THE PHILIPPINE manufacturing sector’s adoption of artificial intelligence (AI) is being hampered by high costs, poor data quality and access, and a lack of understanding of data science and AI, an expert said.

“There are several challenges, but based on our survey in the Philippines, the key issues include a lack of understanding of data science and AI (DSAI) and the value they can deliver,” Christopher P. Monterola, head of the Asian Institute of Management’s Aboitiz School of Innovation, Technology, and Entrepreneurship and executive managing director of its Analytics, Computing, and Complex Systems or ACCeSs Laboratory, said in an e-mail to BusinessWorld.

He said the main challenges include limited resources due to high costs, poor data quality and accessibility caused mainly by data silos, and difficulties in scaling and operationalizing.

“While the skills gap and talent shortage used to be the top concerns, these are gradually being addressed,” Mr. Monterola said.

About 41% of Philippine manufacturers said AI investments were “very critical” to their businesses, according to a recent study by global management consulting firm Kearney on AI and regenerative manufacturing. Meanwhile, 25% of industry leaders rated their companies as “leading” in AI adoption.

However, a study by the International Data Corp. last year also showed that the Philippines ranked just 12th out of 14th countries in Asia in terms of AI adoption.

Mr. Monterola said around 70% of disruption and innovation across industries are driven by AI, making it key to competition, profit margins, and business expansion, with some firms already seeing measurable returns from their investments in AI.

“This trend is expected to continue over the next five years.”

Mr. Monterola said AI adoption is crucial, with most business leaders today already acknowledging this reality.

“According to my review of various studies, AI leads the way, driving nearly 70% of disruption and innovation. Cloud computing and blockchain, which together account for another 16% over the past five years, follow,” he said.

For manufacturing in particular, marketing and research are two critical factors that add value given the competitive landscape of the sector, he added.

“This is supported by Acer, Inc. founder Stan Shih’s smiling curve hypothesis. Effective marketing enhances the perceived quality of a brand based on its manufacturing location, while research drives innovation in products and processes,” Mr. Monterola said.

“AI plays a pivotal role, serving as a key tool for fostering innovation and shaping the perception of a company as technologically advanced.” — Aubrey Rose A. Inosante