pharmaceuticals Segment is Projected to Register the Highest CAGR
Based on sector, the pharmaceuticals segment is projected to register the highest CAGR during the forecast period. The rising need to adopt cost-control measures in the healthcare sector, the increasing adoption of digital technologies in medical device manufacturing operations, and the need to ensure the safety and security of the supply chain are expected to support the growth of this segment.
Asia-Pacific: The Fastest-growing Regional Market
Asia-Pacific is projected to register the highest CAGR during the forecast period. There has been rapid growth in smart factory due to growing economies in the region, such as India, China, and Indonesia. The rapid growth of this regional market is driven by the increasing adoption of smart manufacturing solutions in the region, the increasing adoption of industrial robots, the advent of Industry 4.0, the growing adoption of cloud-based smart manufacturing solutions, the growing presence of well-established players operating in the region, and the increasing demand for IIoT & connected systems among regional automotive industries.
Key Players
The report includes a competitive landscape based on an extensive assessment of the key strategic developments of the leading players in the smart factory industry during 2020–2023. The key players operating in the smart factory market are ABB Ltd (Switzerland), Emerson Electric Co. (U.S.), Rockwell Automation, Inc. (U.S.), General Electric Company (U.S.), Mitsubishi Electric Corporation (Japan), Siemens AG (Germany), Honeywell International Inc. (U.S.), Yokogawa Electric Corporation (Japan), Schneider Electric SE (France), Endress+Hauser Group Services AG (Switzerland), SAP SE (Germany), Oracle Corporation (U.S.), International Business Machines Corporation (U.S.), Cisco Systems, Inc. (U.S.), Microsoft Corporation (U.S.), and Ubisense Ltd. (U.K.).
Scope of the Report:
Smart Factory Market, by Component
- Solutions
- Industrial Sensors
- Industrial Automation & Control Systems/Plant-level Controls
- SCADA (Supervisory Control and Data Acquisition)
- Distributed Control Systems (DCS)
- Programmable Logic Controllers (PLC)
- Other Plant-level Controls
- Industrial Robots
- Articulated Robots
- Cartesian Robots
- SCARA (Selective Compliance Articulated Robot Arm)
- Autonomous Mobile Robots
- Other Industrial Robots
- Machine Vision Systems
- Cameras
- Optics & LED Lighting
- Enterprise-level Controls
- Product Lifecycle Management (PLM)
- Enterprise Resource Planning (ERP)
- Manufacturing Execution Systems (MES)
- Asset Performance Management Solutions
- Industrial Safety Systems
- Other Smart Factory Solutions
- Services
- Professional Services
- Managed Services
- Technologies
- Cloud Computing & Storage
- Industrial Cybersecurity
- Augmented Reality/Virtual Reality (AR/VR)
- Digital Twin
- Artificial Intelligence
- Blockchain
- Other Technologies
Smart Factory Market, by Sector
- Automotive
- Heavy Machinery & Tools
- Electronics & Semiconductors
- Aerospace & Defense
- FMCG
- Medical Devices
- Food & Beverage
- Pharmaceuticals
- Paints & Chemicals
- Oil & Gas
- Metals & Mining
- Energy & Power
- Pulp & Paper
- Other Sectors
Smart Factory Market, by Geography
- North America
- Europe
- Germany
- U.K.
- France
- Italy
- Spain
- Rest of Europe
- Asia-Pacific
- China
- India
- Japan
- South Korea
- Rest of Asia-Pacific
- Latin America
- Mexico
- Brazil
- Rest of Latin America
- Middle East & Africa
- UAE
- Israel
- Rest of Middle East & Africa
Key Questions Answered in the Report: