Artificial intelligence (AI) adoption among Malaysian manufacturers remains at an early stage, with just 26 percent of companies implementing AI solutions while the majority are still in the awareness or exploratory phase, a survey from the Federation of Malaysian Manufacturing (FMM) showed Wednesday.

According to the results of its 27th edition of the Business Conditions Survey for the first half of 2025, familiarity levels also remain modest, with only 12 percent of respondents reporting strong familiarity with AI technologies.

Despite the slow pace of uptake, firms that have adopted AI are applying it across diverse functions, including customer service, inventory management, product development, production optimization, and quality control, with niche applications such as cybersecurity, ERP integration and predictive maintenance also emerging.

However, the survey highlighted that early adopters are already reaping clear benefits.

The top reported gains include improved productivity (60 percent), faster decision-making (57 percent) and better resource management (46 percent).

Additional benefits range from enhanced customer experience and quality improvements to cost reduction, highlighting AI’s potential not just for operational efficiency but also for competitiveness and innovation.

While adoption is still low, the findings underscore AI’s transformative potential for the manufacturing sector, with early signs of experimentation across multiple business functions and tangible returns for companies that have taken the lead.

While short-term strategies focus on broadening offerings and tapping external demand, longer-term opportunities lie in digitalization, cloud technologies, AI, and environmental, social, and governance (ESG) initiatives such as value-chain projects and net-zero strategies, according to the survey.

Meanwhile, Industry 4.0 adoption among manufacturers remains limited, with only 32 percent reporting implementation and most still at an early stage of digital transformation.

Adoption is largely focused on core efficiency tools such as system integration (66 percent), internet of things (IoT) (47 percent) and cloud computing (39 percent), alongside robotics, cybersecurity and data analytics in smaller shares.

More advanced solutions like additive manufacturing (10 percent) and augmented reality (2 percent) remain niche, reflecting a cautious and targeted approach where most firms prioritize incremental improvements over widespread transformation.

Meanwhile, Rrnewable energy (RE) adoption, while still modest, is gaining momentum among Malaysian manufacturers.

Current uptake is dominated by solar-based solutions, including net energy metering and self-consumption schemes, but future intent to adopt RE is significantly higher, with strong interest in large-scale solar, the green electricity tariff, and the new Corporate Renewable Energy Supply Scheme (CRESS).

These results point to an industry under pressure from rising energy costs but also increasingly committed to efficiency improvements and renewable energy investments to secure long-term competitiveness and sustainability, said FMM.

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