Two years on from the Covid-19 crisis, the world’s reliance on technology has lost none of its momentum. In fact, the accelerated digitalisation and innovation seen during the pandemic has only continued, evidenced by increased investment in emerging technologies. However, the Covid-19 crisis also highlighted the global interconnectedness of trade and investment, which along with Russia’s invasion of Ukraine in March 2022 and a global economic downturn, will present major challenges for technology advancement in 2023.
Despite political and economic uncertainty in 2023, technology investment is predicted to grow significantly, underlining a common belief that the world’s greatest innovations have been born in times of great economic and political stress. With this in mind, Investment Monitor looks at some of the technology investment areas to watch in the coming year.
The artificial intelligence (AI) industry will be worth $93bn in 2023, up 12% from 2022, according to GlobalData’s 2023 TMT Predictions. AI has been one of the most anticipated of emerging technologies as it has the ability to greatly accelerate and enhance other technologies including robotics, quantum computing and the internet of things (IoT). In a tech sentiment poll carried out by GlobalData in the third business quarter of 2022, 57% of respondents said that AI will live up to all its promises.
The US and China lead globally on the volume of AI patents filed from 2016 to 2022, but the industry faces an existential threat from an uncertain supply of advanced semiconductor chips. US regulatory constraints introduced in 2022 around technology will affect China’s access to high-value chips until the country can become more self-sufficient in high-end chip production. The AI industry can only evolve if the semiconductor industry solves its global supply chain issues. GlobalData forecasts that AI chips’ revenue will reach $23bn in 2023.
The global cloud computing market will be worth $734bn by the end of 2023, growing 15% from 2022, according to GlobalData. Businesses will continue to outsource IT infrastructure to the cloud for cost reduction and greater flexibility. As well as its growing importance to enterprise operations, cloud computing will be a significant driver, coupled with AI, for emerging technologies such as robotics and IoT, which require continuous access to large swathes of data.
According to GlobalData estimates, the global cybersecurity industry will grow from $125.5bn in 2020 to $198bn in 2025 at a compound annual growth rate (CAGR) of 9.5%, but cyber professionals are reaching breaking point. The next year will be a challenging one with rising cybercrime and growing reliance on cybersecurity professionals, while skills shortages continue. The year ahead will see cybersecurity professionals take an increasingly zero-trust approach to external data as attacks intensify. AI will increasingly feature in the fight against cyberattacks as well as stricter advice on paying ransoms. According to the EU’s Agency for Cybersecurity, the ransomware business model has grown exponentially in the past decade and is projected to cost more than $10trn by 2025, up from $3trn in 2015.
The metaverse will be worth $376bn by 2025, according to GlobalData. While remaining a top trend to watch in 2023, investor enthusiasm for the consumer metaverse will wane throughout 2023 as economic conditions become challenging. The promised transformative effect of the metaverse will only be realised when it becomes regulated, interoperable and has a common definition, which will not occur in 2023, according to GlobalData thematic research. However, in 2023, the enterprise metaverse will evolve and find utility in the concept of digital twinning as a way for businesses to include this technology trend for collaboration, enterprise design, data visualisation, product simulation, risk assessment, predictive maintenance and process optimisation.
Blockchain and cryptocurrencies
The collapse of leading platform FTX in November 2022 ended a challenging year for the $840bn cryptocurrency industry and sent shockwaves throughout the global financial system. However, the FTX crash is likely to prompt significant progress in 2023 for a US regulatory framework that will see the country catch up to the EU’s Market in Crytpo-Assets regulation. In 2023, the focus will be on regulating cryptocurrencies for greater protection of clients’ funds by requiring them to report proof of reserves and no co-mingling of assets. With crypto-asset regulation finally in place, the cryptocurrency market will see increased growth and mainstream adoption.
The robotics industry was valued at $45.3bn in 2020 and is expected to grow at a CAGR of 29% to $568bn by 2030, according to GlobalData research, which adds that rising inflation, supply chain disruption and the Ukraine conflict are fuelling the automation revolution. The service robot market will generate $55.2bn of revenue in 2023, according to GlobalData forecasts. Use cases will include warehouse robots, which will proliferate in 2023 and beyond, as well as autonomous delivery robots and commercial drone delivery. GlobalData forecasts that the global drone market will reach $24.5bn in 2023, supported by regulations, advances in technology such as AI and an increase in beyond-visual-line-of-sight operations. Challenges to the sector will include rising energy costs and supply chain fragility, just as production targets begin to rise.
Internet of things
The global enterprise IoT market will grow to $650bn in 2023, with $315bn attributable to smart cities and $335bn coming from the industrial internet, according to GlobalData. The sector will continue to grow in 2023 despite the economic climate forcing enterprises to streamline their IoT spending to devices that provide the biggest value on investment. Consumer IoT’s three distinct markets (automated home, connected car and wearable tech) will constitute 27% of global IoT revenue in 2023. Wearable tech will be the largest and fastest-growing segment by revenue in 2023, followed by connected car and automated home, according to GlobalData forecasts.
The quantum computing market will be worth $5bn by 2025, with commercial quantum computing likely to begin in 2027, according to GlobalData. As quantum computing technology advances in 2023 and technology standards are increasingly established, the market will see momentum. Companies are unlikely to buy quantum computers but rather will rely on the growing quantum as a service (QaaS) models. Tech companies, government institutions, universities and defence companies will purchase quantum computers for QaaS commercialisation, research and development and military application, according to GlobalData.