Market Overview

In factories for many industries in Japan, IoT, cloud, and AI technologies are used for data collection and analysis, monitoring and maintenance management of production facilities and equipment, product appearance inspection, and locational information management of materials and transportation equipment, among other purposes. These implementations contribute to abnormality detection, fault surveillance, visualization of energy savings or consumption, next-generation quality assurance, advanced automation, and advanced work support for on-site workers.
This began with the initial embedding of telecommunications abilities (IoT features) in manufacturing equipment, production machinery, automated transport equipment, and products themselves since the latter half of the 2010s, which has gradually evolved into a system that collects and accumulates operational, image, locational, and various sensor data.

In FY2023, the market size for factory digitalization in Japan was estimated at 1,767.0 billion yen, 103.7% of the size of the previous fiscal year, based on the order values placed by user companies. This growth owed to the market's tailwind, as IT investments in factories resumed as planned after being suspended due to the pandemic. 

Noteworthy Topics

Shift of Manufacturing to Provide Services

Manufacturing business models are changing as sales of standalone products, which used to be the mainstream sales, have decreased. Packaged service models, (e.g., pay-as-you-go, subscriptions, value sharing, and post-business models) have become more common. These models include post-sales and maintenance support, and the provision of consumables in addition to product sales.   

Multifunctional peripherals (MFPs), which are charged by the counter, are one example of these models. They have already been adopted in production and utility facilities, as well as in industrial robots. Some compressor manufacturers offer pay-as-you-go models that charge based on the volume of compressed air.

Future Outlook

FY2024 shows the market to be overall favorable, because of robust digitalization investments in transportation equipment manufacturing, centered on automobiles; the establishment of new semiconductor factories; reinforced semiconductor production capabilities; and the return of domestic manufacturing due to external environmental changes, such as a stabilized weaker yen, economic security, and managing China risks. However, the so-called “Trump risk” has become the concern since the second half of FY2024, prompting some companies to reconsider or delay their investment plans. 

Nevertheless, the factory digitalization market is projected to reach 1,842.0 billion yen in FY2024, up 4.2% year over year, due to increased digitalization of manufacturing sites overall.

Research Outline