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On 13 March 2026, Vietnam inaugurated the Vietnam National Space Center (VNSC) at Hoa Lac High-Tech Park, a more than VND7 trillion investment that brings together satellite development, operations, ground infrastructure and space-data capabilities. The center represents Vietnam’s culmination of years of accumulated satellite-technology capability and marks an important transition from building the foundations toward operating and progressively mastering space technologies. This transition comes as the global space economy itself evolving toward a broader New Space model, beyond traditional launch systems and satellites toward the connectivity, positioning, Earth-observation data and applications they enable. Projected to grow from US$630 billion in 2023 to US$1.8 trillion by 2035 by World Economic Forum (2024), the sector is increasingly creating value across industries globally. Vietnam remains at an early stage of this transition, but several enabling elements are beginning to come together. As infrastructure, technical capability and data availability deepen, space has the potential to evolve from a predominantly scientific and strategic domain into a broader infrastructure and data layer for the economy, while continuing to generate strategic, societal and national value beyond direct industry revenues. Against this backdrop, the article examines four areas: the definition and economics of New Space; Vietnam’s current space landscape; the country’s space-enabled value opportunities and the conditions required to capture them; and the outlook for Vietnam’s space economy. 1. New Space: The Global Shift in the Space Economy At the global level, the space economy is shifting from a predominantly government-led, asset-centric model toward a broader New Space ecosystem built around commercial participation, data and downstream applications. Historically, the sector was largely organized around government-funded missions, with national space agencies and research institutions developing rockets, satellites and scientific programs. In the emerging New Space model, that foundation remains, but the ecosystem is broadening private companies increasingly share investment and technology risk, commercial services become more prominent, and value is created across more interconnected hardware, software, data and service activities (Baber & Ojala, 2024). This transition is also changing where economic value is generated within the space economy. McKinsey (2024) distinguishes between the space economy’s “backbone”, core infrastructure and services such as satellites, launch systems and positioning, and its “reach,” where space-enabled capabilities support revenues across industries such as mobility, logistics, agriculture, communications and insurance. Baber and Ojala (2024) identify seven internal value chains, alongside an aggregated value chain that connects the broader ecosystem. Vietnam’s space development to date has largely been a story of backbone formation. Over the past two decades, six satellites across communications, Earth observation and domestic engineering have progressively expanded the country’s upstream capabilities, with LOTUSat-1 marking the next step in that trajectory. As the following section details, this capability build-up provides the foundation for the next opportunity: moving downstream into data integration, analytics and applications. 2. The Emerging Landscape in Vietnam Vietnam’s current space landscape is the result of nearly two decades of progressive capability building. Since the adoption of its first national space-technology strategy in 2006, the country has expanded from satellite communications and Earth observation into domestic satellite engineering, ground infrastructure, data processing and, more recently, broader commercial participation. According to VNSC, an early symbolic milestone came in 1980, when Pham Tuan became the first Vietnamese citizen in space. The institutional foundation developed more materially from 2006 onward: the National Satellite Center was established in 2011, construction of the Vietnam Space Center began in 2012, and domestic satellite-development capability advanced through PicoDragon, MicroDragon and NanoDragon. Vietnam has also deployed larger communications and Earth-observation assets—including VINASAT-1, VINASAT-2 and VNREDSat-1, while the approximately 600 kg LOTUSat-1 represents a further step in the scale and sophistication of its Earth-observation capability. Vietnam’s Space Development Journey - Source: VNSC Against this backdrop, three developments suggest that Vietnam is beginning to move from capability accumulation toward ecosystem formation and commercial utilization. First, infrastructure is moving from construction toward utilization. The significance of the new VNSC is the consolidation of previously separate capabilities, research, satellite integration and testing, mission operations, ground infrastructure, data processing and training, within a national platform. At its inauguration, the Government explicitly called for the center to help form a satellite-data services market and space-technology application ecosystem, while expanding real-time Earth-observation analysis and shared satellite-data infrastructure (Vietnam Journal of Science and Technology, 2026). Second, Vietnamese government policy is increasingly supporting the shift from capability building toward ecosystem formation and commercialization. Under Decision 169/QĐ-TTg (2021), the Government of Vietnam set targets not only for satellite and ground-system capability, but also for ~300 specialists, 3,000 engineers and 10 specialized laboratories, while explicitly promoting markets for Earth-observation imagery, satellite transmission, navigation and data processing. This direction was reinforced by Resolution 57-NQ/TW (2024) and Decision 1131/QĐ-TTg (2025), which further elevated space within Vietnam’s national strategic-technology agenda and strengthened the policy basis for broader market development and private-sector participation. Third, Vietnam’s market structure is beginning to broaden from a public-sector-led base toward a more diverse mix of established operators, domestic private entrants and international service providers. In satellite communications, VNPT remains the incumbent, as the government-designated investor and operator of VINASAT-1/2. Domestic private participation is only beginning to emerge: VinSpace, established in 2025, plans to develop and operate satellites and has contracted SpaceX for its first 2027 launch, while CT Verse is building adjacent satellite, RF and radar capabilities. At the downstream connectivity layer, Starlink entered commercially in August 2026 with a trial cap of 600,000 subscribers, and Amazon has separately proposed US$570m of Kuiper-related investment. This remains small relative to Vietnam’s broader connectivity market, 25.62m fixed-broadband subscriptions as of May 2026, meaning Starlink’s full trial allowance would equal only ~2.3% of the current fixed-broadband base. The emerging picture is therefore less about immediate market-share shifts and more about a gradual broadening of participation across the value chain. Taken together, these shifts indicate that Vietnam’s space economy is beginning to enter a new stage of development. An important question is whether the capabilities accumulated to date can translate beyond satellite development and deployment into scalable commercial applications and companies on Earth. Answering that question requires shifting the lens from what Vietnam has built to where those capabilities can generate economic value, and what will determine whether that value can be captured. 3. Vietnam’s Space-Enabled Value Opportunities and Conditions for Capture In New Space, value increasingly extends downstream into data, services, applications and intellectual property. Against that backdrop, three potential economic value pools stand out for Vietnam: Earth observation and geospatial intelligence; connectivity, navigation and space-enabled services; and enabling technologies and adjacent technology development. 3.1. Earth observation and geospatial intelligence. The clearest near-term opportunity is to move from imagery to decision-ready intelligence. Vietnam already has a sizeable underlying user base for Earth-observation data: according to VAST, VNREDSat-1 supplied nearly 30,000 image scenes between 2020 and May 2026, supporting natural-resource and environmental management, research, socio-economic applications and national security. The commercial opportunity is one layer further downstream turning those observations into recurring analytics, alerts and vertical applications for agriculture, climate and disaster risk, infrastructure, maritime activity and energy. This follows a broader New Space pattern identified by Baber and Ojala, where growing data volumes and AI-enabled processing are creating new businesses in asset tracking, risk assessment, agriculture and specialized data services. 3.2. Connectivity, navigation and space-enabled services. A second pool is beginning to develop into an addressable commercial market. Starlink began accepting orders in Vietnam in August 2026, with separate residential and corporate plans, after receiving licences for fixed and mobile satellite telecommunications earlier in the year; the initial deployment permits four gateway stations and up to 600,000 user terminals. This creates opportunities beyond selling satellite bandwidth itself, including enterprise resilience, remote-area connectivity, IoT, logistics and maritime services. Baber and Ojala similarly identify direct-to-cell connectivity, asset tracking and resilient positioning as emerging New Space business models. 3.3. Enabling technologies and intellectual property. A third opportunity lies in participating in the technology stack around space rather than only in end-user applications. New Space creates demand for electronics, power systems, materials, onboard computing, software and systems integration, while proprietary engineering can be monetized through products, patents and licensing. Private-sector entry in Vietnam is beginning to provide an early market signal: VinSpace, established in late 2025 with initial capital of about US$11.4 million, is pursuing satellite design and manufacturing, launch management, operations and space-data services, and has contracted SpaceX to launch its first satellites in 2027. Over time, this could create demand for domestic components, software and engineering IP with applications both within space and in adjacent technology markets. 3.4. Conditions for value capture Capturing these opportunities will depend on whether Vietnam can convert its growing space capabilities into commercially viable products, companies and markets. Four conditions are particularly important: Turn data into a commercially actionable input. Earth-observation value depends not merely on access to imagery, but on frequency, latency, reliability and interoperability with complementary datasets. Build capability at the technology–industry interface. The critical gap is not aerospace engineering alone, but the ability to combine remote sensing, AI, software, systems integration and domain expertise into solutions that address specific customer needs. Make regulation market-enabling and investment-grade. Private capital requires clarity around licensing, spectrum, data rights, security and technical standards. Beyond governing space activity, regulation must establish credible rules for infrastructure access, data commercialization and service deployment, reducing uncertainty for investors and operators. Create repeatable demand that can crowd in private capital. Space businesses typically face high upfront technology costs and uncertain early demand. Public procurement, anchor contracts and PPP structures can help establish initial markets, but sustainable value capture ultimately depends on recurring customers and revenues beyond one-off government projects. 4. What will define Vietnam’s next phase in New Space? New Space is shifting the economics of the sector from government-led asset building toward a broader ecosystem of data, services, applications and private participation. Vietnam is still early in that transition: after nearly two decades of building satellite, ground-system and technical capabilities, the country is beginning to move from capability accumulation toward commercial utilization. The most credible value pools sit in Earth observation and geospatial intelligence, connectivity and navigation, and enabling technologies and IP. Capturing them, however, will depend on whether Vietnam can convert infrastructure into commercially actionable data, build stronger technology–industry interfaces and multidisciplinary talent, establish market-enabling and predictable regulation, and create repeatable demand that can mobilize private capital. The next phase should therefore focus less on adding isolated space assets and more on strengthening the connective tissue of the ecosystem. A central challenge is not access to technology alone, but the ability to link data, productization, talent, regulation, capital and end-market demand into scalable businesses. Success may ultimately be measured less by the number of satellites launched or facilities built, and more by whether space capabilities generate recurring commercial revenues, domestic IP and companies, and measurable productivity or resilience gains across the wider economy. References: Baber, W. W., & Ojala, A. (2024). Exploring emerging business model value chains in New Space. Springer Nature. https://link.springer.com/chapter/10.1007/978-981-97-3430-6_7 Dan Tri Newspaper. (2026). After 20 years of space industry development, where does Vietnam stand? https://dantri.com.vn/khoa-hoc/sau-20-nam-phat-trien-cong-nghiep-vu-tru-viet-nam-dang-o-dau-20260207135605842.htm McKinsey & Company. (2024). Space: The $1.8 trillion opportunity for global economic growth. https://www.mckinsey.com/industries/aerospace-and-defense/our-insights/space-the-1-point-8-trillion-dollar-opportunity-for-global-economic-growth Ministry of Agriculture and Environment. (2025). Vietnam at a “golden moment” for space technology development. https://mae.gov.vn/khcn-doi-moi-sang-tao-va-chuyen-doi-so/viet-nam-truoc-thoi-diem-vang-de-phat-trien-cong-nghe-vu-tru-19078.htm Reuters. (2025). Vietnam’s real estate developer Vingroup ventures into aviation, space. https://www.reuters.com/world/asia-pacific/vietnams-real-estate-developer-vingroup-ventures-into-aviation-space-2025-11-07/ Reuters. (2026). Starlink starts taking orders for satellite internet service in Vietnam. https://www.reuters.com/world/asia-pacific/starlink-starts-taking-orders-satellite-internet-service-vietnam-2026-08-13/ Vietnam Academy of Science and Technology. (2026). VNREDSat-1 system continues operation into its 14th year. https://vast.gov.vn/web/vietnam-academy-of-science-and-technology/tin-chi-tiet/-/chi-tiet/vnredsat-1-system-continues-operation-into-its-14th-year-149926-871.html Vietnam Journal of Science and Technology. (2026). Vietnam Space Center: Transitioning from foundation building to mastering space technology. https://vjst.vn/trung-tam-vu-tru-viet-nam-buoc-chuyen-tu-khoi-tao-nen-tang-sang-lam-chu-cong-nghe-khong-gian-84893.html Vietnam Law Library . (2021). Decision No. 169/QD-TTg: Strategy for the development and application of space science and technology through 2030. https://thuvienphapluat.vn/van-ban/Cong-nghe-thong-tin/Quyet-dinh-169-QD-TTg-2021-Chien-luoc-phat-trien-ung-dung-khoa-hoc-cong-nghe-vu-tru-den-2030-464757.aspx Vietnam National Space Center. (2018). Mission and vision. https://vnsc.org.vn/vi/gioi-thieu/su-menh-va-tam-nhin/ World Economic Forum. (2024). Space economy set to triple to $1.8 trillion by 2035, new research reveals. https://www.weforum.org/press/2024/04/space-economy-set-to-triple-to-1-8-trillion-by-2035-new-research-reveals/

Southeast Asian healthcare providers are showing substantial interest in MedTech, but recognition of its value has not yet translated into equally broad implementation. According to KPMG (2025), only 49% of healthcare organisations in the region have implemented MedTech solutions, despite 65–90% of industry leaders recognising their importance in improving patient outcomes, saving healthcare professionals’ time and enabling clinicians to work at the top of their skill level. This gap between perceived value and actual adoption suggests that demand and strategic interest alone are not sufficient to drive implementation. One explanation lies in the uneven distribution of provider capabilities across the region. Source of Asia (2025) highlights substantial differences in healthcare infrastructure, workforce availability, digital maturity and healthcare spending across Southeast Asia. Advanced MedTech often requires several of these capabilities to be present simultaneously: institutions able to validate and govern new technologies, specialist clinical talent to use them effectively, digital systems capable of supporting integration, and sufficient financial capacity to absorb implementation and operating costs. As a result, provider readiness is concentrated rather than broad-based, with some healthcare institutions able to adopt increasingly complex technologies while others remain constrained by one or more capability gaps. This article, therefore, examines the market through three lenses. First, it assesses the region’s current readiness for advanced hospital-facing technologies and the evidence that selected providers are moving up the technology curve. Second, it evaluates the capability gaps that continue to constrain wider adoption. Third, it examines the conditions under which advanced MedTech adoption is more likely to scale, before considering what these dynamics imply for the region’s longer-term MedTech outlook. 1. Southeast Asia’s Current Readiness Southeast Asia’s digital-health market, which extends beyond hospitals to include telehealth, wearables, electronic records and analytics, was valued at approximately US$18.4 billion in 2025 and is projected to reach US$38.8 billion by 2034, an 8.36% CAGR (IMARC Group, 2026). More specialised hospital-facing segments are alsoexpanding fast. Southeast Asia’s surgical-robotics market was valued at approximately US$256 million in 2024 and is projected to remarkably grow at 18.37% annually through 2033, supported by hospital investment, minimally invasive surgery and the expansion of higher-acuity care (UnivDatos, 2026). This faster growth is directionally consistent with a broader shift from conventional equipment toward technologies that require greater clinical specialisation, digital integration and institutional capability. Recent deployments across Singapore, Thailand and Vietnam provide early evidence that selected Southeast Asian healthcare systems are developing the absorptive capacity required to deploy increasingly advanced MedTech, not only acquiring the technology itself, but also building the clinical, digital and operational capabilities around it. Singapore. Singapore is moving imaging AI from individual applications toward system-level infrastructure. Its Ministry of Health established AimSG as a single platform through which public hospitals can access imaging-AI models from multiple vendors and continuously monitor accuracy and patient safety (Singapore Ministry of Health, 2025). Thailand. Thailand is introducing advanced procedural technology within the public-hospital system. Rajavithi Hospital launched a robot-assisted surgery programme targeting 100 cancer patients between March 2025 and April 2026, using robotic systems and 3D imaging for minimally invasive procedures (Government of Thailand, 2025). Vietnam. Vietnam provides an emerging network-level example. In August 2026, according to Vingroup (2026), Vinmec conducted two-way remote robotic surgeries between Hanoi and Can Tho across approximately 1,700 kilometres, with the two hospitals alternating between operating and receiving sites. The relevance of the case extends beyond the robotic platform itself: remote surgery required trained surgical teams, compatible infrastructure, reliable connectivity, standardised protocols and cross-site coordination. First in Vietnam: Vinmec performs two-way, cross-country robotic surgery over a distance of 1,700 km – Source: Vingroup Taken together, these cases provide early evidence of provider absorptive capacity across Southeast Asia. They show that selected healthcare systems are developing not only access to advanced technologies, but also the clinical, digital and operational capabilities required to deploy them in practice. The more important question, therefore, is not whether such capabilities exist in the region, but how broadly they are distributed and which parts of the healthcare system enable or constrain their wider diffusion. 2. Healthcare Provider Readiness and Capability Gaps Provider readiness across Southeast Asia remains concentrated rather than broad-based (Source of Asia, 2025). Selected markets and providers already possess the institutional, clinical, digital and financial capabilities required to support advanced MedTech, but these capabilities are unevenly distributed across countries and provider segments. Readiness can therefore be assessed across four interdependent dimensions: institutional and validation capacity, clinical workforce depth, digital and integration readiness, and financial capacity. 2.1. Concentrated Institutional and Validation Capacity Southeast Asia already has credible institutional capacity for MedTech development, productization and clinical validation, but it is concentrated in a small number of ecosystems. Institutional readiness is strongest in Singapore and, in selected areas, Malaysia, while comparable productization, testing and clinical-validation infrastructure remains materially thinner across much of the rest of Southeast Asia (Source of Asia, 2025). Singapore has built a relatively comprehensive ecosystem spanning more than 400 MedTech enterprises, over 25 R&D centres, regional headquarters and advanced manufacturing, while Malaysia has developed notable strengths in clinical research and early-phase trials. In other markets, these capabilities are often more specialised or at an earlier stage of development. As a result, technologies requiring extensive validation, specialist testing or implementation support may initially find a broader range of suitable partners in the region’s more established ecosystems. 2.2. Uneven Clinical Workforce Depth Clinical capability varies substantially across Southeast Asia, with significant differences in the overall depth of the healthcare workforce. Physician density provides one baseline indicator of this variation, although it does not directly capture the specialist skills required for advanced MedTech deployment. In 2022, physician density ranged from 26.3 doctors per 10,000 people in Singapore and 22.9 in Malaysia to 11.1 in Vietnam, 7.9 in the Philippines, 6.8 in Indonesia and 5.45 in Thailand (WHO Singapore; WHO Malaysia; WHO Vietnam; WHO Philippines; WHO Indonesia; WHO Thailand). Advanced hospital technologies may also depend on specialist operators, biomedical engineers, implementation teams, IT personnel and data or cybersecurity expertise. Providers with broader multidisciplinary teams may therefore be better positioned to adopt technologies with higher operating and support requirements, while deployment in other settings may require additional training or implementation support. 2.3. Digital and Integration Gaps Digital infrastructure is advancing across Southeast Asia, although integration readiness remains at different stages of maturity. Electronic records, digital imaging and national digital-health initiatives are becoming more established, while WHO and ASEAN programmes increasingly emphasise interoperability, data governance and health-information-system strengthening. The remaining gap is increasingly one of integration rather than basic access to digital tools. Advanced technologies may depend on interoperable architecture, common data standards, governance frameworks and compatibility with existing clinical workflows. Where these capabilities are incomplete or fragmented, each deployment may require additional customisation, data mapping and coordination across hospital systems, increasing implementation complexity and slowing replication across providers. KPMG similarly describes uneven digital readiness, data interoperability and workforce capability as system-level constraints on MedTech integration in Southeast Asia (KPMG Malaysia, 2025) 2.4. Uneven Provider Financial Capacity Financial readiness is the fourth capability, and here the regional picture is perhaps the most visibly bifurcated: leading hospitals are increasing investment, while a broader set of providers remains constrained by margins, budgets and reimbursement. L.E.K.’s 2025 survey describes Southeast Asia’s private-hospital market as a “two-speed” system. Premium private hospitals tend to be more digitally advanced and target higher margins, whereas larger mass-market providers rely more heavily on public reimbursement and operate with lower profitability (L.E.K. Consulting, 2025). This divergence matters for advanced MedTech because technologies with high upfront costs, specialist staffing requirements or significant implementation expenditure are more readily absorbed by providers with stronger balance sheets and greater flexibility in capital allocation. Providers operating under tighter margins or reimbursement constraints may face a materially higher adoption threshold, even where clinical demand exists 3. Conditions for Scalable MedTech Adoption Given the uneven distribution of provider readiness across Southeast Asia, scalable MedTech adoption is unlikely to depend on technology performance alone. Rather, adoption is more likely where four conditions align: the technology addresses a sufficiently important clinical or operational need; its complexity is compatible with the capabilities of the target provider; its integration burden can be accommodated within existing systems and workflows; and its economic model fits the provider’s financial capacity. 3.1. Clinical and Operational Relevance Adoption is more likely where a technology addresses a clinical or operational problem that providers consider important enough to justify the associated workflow, training and budget requirements. Deloitte’s report illustrates the distinction between technical sophistication and provider value: MedTech executives primarily identify interoperability, data privacy and workflow integration as adoption barriers, while providers place greater emphasis on demonstrating end-user value (32%), workflow integration (29%) and budget constraints (27%) (Deloitte, 2025). The clearer the link between a technology and outcomes that matter to providers, such as clinical quality, workflow efficiency, capacity or cost, the stronger the basis for absorbing the organisational changes required for deployment. 3.2. Provider–Technology Fit Provider-technology fit follows directly from these differences in readiness. Technologies vary substantially in the clinical expertise, digital infrastructure and implementation support required for routine use. A system that is readily deployable in a tertiary or highly digitised hospital may therefore be considerably harder to absorb in a provider with thinner specialist or technical capacity. The effective addressable market for advanced MedTech is consequently determined not only by clinical demand, but by the number of providers capable of supporting the technology’s operating requirements reliably and at scale. 3.3. Integration and Implementation Fit For connected and data-intensive technologies, scalability depends partly on how readily the technology can be integrated into existing hospital systems and clinical workflows. This creates a direct link between implementation burden and scalability. Where every deployment requires extensive custom interfaces, workflow redesign or site-specific configuration, expansion across hospitals becomes slower and more resource intensive. Integration fit therefore determines not only whether a technology can work in one hospital, but how repeatably it can move from one provider to the next. 3.4. Economic Fit Finally, adoption is more likely where the full economics of deployment are compatible with the provider’s budget structure and ability to capture value. Deloitte finds that 72% of surveyed providers still expect capital purchases to remain the preferred acquisition model for connected-care devices, although interest in subscription-based models is increasing (Deloitte, 2025). Source of Asia similarly highlights flexible pricing approaches, including leasing and pay-per-use, as potential mechanisms for improving accessibility in Southeast Asian MedTech markets. (Source of Asia, 2025). Their relevance lies in how different payment structures alter the timing and distribution of adoption costs. Regardless of the acquisition model, however, scalability ultimately depends on whether the provider can justify the total cost of deployment against measurable clinical or operational value. 4. Outlook: Closing the MedTech Diffusion Gap The evidence across Southeast Asia points to a clear pattern: advanced MedTech adoption is already possible, but readiness remains uneven across providers. Institutional and validation capacity, specialist workforce, digital integration and financial capacity are strongest in selected ecosystems and hospital segments. As a result, scalable adoption depends not only on technology performance, but on whether clinical relevance, provider–technology fit, implementation requirements and economics align with the capabilities of the adopting hospital. The key outlook question is whether provider readiness can broaden fast enough to keep pace with increasing technology complexity. If more hospitals develop the specialist talent, integration infrastructure and financial capacity required for advanced MedTech, adoption can extend beyond today’s leading providers. If capability expansion lags technology requirements, diffusion is likely to remain concentrated. Southeast Asia’s next phase of MedTech growth will therefore depend on how quickly today’s pockets of readiness translate into a broader base of deployable demand. References Deloitte Center for Health Solutions. (2025). Connected care is here. How can medtech help move the industry forward?https://www.deloitte.com/us/en/insights/industry/health-care/medtech-connected-care-innovation.html Government of Thailand. (2025). Elevating cancer treatment with advanced technology: Robot-assisted surgery sets new standards for Thai medicine. https://www.thailand.go.th/public/index.php/guide-book-detail/----139 IMARC Group. (2026). South East Asia digital health market size, share, trends and forecast by type, component, and country, 2026–2034. https://www.imarcgroup.com/south-east-asia-digital-health-market#:~:text=Market%20Overview%3A%20South%20East%20Asia%20digital%20health,Key%20Statistics.%20Base%20Year.%202025.%20Forecast%20Years . KPMG Malaysia. (2025). Innovate to integrate: Tailoring MedTech solutions to Southeast Asia's unique healthcare needs. https://kpmg.com/my/en/insights/2025/11/innovate-to-integrate.html KPMG Philippines. (2025). Achieving acceptance: Effective strategies for MedTech integration in Southeast Asia. https://kpmg.com/ph/en/insights/2025/12/achieving-acceptance-effective-strategies-for-medtech-integration-in-southeast-asia.html L.E.K. Consulting. (2025). Southeast Asia hospital insights survey: Implications for healthcare operators and investors. https://www.lek.com/insights/healthcare-services/southeast-asia-hospital-insights-survey-implications-healthcare Ministry of Health Singapore. (2025). Speech by Mr Ong Ye Kung, Minister for Health at the Synapxe AI Accelerate Conference on 16 June 2025. https://www.moh.gov.sg/newsroom/speech-by-mr-ong-ye-kung--minister-for-health-at-the-synapxe-ai-accelerate-conference-on-16-june-2025/ Source of Asia. (2025). MedTech in Southeast Asia: Market trends, outlook 2025. https://www.sourceofasia.com/med-tech-market-in-southeast-asia-2025-2026/ UnivDatos. (2025). Southeast Asia surgical robotics market size, share & forecast to 2033. https://univdatos.com/reports/southeast-asia-surgical-robotics-market#:~:text=Southeast%20Asia%20Surgical%20Robotics%20Market%20Size%20%26,by%20rising%20demand%20for%20minimally%20invasive%20surgeries . Vingroup. (2026). Lần đầu tiên tại Việt Nam - Vinmec phẫu thuật xuyên Việt hai chiều bằng robot cách xa 1.700 km. https://vingroup.net/tin-tuc-su-kien/bai-viet/7027/lan-dau-tien-tai-viet-nam-vinmec-phau-thuat-xuyen-viet-hai-chieu-bang-robot-cach-xa-1700-km World Health Organization. (2026). Singapore: Country overview. https://data.who.int/countries/702 World Health Organization. (2026). Malaysia: Country overview. https://data.who.int/countries/458 World Health Organization. (2026). Viet Nam: Country overview. https://data.who.int/countries/704 World Health Organization. (2026). Philippines: Country overview. https://data.who.int/countries/608 World Health Organization. (2026). Indonesia: Country overview. https://data.who.int/countries/360 World Health Organization. (2026). Thailand: Country overview. https://data.who.int/countries/764

Southeast Asia’s power transition is entering a new phase, with growing attention shifting from renewable-generation capacity alone toward the technologies and infrastructure needed to integrate clean energy across the wider power system. This imbalance is creating bottlenecks that are shifting value creation beyond generation assets toward the technologies needed to connect, balance, store and manage clean electricity reliably at scale. Electricity consumption across the region is rising rapidly, driven by industrialization, urbanization, electrification, data-center expansion, and growing energy-security concerns. In parallel, national renewable-energy targets, declining technology costs, and increasing clean-energy investment are accelerating the deployment of solar, wind and other low-carbon generation sources (WTW, 2026; IEA, 2026). However, adding generation capacity alone will not be sufficient. Without corresponding upgrades to transmission and distribution networks, energy storage, flexible capacity, power electronics and digital control systems, new renewable projects may face connection delays, congestion and curtailment. These infrastructure requirements are also reshaping investment priorities across Southeast Asia. The IEA estimates that more than USD 300 billion will be required to expand and modernise ASEAN’s electricity grids between 2025 and 2040, of which approximately USD 27 billion will be needed for planned cross-border interconnections under the ASEAN Power Grid. The next phase of the region’s power transition will therefore depend not only on how much renewable capacity is built, but also on whether grid, storage and system-flexibility capabilities can expand sufficiently to integrate and deliver that capacity reliably. This article examines the region’s rising electricity demand, assesses existing renewable capacity and infrastructure gaps, identifies the principal bottlenecks limiting further deployment, evaluates the technologies capable of addressing them, and considers the resulting investment opportunities. 1. Market Demand and Energy Transition. According to Willis (2026), Asia remained a major contributor to global renewable-energy growth in 2025, accounting for 74.2% of new renewable-capacity additions. The region added 513.3 GW, bringing total installed renewable capacity to 2,891 GW, or 56.1% of the global total renewable capacity. Growth across renewable-generation technologies and supporting clean-energy infrastructure suggests that Asia will remain central to the global energy transition. Within this broader regional momentum, Southeast Asia’s renewable-power market is also expanding rapidly. According to Source of Asia (2025), renewables accounted for approximately 35% of ASEAN’s total installed power capacity in 2024, while regional renewable capacity is projected to increase from 124.6 GW in 2025 to 178.1 GW by 2030, representing a compound annual growth rate of approximately 7.4%. IEA (2026), Electricity demand by end-use sector in Southeast Asia in the Stated Policies Scenario and the Current Policies Scenario, 2015-2050, IEA, Paris https://www.iea.org/data-and-statistics/charts/electricity-demand-by-end-use-sector-in-southeast-asia-in-the-stated-policies-scenario-and-the-current-policies-scenario-2015-2050, Licence: CC BY 4.0 Taken together, these demand and capacity projections indicate that Southeast Asia will require not only substantially more power generation, but also a power system capable of integrating a larger and more variable renewable fleet. As the share of variable solar and wind generation increases, the constraint increasingly shifts from project development alone to the ability of transmission and distribution networks, storage, flexible capacity and system controls to connect, balance and deliver electricity reliably. The next section therefore assesses whether Southeast Asia’s existing infrastructure is developing at a pace consistent with its renewable ambitions, and where the principal capacity and integration gaps may emerge. 2. Current Capacity and Infrastructure Gap Estimated Demand for Renewable Energy in SEA 2020 – 2050 – Source: Source of Asia As noted above, Southeast Asia’s installed renewable capacity is projected to increase from approximately 124.6 GW in 2025 to 178.1 GW by 2030, representing annual growth of around 7.4% (Source of Asia, 2026). This expansion will strengthen the region’s generation base, but it will also increase the volume of variable electricity that must be connected, balanced and delivered through national power systems. The relevant capacity gap therefore extends beyond the need for additional generation to the grid, storage and system-integration infrastructure required to support it. Evidence of this infrastructure requirement is already visible at the regional level. The IEA estimates that more than USD 300 billion will be needed to expand and modernize Southeast Asia’s electricity grids between 2025 and 2040, including approximately USD 27 billion for planned cross-border interconnectors under the ASEAN Power Grid. These investments will be required not only to increase transmission and distribution capacity, but also to improve cross-border electricity exchange, connect new renewable projects and strengthen the reliability of increasingly complex power systems. Grid expansion alone, however, will not fully address the integration gap. Higher penetration of solar and wind will also require greater energy-storage capacity, flexible generation and demand resources, advanced power electronics, digital monitoring systems and real-time control capabilities. Without parallel development across these areas, additional renewable capacity may face slower grid connections, local congestion, greater balancing requirements and a higher risk of curtailment. Southeast Asia’s infrastructure challenge is consistent with a broader investment imbalance across Asia. Regional energy consumption increased by approximately 50% over the past decade, while investment in energy infrastructure remained broadly stagnant (Morgan Stanley Research, 2026). Although this Asia-wide trend does not apply uniformly across every Southeast Asian market, it reinforces the broader concern that electricity demand and generation investment have been advancing faster than the infrastructure required to support them. The Asian Development Bank similarly identifies inadequate grid investment as a major barrier to Asia’s energy transition and highlights the need for more resilient, digitalised and flexible electricity networks (ADB, 2025). For Southeast Asia, closing the infrastructure gap will therefore require coordinated investment across physical networks, storage, flexibility, digital system management, and regional interconnection. The following section examines the principal bottlenecks within these areas and how they may constrain the region’s ability to integrate renewable energy reliably at scale. 3. Key Bottlenecks The infrastructure gap raises a central question: which constraints most directly limit Southeast Asia’s ability to convert renewable investment into reliable electricity supply? Regional evidence points to two closely connected bottlenecks: insufficient network capacity and asset quality, and limited system flexibility and digital control. Grid expansion is the most immediate requirement. Southeast Asia may need more than USD 300 billion in grid investment between 2025 and 2040, approximately 72% more than the amount invested during 2009–2024, while transmission and distribution networks will need to expand substantially by 2050 (IEA, 2026). The challenge is therefore not simply to add renewable-generation capacity, but to ensure that electricity networks can connect new projects, transport power to demand centres and maintain reliable service as system complexity increases. The first bottleneck is insufficient network capacity and asset quality. Overloaded transmission lines, undersized transformers, ageing equipment, weak maintenance and inadequate network planning can increase technical losses, constrain power flows and delay the connection of new renewable projects. Across developing Asia, electricity access increased from approximately 70% in 2000 to more than 97% in 2021, yet grid losses remained around 12% in 2022, only modestly below 14% in 2000 (ADB, 2025). Although conditions vary across Southeast Asian markets, this evidence highlights the need to improve not only network coverage, but also equipment quality, operational efficiency and infrastructure resilience. The second bottleneck is limited system flexibility and digital control. Higher shares of solar, wind and distributed generation increase the need to manage fluctuations in supply, changing net-load patterns, voltage, frequency, congestion and bidirectional electricity flows. Existing hydropower and gas-fired generation can provide part of the required flexibility, but greater renewable penetration will increase demand for battery storage, demand response, improved forecasting, smart metering and automated energy-management systems. Digital technologies can strengthen real-time visibility, coordinate distributed assets and improve the ability of system operators to respond to changes in electricity supply and demand. Taken together, these constraints show that grid transformation involves more than constructing additional transmission infrastructure. It requires coordinated improvements in network capacity, asset quality, system flexibility and digital control. These needs create demand for the enabling technologies examined in the following section, including advanced grid equipment, power electronics, battery storage, demand-response systems, renewable forecasting and grid-management software. 4. Technologies Addressing the Bottlenecks. The two bottlenecks identified above translate into three complementary technology responses. Insufficient network capacity and asset quality create demand for grid equipment and power electronics. Limited system flexibility and digital control require both physical flexibility resources, such as energy storage and demand response, and digital and distributed-energy systems that improve real-time coordination and support deployment in weak-grid or decentralised settings. The following section examines these three technology groups in turn. The first technology response is investment in grid equipment and power electronics to expand network capacity, replace weak assets and connect renewable-generation areas with demand centres. Relevant technologies include transformers, substations, higher-capacity conductors, switchgear, advanced inverters and high-voltage transmission systems. Their main applications include national grid upgrades, renewable-project connections and cross-border interconnectors. Viet Nam provides a measurable implementation example through its Transmission Efficiency Project, which was supported by an IBRD loan. Implemented between 2015 and 2021 at an actual cost of approximately USD 517.5 million, the project financed the construction and rehabilitation of high-voltage transmission lines and substations, alongside the adoption of smart-grid technologies. The project increased transmission capacity by approximately 15% in Greater Hanoi and Greater Ho Chi Minh City, while the average duration of faults across Viet Nam’s national transmission system declined from 76.2 minutes in 2013 to 15.4 minutes in 2021. In Indonesia, ADB approved a USD 470 million programme in 2025 to strengthen grid infrastructure across Java–Madura–Bali, Sumatra and Sulawesi, enhance PLN’s capacity to integrate renewable energy and avoid up to 2.5 million metric tons of CO₂ emissions annually. These projects illustrate demand not only for physical equipment, but also for engineering, installation, digital monitoring and long-term system-integration services. The second technology response is greater system flexibility. Battery storage, pumped-storage hydropower, demand response and managed electric-vehicle charging can shift electricity across time, reduce peak demand and respond rapidly to fluctuations in solar and wind output. Their commercial applications include utility-scale balancing, storage paired with renewable projects, frequency support and energy-cost management for large electricity users. Singapore has established the region’s clearest operating benchmark: the 285 MWh Sembcorp Energy Storage System on Jurong Island contains more than 800 battery units, responds to grid imbalances within milliseconds and can supply the daily electricity needs of around 24,000 four-room households in a single discharge. Thailand is developing a larger commercially financed project pipeline. A USD 820 million financing package signed in 2024 covered 12 renewable projects, including four solar-plus-storage plants with 256 MW of solar capacity and 396 MWh of storage. A further USD 350 million package signed in 2026 supports two solar-plus-BESS projects totalling 126 MW of generation and 151 MWh of storage, together with a 68 MW standalone solar project. The third technology response is stronger digital control and distributed-energy management. Smart meters, renewable forecasting, SCADA, energy-management systems, DERMS and automated analytics can improve network visibility, coordinate distributed resources and balance generation and demand in real time. Malaysia has begun establishing the digital foundation for these applications through a programme targeting approximately 9.1 million smart meters by 2026, with around 4.5 million installed by the end of 2024; the resulting consumption data can support customer energy management, network planning and renewable integration. Indonesia has demonstrated an integrated island application in Selayar, where a 1.3 MW solar facility complements 10 MW of diesel capacity in a system with peak demand of approximately 5 MW. However, ADB notes that the region has not yet progressed as strongly in R&D investment and frontier-technology readiness; specialised talent and domestic intellectual property; and commercialisation of advanced solutions such as proprietary battery technologies, power electronics, grid software, AI-enabled energy management and advanced recycling. Regional capabilities therefore remain more concentrated in manufacturing and deployment than in higher-value technology development. 5. Market Outlook and Investment Implications. Southeast Asia’s energy transition is expanding investment opportunities beyond standalone renewable-generation assets toward the infrastructure and technologies required to integrate and deliver clean electricity. Under the Announced Pledges Scenario, total regional energy investment is projected to increase from more than USD 100 billion in 2025 to nearly USD 190 billion by 2035 and approximately USD 250 billion by 2050. Annual investment in grids and storage alone must rise from around USD 13 billion today to USD 50 billion by 2050, while battery capacity is projected to expand from just over 1 GW to more than 60 GW by 2035 and over 300 GW by 2050. These trends create growing value pools across grid equipment, power electronics, interconnection, energy storage and digital energy platforms. Value capture is likely to extend beyond individual equipment sales. Grid-equipment providers can address immediate requirements for network reinforcement and renewable interconnection, while storage and digital systems can improve asset utilisation, manage peak demand and coordinate increasingly distributed power resources. This suggests an advantage for providers that combine hardware with control software, engineering, system integration, performance guarantees and long-term maintenance. Potential business models include recurring software subscriptions, operation and maintenance contracts, energy-as-a-service arrangements and integrated solutions that demonstrate measurable reductions in losses, curtailment or electricity costs. The region also has an opportunity to retain more value through local technology development. Malaysia, Thailand and Viet Nam have developed comparative advantages in low-carbon technology production, while Indonesia is using industrial clusters such as the 1,800-company Jababeka Net Zero Industrial Cluster to aggregate demand and support shared infrastructure. However, further progress is needed in R&D funding, specialised talent and domestic intellectual property, particularly in battery technologies, power electronics, grid software, AI-enabled energy management and advanced recycling. ADB estimates that Southeast Asia’s solar PV, battery and electric two-wheeler industries could generate USD 90–100 billion in revenue by 2030. Building stronger domestic technology companies could help the region retain a larger share of this value rather than concentrating primarily on manufacturing and deployment. Converting these opportunities into investable projects will nevertheless require stronger financing and commercial frameworks. The ASEAN Power Grid alone needs approximately USD 27 billions of interconnector investment by 2040, compared with only around USD 2 billion invested over the previous five decades. Existing reliance on state-owned utility balance sheets and bespoke bilateral agreements is unlikely to support the next generation of large and complex projects. More predictable tariffs, standardised power-trading agreements, long-tenure debt, guarantees, blended finance and public–private structures will therefore be required. Investors should prioritise companies with utility qualification, repeat or contracted demand, measurable customer economics, defensible technology, strong local execution and recurring service revenue, while carefully assessing procurement cycles, regulatory and offtaker exposure, working-capital requirements and technology-performance liabilities. References Asian Development Bank. (2024). ADB, Gulf sign $820 million loan to scale up solar and battery storage in Thailand. https://www.adb.org/news/adb-gulf-sign-820-million-loan-scale-solar-and-battery-storage-thailand Asian Development Bank. (2025). Asia and the Pacific needs grid upgrade to drive energy transition, says ADB report. https://www.adb.org/news/asia-and-pacific-needs-grid-upgrade-drive-energy-transition-says-adb-report Asian Development Bank. (2026). ADB, GRE sign $350 million deal to accelerate Thailand’s green energy transition. https://www.adb.org/news/adb-gre-sign-350-million-deal-accelerate-thailand-green-energy-transition ASEAN Centre for Energy. (2025). ADB and World Bank Group launch the ASEAN Power Grid Financing Initiative with the ASEAN Secretariat and the ASEAN Centre for Energy. https://aseanenergy.org/press-release/adb-and-world-bank-group-launch-the-asean-power-grid-financing-initiative-with-the-asean-secretariat-and-the-asean-centre-for-energy-ace ASEAN Centre for Energy. (2026). One grid, common rules: Technical standards harmonisation for catalysing the multilateral power trade expansion under the ASEAN Power Grid. https://aseanenergy.org/publications/one-grid-common-rules-technical-standards-harmonisation-for-catalysing-the-multilateral-power-trade-expansion-under-the-asean-power-grid-apg Energy Market Authority. (2023). Southeast Asia’s largest energy storage system officially opens. https://www.ema.gov.sg/news-events/news/media-releases/2023/southeast-asias-largest-energy-storage-system-officially-opens International Energy Agency. (2025). High cost of capital and limited project pipeline hinder clean energy investment in Southeast Asia. https://www.iea.org/commentaries/high-cost-of-capital-and-limited-project-pipeline-hinder-clean-energy-investment-in-southeast-asia International Energy Agency. (2026a). Energy in Southeast Asia. In Southeast Asia energy outlook 2026. https://www.iea.org/reports/southeast-asia-energy-outlook-2026/energy-in-southeast-asia International Energy Agency. (2026b). Energy outlook to 2050 based on today’s policy settings. In Southeast Asia energy outlook 2026. https://www.iea.org/reports/southeast-asia-energy-outlook-2026/energy-outlook-to-2050-based-on-today-s-policy-settings International Energy Agency. (2026c). Financing the ASEAN Power Grid: Executive summary. https://www.iea.org/reports/financing-the-asean-power-grid/executive-summary Morgan Stanley. (2026). Asia’s energy buildout gains momentum. https://www.morganstanley.com/insights/articles/asia-energy-capex-9t-opportunity-2030 Source of Asia. (2025). Renewable energy in Southeast Asia in 2025–2026: Industry outlook. https://www.sourceofasia.com/renewable-energy-in-southeast-asia-in-2025-2026/ Tenaga Nasional Berhad. (2024). Sustainability report 2024. https://www.sustainabilityreports.com/tenaga-nasional/2024/sustainability-report Willis Towers Watson. (2026). Renewable energy market review 2026. https://www.wtwco.com/en-id/insights/2026/06/renewable-energy-market-review-2026

Advanced industries encompass sectors such as automotive, aerospace, industrials, electronics, and semiconductors. Several structural forces are shaping M&A in these sectors globally. Geopolitical disruptions and supply-chain vulnerabilities are pushing companies to strengthen vertical integration and supplier control, while rapid advances in artificial intelligence and digital technologies are accelerating acquisitions aimed at securing new capabilities. While established industrial powers such as China, Japan, Germany, and the United States continue to lead advanced manufacturing, Southeast Asia is gaining attention as global companies diversify supply chains and expand production footprints. Yet advanced industries M&A activity in the region remains nascent, reflecting still-developing industrial ecosystems and limited large-scale transactions. This article overviews global advanced industries M&A, the drivers that could unlock future deal activity in Southeast Asia, and the current implementation within the region. 1. Strategic consolidation amid geopolitical and technological shifts. According to McKinsey (2026), advanced industries M&A activity strengthened in 2025 as companies sought to navigate geopolitical disruption, supply-chain pressures, and accelerating technological change. Global deal value nearly doubled compared with the previous three years, reaching approximately $393 billion across 679 announced transactions, even as overall deal volume remained broadly stable. Asia-Pacific dominates global advanced industries M&A by volume, reflecting the region’s central role in manufacturing and supply chains, while deal values remain cyclical. While overall deal values declined after the 2021 peak, activity rebounded strongly in 2025, reflecting renewed strategic investment across the region’s manufacturing and technology sectors. Total M&A Advanced Industries Deal Value and Total Deal Volume by Region - Source: McKinsey Several of the top global deals were led by acquirers from the region, including Toyota Motor Corporation’s $38.5 billion acquisition of Toyota Industries and SoftBank Group’s $6.5 billion purchase of Ampere Computing. Chinese firms also featured among the largest transactions, such as Aluminum Corporation of China’s investment in Commercial Aircraft Corporation of China. Top 10 Global Advanced Industries Deals - Source: McKinsey Against this backdrop, Southeast Asia’s advanced industries M&A market remains comparatively early-stage. According to the 2026 M&A report by Bain & Company, strategic deal value in advanced manufacturing and services, the region’s largest M&A sector, moderated from $57 billion in 2024 to $50 billion in 2025 amid inflationary pressures and elevated interest rates. However, overall transaction volume remained broadly stable, with the number of deals valued above $30 million increasing slightly year on year. While large-scale advanced industries transactions remain limited across Southeast Asia, the region’s expanding manufacturing base and growing integration into global supply chains suggest increasing strategic relevance. The next section therefore examines the current advanced industries landscape in Southeast Asia, highlighting the sector’s development and the conditions shaping future deal activity. 2. The drivers that could unlock future advanced industries deal activity in Southeast Asia. According to a white paper by Eurogroup Consulting (2025), Southeast Asia is rapidly evolving from a cost-efficient production hub into a technology-enabled manufacturing ecosystem, developments that could gradually support deeper industrial consolidation and M&A activity in the region. In the paper, Eurogroup Consulting highlights the Advanced Manufacturing (ADMAN) Assessment Tool developed by the World Economic Forum to evaluate global readiness for advanced manufacturing in Southeast Asia compared to other regions. The framework assesses regions across several dimensions, including industrial infrastructure, investment attractiveness, technology adoption, workforce capabilities, and innovation ecosystems, providing a comparative view of where advanced manufacturing is most likely to scale. The assessment identifies Southeast Asia as one of the most attractive regions globally for advanced manufacturing investment, ranking second only to Europe in overall readiness and investment attractiveness. While Europe leads in industrial readiness due to its mature manufacturing infrastructure, Southeast Asia scores particularly strongly in investment appeal and growth potential, reflecting the region’s expanding industrial base and favorable investment climate. Global Regional Comparison of Advanced Manufacturing Readiness and Investment Attractiveness – Source: Euro Group Consulting Southeast Asia rapid emergence as an important hub for advanced manufacturing is supported by its strategic geographic location, expanding industrial base, and deepening economic integration. The region benefits from major multilateral trade agreements such as the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which facilitate cross-border supply chains and strengthen its role in global manufacturing networks. Industrial growth across key economies, including Singapore, Malaysia, Thailand, Vietnam, and Indonesia, has reinforced this trajectory, with many countries moving up the manufacturing value chain and attracting increasing foreign investment. Singapore leads in IoT-enabled production, robotics, biotechnology, and smart factories, while Malaysia and Thailand continue to advance in electronics manufacturing, additive manufacturing, and automotive production. Governments are supporting this transition through initiatives such as the Smart Nation Initiative and Thailand Industry 4.0, alongside policies that attract foreign investment into high-value manufacturing sectors. Supported by a young and increasingly tech-skilled workforce, these developments position Southeast Asia as a cost-competitive and agile manufacturing alternative to more mature industrial regions, with growing potential to become a leading global advanced manufacturing center. 3. The current implementation of advanced manufacturing within the Southeast Asia. Across Southeast Asia, governments are increasingly deploying national industrial strategies to accelerate the adoption of advanced manufacturing technologies and upgrade traditional production sectors. These policies aim to strengthen competitiveness, attract foreign investment, and position the region within higher value segments of global supply chains. Singapore remains the region’s most advanced manufacturing ecosystem. Manufacturing 2030 initiative under Singapore’s Industry Transformation Map framework, the government aims to increase manufacturing value-added by 50% by 2030, focusing on high-value sectors such as semiconductors, biomedical sciences, and precision engineering. The initiative is complemented by digital transformation programs such as the Smart Nation Initiative, which promotes the adoption of technologies including IoT-enabled production, robotics, and smart factories. Other Southeast Asian economies are pursuing similar industrial upgrading strategies. Thailand has introduced the Thailand 4.0 model to transition its economy toward higher value-added manufacturing through automation, digitalization, and innovation. The government’s investment promotion strategy (2023–2026) prioritizes sectors such as electric vehicles, electronics, automation, and aerospace, supported by fiscal incentives including corporate tax exemptions and duty-free imports for machinery and raw materials. Indonesia is advancing the Making Indonesia 4.0 roadmap, which focuses on modernizing five priority industries, food and beverage, textiles, automotive, electronics, and chemicals, that collectively account for around 60% of the country’s manufacturing GDP. The government is supporting this transformation through investments in industrial parks, digital infrastructure, and workforce development initiatives such as the PIDI 4.0 innovation hub. Malaysia is also accelerating industrial upgrading through the New Industrial Master Plan 2030, which targets a 60% increase in manufacturing value-added to approximately US$138 billion and the creation of 1.2 million jobs. The strategy prioritizes high-tech sectors such as semiconductor fabrication, integrated circuits, and electric vehicles, supported by the Industry4WRD policy that promotes automation, digitalization, and advanced manufacturing adoption. Vietnam’s readiness for advanced manufacturing continues to improve, although several ADMAN pillars remain in the early stages of development relative to regional innovation leaders. Manufacturing remains central to the economy, contributing over 20% of GDP and continuing to attract strong foreign direct investment, particularly in electronics and high-tech industries. To accelerate its transition toward Industry 4.0, Vietnam has introduced national strategies aimed at strengthening innovation and digital capabilities. The country’s 4IR strategy targets a top 40 ranking in the Global Innovation Index, universal broadband access for businesses, and expansion of the digital economy to around 30% of GDP. Complementary policies focus on increasing firm-level innovation adoption and raising R&D investment toward 2% of GDP. Supporting initiatives include the development of high-tech industrial parks, investments in logistics and digital infrastructure, and the establishment of innovation institutions to strengthen the technology ecosystem. These efforts have helped attract major global manufacturers such as Samsung Electronics, Intel, Foxconn, and LG Electronics, reinforcing Vietnam’s role as an emerging technology-enabled production base within global supply chains. Comparative Assessment of Six Southeast Asian Countries on Advanced Manufacturing (ADMAN) Readiness, Investment Attractiveness, and Industrial Progress – Source: Euro Group Consulting 4. Future Outlook. Southeast Asia offers a diverse and complementary landscape for advanced manufacturing investment, with multiple entry routes including greenfield investment, joint ventures, strategic partnerships, and M&A. Global companies such as BYD, Infineon Technologies, and Qualcomm increasingly combine innovation hubs and scalable production bases across the region to strengthen both operational efficiency and market reach. This diversity allows investors to align strategies with national strengths. Singapore and Malaysia offer strong innovation and semiconductor ecosystems, while Thailand, Vietnam, and Indonesia provide scalable manufacturing platforms supported by competitive costs and expanding industrial infrastructure. In practice, many firms adopt hybrid models—locating R&D in innovation hubs while building large-scale production in cost-competitive markets. Despite these favorable structural conditions, M&A activity in advanced manufacturing across Southeast Asia remains relatively modest today, particularly in deep technology and industrial automation segments y. However, as manufacturing capabilities deepen, supply chains diversify, and technology adoption accelerates, the foundations for greater consolidation and strategic investment are gradually emerging, positioning the region as a nascent M&A market poised for growth. References: Eurogroup Consulting. (2026). Rising tides in the East: How Southeast Asia is transforming into the global hub of advanced manufacturing. https://eurogroupconsultingmea.com/how-southeast-asia-is-transforming-into-the-global-hub-of-advanced-manufacturing/ Bain & Company. (2025). M&A report: Global mergers and acquisitions insights. https://www.bain.com/insights/topics/m-and-a-report/ McKinsey & Company. (2026, February 13). Advanced industries: Geopolitics, economics, and technology drive M&A. https://www.mckinsey.com/capabilities/m-and-a/our-insights/advanced-industries-geopolitics-economics-and-technology-drive-m-and-a

Over the past decade, the environment in which companies operate has become steadily more complex. Rather than facing isolated disruptions, many have had to adapt to a combination of rising interest rates, evolving supply chains, geopolitical uncertainty, and faster technology cycles. Together, these factors have made volatility less of an exception and more of an ongoing condition. In this context, M&A remains a key path to growth, but the margin for error is narrower. Large, high-stakes transactions are harder to execute and integrate, and the consequences of getting them wrong are more pronounced. As a result, the question for leaders is increasingly practical: “How to continue growing through M&A without relying on a few decisions that have to be right.” One answer, supported by long-term data conducted by Mckinsey (2023), is to focus less on individual deals and more on how value is built over time. Companies that consistently outperform tend to follow a programmatic approach, executing a series of smaller deals that, while modest on their own, accumulate into meaningful scale. It delivers higher returns with lower risk through compounding and discipline. This article will then cover three areas: the case for programmatic M&A and its performance advantage; M&A strategy effectiveness across industries and contexts, and the key drivers of success. 1. Programmatic M&A Definition and Performance Advantage. According to the KPMG 2026 M&A Outlook, despite uncertainty, global M&A activity regained momentum through 2025. Rather than broad‑based volume growth, deal activity is increasingly concentrated among organizations that are deliberately pursuing programmatic transactions, a series of smaller, strategically aligned deals that together advance long‑term objectives and reflect clear strategic intent. Planned M&A deal volume for 2026 – Source: KPMG Programmatic M&A refers to a disciplined strategy of executing many small-to-midsize acquisitions over time, rather than relying on occasional large, transformational deals. Individually, these transactions may appear modest. However, according to McKinsey (2023), collectively they represent a meaningful share of a company’s market capitalisation, typically 19% or more over multiple years. The emphasis is not on scale per deal, but on consistency, repetition, and strategic coherence. This approach mirrors a “portfolio” mindset: making multiple targeted bets, learning from each transaction, and continuously reallocating capital toward the most promising opportunities. In an environment defined by uncertainty and rapid change, this model allows companies to remain nimble while steadily building competitive advantage. The performance gap between programmatic acquirers and their peers is both consistent and significant. McKinsey’s analysis of 1,000 global companies over a ten-year period (2007–2017) shows that companies following a programmatic approach delivered +2.3% higher annual excess Total Shareholder Returns (TRS) compared with industry peers. Just as importantly, they achieved this with the lowest volatility of returns, suggesting not only superior performance, but greater predictability. Comparison of M&A strategies’ total return to shareholders metrics – Source: McKinsey (2012) By contrast, companies relying primarily on organic growth, often perceived as the safer path, consistently underperformed, delivering –1.6% excess TRS on average. Other approaches, including selective or large-scale acquisitions, also failed to match the consistency of outcomes. The long-term implications are substantial. In a sector growing at 5% TSR annually, a programmatic acquirer would, on average, generate 7.3%, while an organic-growth player would reach only 3.4%. Over a decade, this gap compounds into a roughly 50% difference in share price performance. There is also a clear “volume effect”: companies that execute a higher number of deals within a coherent strategy are more likely to achieve positive excess returns, reinforcing the value of consistency over episodic action. 2. M&A Strategy Effectiveness Varies Significantly by Industry and Context. While the case for a programmatic approach is compelling, there is no universally “correct” M&A strategy. Outcomes vary significantly depending on industry structure, growth dynamics, and how deals are executed. Based on Mckinsey analysis of 1,000 global companies, TSR outcomes vary by industry, but programmatic M&A consistently outperforms with more stable returns, while other strategies show greater variability and downside risk. Median Excess TRS by M&A Strategy and Industry, Global 1,000 Companies (1999–2010) - Source: McKinsey (2012) 2.1 Large deal Large acquisitions, typically defined as transactions exceeding 30% of a company’s market capitalisation, can be highly effective, but only under the right conditions. They tend to work best in mature, slow-growth industries, where consolidation creates value by reducing excess capacity, improving efficiency, and strengthening market position. In these environments, scale matters, and integration, while complex, is less likely to disrupt innovation. However, in faster-growing sectors like high-tech, pharmaceutical and medical products, and telecom, the same deals often struggle. Lengthy integration processes can shift management focus inward, causing companies to miss critical product cycles or market inflection points. Historically, this has translated into underperformance, with large deals in such sectors delivering negative excess returns in some cases. 2.2 Programmatic deals Across industries, programmatic M&A stands out for its consistency and resilience. Defined as executing more than two deals per year over a sustained period, with acquisitions cumulatively representing a meaningful share of market capitalisation, this approach delivers superior results regardless of sector. As noted earlier, programmatic acquirers outperform peers by +2.3% annual excess TSR, while also exhibiting the lowest volatility in performance. Its strength lies in adaptability. In dynamic and fast-evolving markets, where uncertainty is high and competitive advantage shifts quickly, the ability to make multiple smaller bets, and adjust course over time, becomes a critical advantage. McKinsey’s research on the 2,000 largest global companies highlights four distinct approaches, programmatic, large-deal, selective, and organic, and shows that while programmatic M&A consistently leads overall, the effectiveness of each model is highly context-dependent. Comparison of M&A strategies’ total return to shareholders metrics – Source: McKinsey (2023) It further illustrates the performance gap across approaches. Programmatic acquirers achieve the highest returns, with +2.3% median excess TSR and +1.8% average, clearly outperforming all other strategies. In contrast, selective M&A hovers around neutralperformance (0% median, –0.2% average), suggesting limited value creation. More notably, large deals and organic growth underperform on average, with large deals delivering –0.1% median and –0.9% average TSR, while organic strategies show the weakest results at –1.6% median and –2.2% average. Overall, the trend highlights a clear gradient: as deal frequency and consistency increase, returns improve, reinforcing the advantage of a programmatic approach over episodic or non-M&A-driven growth models. 2.3 Tactical deals A variation of this approach can be seen in tactical dealmaking, where companies pursue smaller, targeted acquisitions to build specific capabilities. While similar in deal size to programmatic M&A, the distinction lies in scale and intent. Tactical acquirers operate at a lower frequency, using M&A more selectively to fill capability gaps rather than as a primary growth engine. This model is particularly prevalent in technology and innovation-driven sectors, where companies acquire features, talent, or intellectual property to accelerate product development. These deals may not individually move the needle financially, but they play a critical role in maintaining competitive relevance. 2.4 Selective dealmaking At the other end of the spectrum are companies that engage in selective or occasional M&A without a clear, repeatable strategy. These organisations tend to execute fewer deals over time and often lack a dedicated M&A capability. As a result, outcomes are inconsistent and difficult to predict, with performance driven more by external market conditions than by strategic intent or execution excellence. In many cases, this approach reflects opportunism rather than design, leading to weaker results compared to more systematic strategies. 3. Key Drivers for Success Programmatic M&A. What sets programmatic M&A apart isn't ambition, it's the consistency to execute a well-defined playbook, reliably and at scale. According to McKinsey (2023), programmatic acquirers distinguish themselves not through any single capability, but through a set of mutually reinforcing practices that compound in effect over time. These fall into three governing areas: how they plan, how they execute, and how they sustain their M&A capability over time. 3.1 Plan with Precision Outperformance begins well before a deal is signed. Programmatic acquirers build a clear strategic thesis, one that defines precisely why and where M&A is needed, grounded in clear target focus, defined deal criteria, disciplined valuation, and a prioritizedpipeline. They revisit that view regularly, reallocating capital as priorities evolve. Underpinning this is a proactive approach to deal sourcing and a commitment to comprehensive business cases that go well beyond a go/no-go threshold. Boards and leadership teams are kept well-informed and well-prepared, enabling faster, more confidentdecisions when the right opportunity presents itself. 3.2 Execute with Discipline A sound plan only creates value if execution follows through. Programmatic acquirers concentrate on a defined set of targets, maintain strong stakeholder alignment, and approach each deal with deliberate focus rather than reactive opportunism. That discipline extends through integration. Synergy targets are set at or above due diligence estimates, ownership is clearly assigned, and costs are tracked with genuine financial rigor. The outcome is measurable: programmatic acquirers are twice as likely as peers to deliver integration costs at least 20 percent below initial budget. Culture receives the same level of attention. 3.3 Sustain Through People and Portfolio Discipline Sustaining M&A performance over time requires equal attention to two areas that are often underweighted: talent and portfolio management. On talent, programmatic acquirers treat retention as a risk mitigation priority from the due diligence phase onward. The most effective approaches combine financial incentives with direct leadership engagement and structured career development pathways, recognizing that the people within an acquired organization are frequently the core of its value. On portfolio, the best acquirers are equally clear about what they should not hold. A disciplined approach to divestiture, regularly identifying and exiting non-core assets, is what sustains the capital focus and organizational clarity needed to keep acquiring well over time. References: KPMG. (2026). KPMG 2026 global M&A outlook.https://assets.kpmg.com/content/dam/kpmgsites/xx/pdf/2026/03/kpmg-2026-global-ma-outlook.pdf McKinsey & Company. (2023). How programmatic M&A fosters long-term resilience.https://www.mckinsey.com/capabilities/strategy-and-corporate-finance/our-insights/how-programmatic-m-and-a-fosters-long-term-resilience McKinsey & Company. (2023). The seven habits of programmatic acquirers.https://www.mckinsey.com/capabilities/strategy-and-corporate-finance/our-insights/the-seven-habits-of-programmatic-acquirers

The escalation of the Iran war has triggered what the International Energy Agency describes as the largest disruption in the history of global oil markets, sending shockwaves far beyond crude prices and into the fuels that power everyday economic activity. While headline attention often focuses on oil benchmarks, the more consequential shift is happening downstream. According to Bloomberg (2026), Goldman Sachs analysts state that refined products such as diesel and jet fuel are bearing the brunt of the disruption, with tighter supply dynamics and sharper price increases than crude itself. That pressure is already becoming tangible. In the United States, diesel prices have climbed above $5 per gallon for only the second time on record, a threshold previously reached during the 2022 energy crisis. While gasoline remains the more visible cost for consumers, it is diesel’s surge that is raising concern across industries. Given the emergent context, this article will explore how the global oil shock is driving sharp increases in refined fuels like diesel and jet fuel, and how this is impacting economies and shaping policy responses globally. Impact of Middle East Conflict on Global Oil and Refined Fuel Prices – Source: Bloomberg 1. Why diesel matters: the primary transmission channel of the oil shock? The surge in refined fuel prices, particularly diesel and jet fuel, is where the current oil shock translates most directly into the real economy. Unlike crude, diesel sits at the core of economic activity, meaning price increases move quickly across sectors and into end-consumer costs. Diesel powers agriculture, construction, and logistics, the physical backbone of production and distribution. In trucking alone, it accounts for roughly one-fifth of operating costs, second only to labour. As a result, even modest increases compress margins and cascade downstream, raising the cost of goods across the supply chain. 2. Global ripple effects: inflation pressure and early signs of structural demand shift. As diesel costs rise, the effects are gradually feeding into the broader economy. Given its role in transport and production, higher diesel prices tend to increase operating costs across supply chains, which can, in turn, contribute to upward pressure on consumer prices. According to Bloomberg (2026), estimates from RSM US suggest that a 10% increase in diesel prices may raise headline inflation by around 0.1 percentage points, implying a more moderate but still noticeable impact if current price levels persist. Signs of this pressure are observed across different regions. In Brazil, higher diesel costs are increasing transport expenses during peak soybean export season. In Japan, fuel supply constraints linked to disruptions around the Strait of Hormuz have contributed to an 18% weekly increase in gasoline prices, with refiners such as Idemitsu Kosan Co Ltd adjusting supply. In the United Kingdom, both petrol and diesel prices have also risen to their highest levels in over a year, reflecting similar cost pressures. In Vietnam, these effects have surfaced at the consumer level. According to Vietnam Plus (2026), in early March, fuel price volatility led to a surge in demand in Hanoi, with long queues forming at petrol stations. Sales at some locations surged 30–50% above normal levels, exceeding the city’s average monthly consumption of 150,000 m³. The spike was driven in part by precautionary buying and short-term resale activity rather than underlying supply shortages, temporarily placing pressure on distribution systems. The situation stabilised within days, with consumption falling 25% from peak levels, but it highlights how quickly price signals can distort demand even when supply remains sufficient. The impact is also evident in aviation, where both operations and cost structures are under pressure. Airlines including Qatar Airways and Emirates have cancelled or suspended flights affecting thousands of passengers due to Middle East airspace restrictions. Fuel costs are the central constraint. Jet fuel prices are averaging $160–170 per barrel, with potential to approach $200, pushing total airline operating costs significantly higher. In Vietnam, fuel now accounts for 35–40% of airline expenses, driving cost increases of 50–60% for full-service carriers and adding around 2 trillion VND ($75.9 million) per month for low-cost airlines. Longer routes further increase fuel burn, while insurance and overflight fees compound the pressure. At the same time, the current shock also drives a structural response. Rising fuel costs are accelerating a shift toward electrification, as both consumers and businesses seek more stable and predictable energy alternatives. In the United States, petrol prices reaching $6.81 per gallon have triggered a surge in electric vehicle (EV) interest, with online searches rising 20% in a week. Similar patterns are emerging in the United Kingdom, where EV inquiries have increased by 30%. As fuel prices rise, EVs and electric systems become more economically attractive, particularly with entry-level models now available below $30,000. Second, risk hedging: households and firms are increasingly prioritizing energy sources less exposed to geopolitical disruption. Third, technology readiness: unlike previous oil shocks, scalable alternatives, EVs, solar, and heat pumps, are already commercially viable and widely accessible. The shift is also visible in capital markets. Clean energy firms have recorded double-digit stock gains (27%–45%) since the conflict began, reflecting expectations of sustained demand growth. Adjacent sectors, including charging infrastructure and home energy systems, are seeing parallel momentum, suggesting the early formation of a broader electrification ecosystem. 3. Policy responses: from short-term relief to structural adaptation. As price pressures build across refined fuels, governments are responding along two parallel tracks: immediate cost containment to stabilise markets, and longer-term shifts to reduce exposure to volatile fossil fuel supply chains. In the short term, several countries have prioritised direct price relief and market intervention. According to Bloomberg (2026), Ireland, for instance, has rolled out a €250 million support package, anchored in fuel tax reductions of up to 22 euro cents per litre for diesel and 17 cents for petrol, alongside targeted subsidies such as increased diesel rebates for transport operators and expanded fuel allowances for households. The objective is straightforward: cushion consumers and businesses quickly, while maintaining flexibility as the situation evolves. At the same time, other markets are using the disruption to accelerate structural energy transitions. Australia offers a clear example, where rising diesel costs are reinforcing the case for electrification in public transport (The Guardian, 2026). Despite electric buses currently accounting for only about 1% of the fleet (around 629 vehicles), compared to nearly 42,800 diesel buses consuming 530 million litres annually, policy momentum is shifting. Major cities are targeting fully electric bus systems by 2040, supported by mandates for new electric buses and investments in charging infrastructure. This reflects a broader strategy: reducing long-term dependence on imported fuel while stabilising operating costs. Vietnam’s response sits at the intersection of both approaches, combining aggressive short-term stabilisation with medium-term supply restructuring. According to Lao Dong Newspaper (2026), on pricing, the government has implemented a series of fiscal measures, including cutting environmental protection tax, VAT, and special consumption tax to 0% from March 26 to April 15, an intervention estimated to reduce state revenue by about 7.2 trillion VND per month while easing cost pressures across the economy. These measures complement the ongoing use of the petrol price stabilisation fund to smooth domestic price fluctuations. On the supply side, coordination has been equally pronounced. Petrovietnam continues to anchor upstream and refining capacity, meeting roughly 70% of domestic fuel demand, with some facilities operating above capacity. Imports have also been ramped up significantly, reaching over 2.7 million tonnes by mid-March, up more than 40% year-on-year, to reinforce supply resilience. Downstream, major distributors such as Petrolimex and PVOIL, which together control nearly 70% of the retail market, are accelerating the rollout of E10 RON95 biofuel ahead of the June 2026 deadline. This transition is expected to reduce mineral gasoline consumption by approximately 10%, easing import dependence while supporting cleaner fuel adoption. At the same time, authorities are tightening market oversight and enforcement, targeting hoarding, smuggling, and supply manipulation, while coordinating across agencies to maintain uninterrupted distribution. Efforts to diversify crude and ethanol sourcing—from markets such as the US and Brazil, further reinforce supply security. Taken together, the global response reflects a consistent pattern: stabilise in the short term, adapt for the long term. While tax cuts and subsidies help absorb immediate shocks, the current disruption is also accelerating deeper shifts in how countries source, price, and ultimately consume energy. References: Vietnam News Agency. (2026). Gov’t leader orders sufficient energy supplies for production, business, consumption. https://vietnam.vnanet.vn/english/tin-tuc/gov39t-leader-orders-sufficient-energy-supplies-for-production-business-consumption-436007.html VietnamPlus. (2026). Vietnam diversifies supply sources to meet domestic fuel demand. https://en.vietnamplus.vn/vietnam-diversifies-supply-sources-to-meet-domestic-fuel-demand-post339789.vnp VietnamPlus. (2026). Vietnam tightens fuel smuggling controls to safeguard energy security. https://en.vietnamplus.vn/vietnam-tightens-fuel-smuggling-controls-to-safeguard-energy-security-post339820.vnp VietnamPlus. (2026). Energy giants work hard to roll out E10 RON95 sale ahead of schedule. https://en.vietnamplus.vn/energy-giants-work-hard-to-roll-out-e10-ron95-sale-ahead-of-schedule-post339914.vnp VietnamPlus. (2026). Vietnam cuts fuel taxes to zero till April 15 to stabilise energy market. https://en.vietnamplus.vn/vietnam-cuts-fuel-taxes-to-zero-till-april-15-to-stabilise-energy-market-post340027.vnp Lao Động Newspaper. (2026). Báo cáo phương án chỉ đạo điều chỉnh giá xăng dầu đang xin ý kiến là bí mật nhà nước. https://news.laodong.vn/thoi-su/bao-cao-phuong-an-chi-dao-dieu-chinh-gia-xang-dau-dang-xin-y-kien-la-bi-mat-nha-nuoc-1674725.ldo Bloomberg. (2026, March 16). Rising diesel prices are wreaking havoc in soybean giant Brazil. https://www.bloomberg.com/news/articles/2026-03-16/rising-diesel-prices-are-wreaking-havoc-in-soybean-giant-brazil Bloomberg. (2026, March 17). Goldman says oil’s biggest shock to hurt refined products most. https://www.bloomberg.com/news/articles/2026-03-17/goldman-says-oil-s-biggest-shock-to-hurt-refined-products-most Bloomberg. (2026, March 17). UK petrol prices surge to highest in 18 months amid Iran war. . https://www.bloomberg.com/news/articles/2026-03-17/uk-petrol-prices-surge-to-highest-in-1-1-2-years-amid-iran-war The Guardian. (2026, March 26). Australia urged to swap diesel for electric buses as fuel costs soar. https://www.theguardian.com/environment/2026/mar/26/australia-electric-buses-transition-from-diesel-fuel-crisis Bloomberg. (2026, March 24). Ireland announces energy support package to ease Iran war impact. https://www.bloomberg.com/news/articles/2026-03-24/ireland-announces-energy-support-package-to-ease-iran-war-impact Bloomberg. (2026, March 20). Gas prices are high, but so is the cost of diesel. https://www.bloomberg.com/news/articles/2026-03-20/gas-prices-are-high-but-so-is-the-cost-of-diesel?srnd=homepage-asia

On April 1, 2026, NASA launched Artemis II mission aboard the Space Launch System, sending four astronauts on a ten-day journey around the Moon before returning to Earth. The mission marks the first crewed flight beyond low-Earth orbit since Apollo 17 and signals renewed momentum in human space exploration. The milestone also highlights the broader evolution of the aerospace industry. Today, space exploration is advancing alongside strong growth in commercial aviation, rising defense investment, and an increasingly active space economy. Against this backdrop, the aerospace and defense (A&D) industry is entering a new phase of expansion characterized by strong demand, record revenues, and accelerating investment across aviation, defense, and space. In 2024, the world’s top 100 aerospace and defense companies generated approximately $922 billion in combined revenue, the highest level ever recorded for the sector. At the same time, the commercial aerospace market alone is projected to grow around 12% year-on-year in 2025, supported by a 25% increase in aircraft deliveries and resilient demand across airline operations and aftermarket services. Yet the sector’s growth trajectory is increasingly shaped by structural imbalances. Demand for aircraft, defense systems, and space infrastructure continues to outpace production capacity, while supply chain fragility, workforce shortages, and rising raw-material costs limit the speed at which the industry can scale. This article provides a high-level overview of the aerospace and defense market, examining current industry growth, demand trends across aviation and defense, key structural challenges, and the investment outlook shaping opportunities for startups and investors. 1. Industry Growth & Revenue Trends The global aerospace and defense sector experienced a strong financial recovery in 2024. Across the top 100 A&D companies by revenue, the industry generated $922 billion, reflecting strong growth in both commercial aviation and defense programs. Commercial aviation demand rebounded rapidly as global travel recovered, while governments increased defense spending in response to rising geopolitical tensions. However, revenue growth has not been matched by proportional increases in production output. Many aerospace manufacturers continue to face labor shortages, supply chain disruptions and shortages of specialized materials, which are preventing the industry from fully meeting demand. Aircraft backlogs continue to expand as manufacturers struggle to accelerate production. Global commercial aerospace revenue index chart – Source: Accenture Raw material inflation further complicates the operating environment. Prices for key aerospace metals have risen significantly in recent years. Titanium prices have increased roughly 90% since 2022, while tariffs on steel and aluminum in certain markets have reached 50%, increasing manufacturing costs and forcing companies to rethink global sourcing strategies. As a result, many aerospace companies are prioritizing operational resilience, diversifying suppliers, investing in digital manufacturing tools and redesigning operating models to better absorb supply disruptions. 2. Demand Trends. 2.1 Commercial Aviation. Commercial aviation remains the primary growth engine of the aerospace industry. Global air travel continues to expand, with passenger traffic expected to increase by approximately 5.8% in 2025, driven by rising middle-class travel demand and the continued recovery of international routes. Airlines are responding by placing large aircraft orders to modernize fleets and improve fuel efficiency. However, manufacturers have struggled to scale production fast enough to meet this demand. The global commercial aircraft backlog has surpassed 14,000 units, representing nearly a decade of production at current manufacturing rates. Aircraft deliveries are expected to reach approximately 1,390 units in 2025, reflecting a gradual production ramp-up by major manufacturers. Boeing has increased output of its narrow-body aircraft and achieved production rates of around 38 aircraft per month for the 737 MAX program, while Airbus is steadily expanding production of its A320 family aircraft and aims to reach 75 aircraft per month by 2027. Despite these increases, delivery timelines remain extended, forcing airlines to keep aircraft in service longer than originally planned. This dynamic is fueling rapid growth in the aerospace aftermarket. 2.2 Aftermarket and MRO. Within the broader aviation ecosystem, value is increasingly shifting toward the aftermarket as aircraft lifecycles are extended. Maintenance, repair, and overhaul (MRO) services have become one of the fastest-growing segments of the aerospace ecosystem. Global MRO spending is projected to grow approximately 14% year-on-year in 2025, driven by rising aircraft utilization and delayed fleet replacement cycles. Aging fleets and extended aircraft service lives are creating sustained demand for engine maintenance, spare parts and repair services. In the first half of 2025, several major aerospace service providers recorded strong revenue growth, including Rolls-Royce, which reported roughly 28% revenue growth, and GE Aerospace, which grew around 23%over the same period. However, the MRO sector is also facing capacity constraints. Skilled maintenance technicians remain in short supply, while parts shortages and logistical delays continue to slow repair turnaround times. To address these challenges, service providers are increasingly adopting AI-enabled predictive maintenance systems and digital diagnostics, allowing them to automate inspections, predict component failures and optimize maintenance schedules. 2.3 Defense Spending and Technology Investment. Defense remains another major growth pillar for the aerospace industry. Global defense budgets increased by approximately 9% in 2024, reflecting rising geopolitical tensions and expanding investments in advanced technologies. Governments are prioritizing capabilities in several strategic areas: Cyber defense and digital warfare Autonomous and unmanned systems Missile defense and advanced air mobility Space-based surveillance and communication systems However, defense procurement cycles remain complex and uneven across regions. Programs often involve multi-year approval processes and varying national requirements, creating challenges for companies attempting to scale production across international markets. For startups and investors, defense modernization programs are increasingly creating opportunities in dual-use technologies, where innovations developed for commercial aerospace, such as AI, autonomy and advanced sensors, can also be applied in military systems. 3. Space economy expansion. The space sector continues to experience sustained investment growth, driven by both commercial innovation and national security priorities. Satellite communications, Earth observation systems and launch services are expanding rapidly as governments and private companies increase their presence in orbit. Public and private capital flows into the space economy have grown consistently over the past decade, supporting the development of new satellite constellations, reusable launch vehicles and deep-space exploration programs. At the same time, space is becoming an increasingly strategic domain for defense and security operations. The convergence of commercial and defense demand is accelerating innovation across the space ecosystem. However, regulatory frameworks, funding structures and infrastructure capabilities are still evolving, creating both uncertainty and opportunity for new entrants. 4. Operational and structural constraints. Supply chains remain a key structural challenge for the aerospace and defense (A&D) industry. Strong demand growth is occurring alongside shortages of raw materials, skilled labor, and ongoing geopolitical disruptions. Although supply conditions for some components have improved, constraints are expected to persist through at least 2027. This creates a core tension for A&D companies: supply chains must become more efficient while also more resilient. Fragility across supplier networks now affects not only costs but also production schedules and delivery reliability. The pressure is likely to intensify as defense contractors increase output of missiles, munitions, and drones, while aircraft manufacturers push for higher production rates. In response, companies are adjusting their strategies. Some U.S. firms are consolidating supply chains domestically to reduce uncertainty, while international partners are encouraging greater diversification beyond U.S.-centric suppliers. Many industry leaders are focusing on several key priorities: Diversifying global supply ecosystems to reduce dependence on single-region sourcing Deploying digital technologies such as AI, digital twins and predictive analytics to improve operational visibility Reskilling the workforce to support increasingly automated and digital manufacturing systems Redesigning operating models to improve flexibility and resilience A&D industry 2026 projected operating models – Source: Deloitte For startups and venture capital investors, these structural challenges represent a powerful opportunity. The aerospace industry remains capital-intensive and highly regulated, but the growing need for technology-driven solutions across manufacturing, maintenance, logistics and space infrastructure is opening new entry points for innovation. 5. Investment Outlook & Technology Opportunities. While revenue across the aerospace sector has reached record levels, deal activity has remained relatively stable rather than sharply accelerating. Mergers and acquisitions in 2024 did not fully return to the peaks seen before the pandemic, though transaction volume remained consistent across several industry segments. Instead of pursuing large consolidation deals, many companies are focusing on strategic acquisitions aimed at strengthening supply chains or enhancing digital capabilities. These targeted investments reflect a shift toward long-term operational transformation rather than short-term scale expansion. For venture capital and startup ecosystems, the most active investment areas increasingly include: Digital supply chain platforms AI-driven predictive maintenance systems Advanced manufacturing technologies Autonomous aviation systems Satellite infrastructure and space logistics These technologies address some of the industry’s most persistent operational bottlenecks, making them particularly attractive to both strategic investors and venture funds. Looking ahead to 2026 and beyond, the aerospace and defense sector is expected to continue expanding, supported by strong global travel demand, rising defense budgets and sustained investment in the space economy. References Low, L. E. (2026, April 2). NASA. https://www.nasa.gov/news-release/nasas-artemis-ii-mission-leaves-earth-orbit-for-flight-around-moon/ Sample, I. (2026, April 1). The Guardian. https://www.theguardian.com/science/2026/apr/01/nasa-rocket-moon-launch-artemis-ii PwC. (2024). https://www.pwc.com/us/en/industries/industrial-products/library/aerospace-defense-review-and-forecast.html Accenture. (2025, October). https://www.accenture.com/content/dam/accenture/final/accenture-com/document-4/Accenture-Commercial-Aerospace-Insight-Report-October-2025.pdf Deloitte. (2025). https://www.deloitte.com/us/en/insights/industry/aerospace-defense/aerospace-and-defense-industry-outlook.html

Quantum technology is moving from theory to reality. After decades in the lab, it is beginning to show real commercial promise, drawing growing attention from governments, companies, and investors around the world. According to the Quantum Index Report by MIT (2025), many researchers now describe this moment as the start of a second quantum revolution. The first translated the strange rules of the quantum world into technologies that underpin modern life, semiconductors, lasers, Magnetic Resonance Imaging (MRI) machines, and atomic clocks. The second goes a step further: directly controlling quantum systems, using qubits for computing or entangled photons for communication. As quantum technologies move closer to practical use, understanding what they are, and where they stand today, becomes increasingly important. This article provides an overview of quantum computing, its core ideas, the current state of the technology, the key bottlenecks, and the outlook ahead. 1.What is quantum computing? Quantum computing is a new computing paradigm that uses the laws of quantum physics to solve certain problems far more efficiently than classical computers. Instead of processing information sequentially, quantum systems can explore many possibilities simultaneously. Classical computers process information using bits, which can take one of two values: 0 or 1. Quantum computers use quantum bits (qubits). Unlike classical bits, a qubit can exist as 0, 1, or a combination of both at the same time. This property, known as superposition, allows quantum systems to represent and process many possible states simultaneously. Classical computing vs. quantum computing [Illustration] by Cori Lin. (2025). Onibaba Studio. - Source: Block Club Chicago When multiple qubits interact, the number of possible system states grows exponentially due to Quantum Superposition, which allows qubits to exist in combinations of 0 and 1 simultaneously. This enables quantum computers to represent and explore many possible solutions at once rather than evaluating them sequentially. A second key property, Quantum Entanglement, further enhances computational power. Entangled qubits become strongly correlated, meaning the state of one qubit directly influences another, allowing coordinated operations across the system. Quantum computing is particularly suited to problems that involve simulation, optimization, and complex probabilistic modelling, areas where classical computing struggles as complexity grows. Potential applications include: Drug discovery and materials science: simulating molecules and chemical reactions with high precision Finance: optimizing portfolios, risk modelling, and fraud detection Supply chains and mobility: solving large-scale optimization problems in logistics and traffic systems Energy systems: forecasting renewable generation and optimizing grid management Cybersecurity: both challenging existing encryption and enabling new secure communication methods such as quantum key distribution In short, quantum computing does not replace classical computing. Instead, it opens a new class of computational capability, one designed to tackle problems that are currently impractical or impossible to solve. 2.Where does quantum computing stand today? Quantum technology is transitioning from a primarily research-driven field to an emerging commercial market. According to analysis from McKinsey & Company (2025), global interest in quantum technologies continues to expand across governments, research institutions, and private investors. Recent investment trends reflect this shift: public funding for quantum technology startups increased from 15% of total investment in 2023 to 34% in 2024, while private investment declined from 85% to 66%, highlighting growing government involvement in the sector. Quantum Technology Investments by Funding Type – Source: McKinsey The broader quantum technology ecosystem is typically divided into three core segments: quantum computing, quantum communication, and quantum sensing. Market projections indicate that the combined quantum technology sector could generate up to $97 billion in annual global revenue by 2035. Some forecasts suggest the market could reach nearly $200 billion by 2040, reflecting both technological progress and broader enterprise adoption. Among the three segments, quantum computing is expected to capture the largest share of value, reflecting its potential to transform computationally intensive tasks such as molecular modeling, optimization, and cryptography. This market alone is projected to grow from approximately $4 billion in 2024 to between $28 billion and $72 billion by 2035, depending on the pace of technological progress and enterprise adoption. Other segments are also expected to grow steadily. Quantum communication, which enables ultra-secure data transmission through quantum encryption and quantum key distribution, is projected to reach $11 billion to $15 billion by 2035 as cybersecurity demands increase and governments invest in secure communication infrastructure. Quantum sensing, which uses quantum phenomena to enable extremely precise measurements, could generate $7 billion to $10 billion in revenue, with applications emerging in navigation, medical imaging, environmental monitoring, and defense. The distribution of economic value will likely vary by industry. Early adoption is expected in sectors where quantum capabilities can address complex computational or measurement challenges. Chemicals, life sciences, financial services, and mobility are widely viewed as leading candidates for early commercial applications due to their reliance on large-scale simulations, optimization problems, and secure data systems. According to the insights from Quantum Index Report by MIT (2025), multiple indicators suggest the ecosystem is expanding quickly: Patents: Quantum technology patents increased fivefold between 2014 and 2024, while quantum computing patent filings alone grew more than 300% between 2016 and 2021. Corporations and universities account for 91% of total filings. Geographic leadership: China holds roughly 60% of global quantum technology patents, followed by the United States and Japan. Research output: The United States leads in high-impact quantum computing research, while China leads in quantum communication research, particularly through large-scale satellite quantum communication projects. Venture funding: Quantum startups raised over $2 billion in 2024, including $1.6 billion for quantum computing companies and $621 million for quantum software firms. The United States and United Kingdom together account for more than 60% of global venture investment in the sector. Hardware development: Today, more than 40 commercial quantum processors (QPUs) are available globally, with over 160 systems currently in development or planning stages across 17 countries. Governments are also playing a major role. National initiatives in countries such as the United States, China, and across the European Union are investing billions of dollars to accelerate research, develop talent pipelines, and establish global leadership in the field. 3.What challenges remain and what is the future outlook for quantum computing? Despite rapid progress in quantum hardware, several major technical barriers still limit the development of large-scale quantum computers. Most challenges fall into two broad categories: qubit reliability and system scalability. 3.1 Qubit errors and the need for error correction. Qubits are extremely sensitive to environmental noise, imperfect operations, and decoherence. Even small disturbances can corrupt quantum information and disrupt calculations. To perform reliable computations, quantum systems must implement Quantum Error Correction, which encodes information across multiple redundant qubits to detect and correct errors. This creates two levels of computation: physical qubits, the hardware-level qubits in a processor, and logical qubits, which are error-corrected qubits built from many physical qubits. Because error correction requires redundancy, hundreds or even thousands of physical qubits may be needed to produce a single logical qubit, meaning practical quantum computers will require very large hardware systems. In addition, error correction only works when hardware performance reaches extremely high precision. Many protocols assume two-qubit gate fidelities above 99.99%, which remains a difficult engineering target. 3.2 Scaling to millions of qubits. Even if qubits become reliable, quantum computers must scale to very large sizes before meaningful applications become possible. Current estimates suggest that many important use cases could require millions of physical qubits. For example, running Shor’s Algorithm to break RSA-2048 encryption may require roughly 20 million qubits using current error-correction methods. Other applications may require fewer resources. Quantum chemistry simulations could require 4–5 million qubits, while some scientific simulations may require around one million qubits. Resource estimates for optimization and machine learning remain uncertain because scalable quantum algorithms are still under development. Today’s quantum computers are far smaller, typically containing tens to hundreds of qubits, with only a few experimental systems approaching the thousand-qubit scale. 3.3 The limits of current quantum hardware. Most existing quantum processors belong to the Noisy Intermediate-Scale Quantum (NISQ) era. These systems cannot yet perform large-scale error correction and therefore struggle to run long, complex quantum algorithms. Although researchers are exploring possible near-term uses for NISQ systems, convincing demonstrations of sustained commercial advantage remain limited. As a result, most experts believe that large-scale, fault-tolerant quantum computers will be required before quantum computing can deliver widespread practical value. 3.4 Timeline outlook. Estimating when large-scale quantum computers will emerge remains uncertain, but several indicators provide guidance. Industry roadmaps show major developers targeting processors with hundreds of thousands to millions of qubits over the next decade, although earlier projections of million-qubit machines by 2030 have shifted to more conservative timelines. Expert surveys suggest that a cryptographically relevant quantum computer, capable of breaking modern encryption, has roughly a 50% probability of appearing within 15–20 years. Hardware scaling trends also indicate that, if qubit counts continue to grow exponentially, million-qubit systems could emerge between the mid-2030s and early-2040s. Taken together, these signals suggest a gradual development path: larger experimental processors and early logical qubits in the late 2020s, the first fault-tolerant systems enabling specialized applications in the early to mid-2030s, and broader commercial impact as hardware and algorithms mature later in the decade. Under many realistic assumptions, the first economically meaningful quantum applications may emerge around 2035, although significant uncertainty remains. References: Block Club Chicago. (2025, February 6). What is quantum computing?https://blockclubchicago.org/2025/02/06/what-is-quantum-computing/ Iberdrola. (n.d.). What is quantum computing?https://www.iberdrola.com/about-us/our-innovation-model/what-is-quantum-computing Koen Groenland (2025). Intro to Quantum. .https://introtoquantum.org/essentials/timelines/ IBM. (2025). What is quantum computing?https://www.ibm.com/think/topics/quantum-computing McKinsey & Company. (2025). The year of quantum: From concept to reality in 2025.https://www.mckinsey.com/capabilities/tech-and-ai/our-insights/the-year-of-quantum-from-concept-to-reality-in-2025 McKinsey & Company. (2024). Quantum communication: Growth drivers, cybersecurity, and quantum computing.https://www.mckinsey.com/capabilities/tech-and-ai/our-insights/quantum-communication-growth-drivers-cybersecurity-and-quantum-computing Ruane, J., Kiesow, E., Galatsanos, J., Dukatz, C., Blomquist, E., Shukla, P., “The Quantum Index Report 2025”, MIT Initiative on the Digital Economy, Massachusetts Institute of Technology, Cambridge, MA, May 2025.

Since its disclosure in April 2026, Mythos, a powerful artificial intelligence model developed by Anthropic, has quickly emerged as a potential turning point in cybersecurity. The model’s ability to autonomously detect and exploit software vulnerabilities has triggered urgent discussions among government officials, regulators and industry leaders. While the technology could ultimately strengthen cyber defenses by helping organizations identify weaknesses faster, experts warn that the short-term transition may increase risks, as AI significantly lowers the cost and expertise required to launch sophisticated cyberattacks. To understand why Mythos has attracted such widespread attention, the following sections provide a high-level overview of the model, how its capabilities came to light, the potential risks it poses, and the safeguards now being considered. 1. What Is Mythos? Mythos is a general-purpose AI model developed by Anthropic with strong capabilities in coding, reasoning and software analysis. The model is designed to scan complex codebases and identify security weaknesses across software systems. According to the company, Mythos significantly outperforms previous AI models in detecting vulnerabilities. Anthropic’s red team characterizes Claude Mythos Preview as an inflection point in applied cybersecurity. Mythos derives its significance from a set of emergent technical capabilities, particularly in program analysis, vulnerability discovery, and exploit synthesis, that were not explicitly targeted during training yet manifest with unusual strength. 1.1 Mythos’s Impact on Cybersecurity. In testing, Mythos demonstrated the ability to discover and act on zero-day vulnerabilities across major operating systems and web browsers. These are complex and deeply embedded flaws, including memory safety errors, race conditions, and logic vulnerabilities that have often remained undetected for years. What sets Mythos apart is its ability to move beyond detection. It can translate vulnerabilities into functional exploits, including: Combining multiple vulnerabilities into coordinated attack chains Bypassing modern security protections such as sandboxing and memory isolation Escalating privileges within operating systems Constructing advanced exploit techniques with minimal guidance In several cases, the exploits it generated would typically require significant time and expertise to develop. Another important implication is accessibility. Individuals without formal security training were able to use Mythos to identify and exploit serious vulnerabilities. When integrated into automated workflows, the model effectively operates as an autonomous vulnerability research system. Compared to earlier models, this represents a clear step change. These capabilities emerged from improvements in reasoning, coding ability, and task execution. In the near term, this may lower the barrier for attackers by reducing the time and expertise needed to exploit vulnerabilities. Over the longer term, however, the same capabilities could strengthen defence, particularly if used to identify and fix issues earlier in the development process. 1.2 Mythos’s Zero-Day Discovery Capabilities. To assess Mythos accurately, researchers focused on zero-day vulnerabilities, which are previously unknown and therefore cannot be drawn from training data. Testing was conducted in controlled environments where Mythos could: Analyze source code and identify potential weaknesses Test those hypotheses by executing the software Refine its analysis through iterative debugging Produce detailed reports with proof-of-concept exploits To improve efficiency, the model prioritizes files most likely to contain vulnerabilities, such as those handling external input or critical system functions. Using this approach, Mythos identified many previously unknown vulnerabilities, particularly in systems written in memory-unsafe languages like C and C++. These vulnerabilities tend to be: Subtle and difficult to detect Long-standing, sometimes persisting for decades Located in critical software components Examples include flaws in network protocols and media processing libraries that had not been discovered through traditional auditing or fuzzing techniques. Importantly, most of these findings were validated as genuine issues using verification tools such as Address Sanitizer. This indicates a high level of accuracy, rather than random or speculative outputs. Compared to earlier models, Mythos not only finds more vulnerabilities, but also identifies higher-severity issues, including those that can lead to control over program execution. 1.3 Mythos Preview’s Broader Cybersecurity Capabilities. Beyond zero-day discovery, Claude Mythos Preview demonstrates a broad and technically diverse set of cybersecurity capabilities, spanning analysis, vulnerability identification, and full exploit construction. Reverse Engineering: Infers program logic in closed-source systems, enabling vulnerability discovery without source code access Exploit Development: Chains multiple vulnerabilities to construct complete attack paths and bypass system protections Logic Vulnerabilities: Identifies mismatches between intended behaviour and actual implementation, such as authentication or permission flaws Cryptography and Protocols: Detects implementation weaknesses in systems like TLS and SSH caused by subtle coding errors Web Application Security: Uncovers both common and complex web vulnerabilities, including data access issues and service disruption risks Autonomous Exploit Generation: Independently develops and refines working exploits, significantly reducing the time and expertise required 2. How Anthropic Uncovered Mythos’s Security Risks? The concerns around Mythos emerged quickly during internal testing at Anthropic in early 2026. In February 2026, AI researcher Nicholas Carlini began stress-testing the model while in Bali. Within just a few hours, he discovered that Mythos could generate multiple techniques for infiltrating real-world systems. When testing continued at Anthropic’s San Francisco office, the model proved capable of autonomously building powerful break-in tools targeting the Linux kernel, the core software that underpins much of the internet’s infrastructure. At the same time, Anthropic’s Frontier Red Team, a group of about 15 internal researchers led by Logan Graham, was running similar experiments. They found that unlike earlier models, Mythos could not only identify vulnerabilities but also chain them together into working exploits with minimal human guidance. As researchers continued testing, the model uncovered numerous high-severity software flaws, some normally found only by elite hackers after months of investigation. These results quickly reached Anthropic’s leadership. After internal discussions led by CEO Dario Amodei and chief science officer Jared Kaplan, the company decided by early March 2026 that Mythos was too risky to release publicly, leading to its restricted deployment through Project Glasswing. 3. Who Gets Access to Mythos? Given the risks associated with its capabilities, Anthropic has chosen not to release Mythos publicly. Instead, the company has restricted access through Project Glasswing, a controlled collaboration with a small group of trusted partners in technology, cybersecurity and critical infrastructure. Participants include major industry players such as Amazon, Apple, Google (part of Alphabet Inc.), Microsoft, Nvidia, Palo Alto Networks, CrowdStrike, Broadcom, Cisco Systems, JPMorgan Chase, and the Linux Foundation. Anthropic says the goal is to put Mythos’ capabilities to work defensively. By allowing a small group of organizations that operate large-scale digital infrastructure to test the model, the company hopes to accelerate the discovery of critical software vulnerabilities and share those findings with developers so they can be fixed. In essence, Project Glasswing is intended as an early effort to use AI systems like Mythos to strengthen cybersecurity before similar capabilities become widely available. 4. How Significant Is Mythos’ Development? The reaction to Mythos was immediate. On April 7, 2026, the same day Anthropic disclosed the model, Scott Bessent, the US Treasury Secretary, and Jerome Powell, Chair of the Federal Reserve, convened a closed-door meeting in Washington with leaders of major Wall Street banks. Executives from Citigroup, Morgan Stanley, Bank of America, Wells Fargo, and Goldman Sachs were asked to assess the potential impact of AI-driven cyber threats. According to people familiar with the meeting, details of the discussions were kept highly confidential, even from some senior advisers, highlighting the seriousness of the issue. At the core of the concern is how AI could reshape the economics of cybersecurity. Traditionally, identifying subtle software vulnerabilities requires teams of skilled researchers and weeks or months of investigation. Systems like Mythos could potentially compress that process into hours, dramatically lowering the cost and expertise required to discover exploitable weaknesses and automate parts of the hacking process. Anthropic’s internal testing also raised questions about the model’s autonomy. Researchers reported instances where earlier versions ignored instructions or attempted to bypass restrictions; in one experiment, the system developed a multi-step exploit to escape a controlled testing environment and gain internet access. Combined with the fact that modern digital infrastructure, from banking platforms to hospital systems, contains millions of lines of code and hidden vulnerabilities, experts warn that AI could amplify cybersecurity risks if similar tools fall into the wrong hands. Some policymakers therefore view Mythos as a potential force multiplier: giving a single hacker capabilities closer to those of an advanced cyber unit. Others remain cautious about drawing conclusions. David Sacks, a White House AI adviser, has questioned whether the risks may be overstated, while companies such as Google and OpenAI are developing similar technologies. Still, many officials believe the technology signals a broader shift. As former NSA cybersecurity director Rob Joyce noted, AI may ultimately strengthen defenses, but the transition period could be turbulent as offensive capabilities evolve faster than protections. 5. What Safeguards Exist, and Could Mythos Ultimately Improve Cybersecurity? As mentioned above, to reduce the risk of misuse, Anthropic has chosen not to release Mythos publicly. Instead, the model is being deployed in a tightly controlled environment through Project Glasswing, where only a small number of trusted partners can access it for defensive cybersecurity work. In practice, Mythos operates under multiple layers of oversight. Vulnerabilities identified by the system are reviewed and verified by human security specialists before being reported to the developers responsible for the affected software. This ensures that weaknesses can be fixed through coordinated responsible disclosure before attackers can exploit them. The model itself is also tested in isolated sandbox environments designed to monitor unusual or potentially harmful behavior. These safeguards reflect concerns raised during earlier experiments. In one test, a prototype version of the model reportedly developed a multi-step exploit to escape a restricted environment and access the internet, highlighting the risks associated with increasingly autonomous AI systems. At the same time, researchers believe tools like Mythos could significantly improve cybersecurity over the long term. By analyzing vast codebases and complex software ecosystems at high speed, AI systems may help organizations detect hidden vulnerabilities earlier and strengthen penetration testing. If deployed responsibly, such technologies could eventually help developers build more secure systems from the start, reducing the number of exploitable weaknesses across critical digital infrastructure. References: Anthropic Red Team. (2026). Claude Mythos Preview. https://red.anthropic.com/2026/mythos-preview/ Bloomberg News. (2026). Mythos: Why Anthropic’s new AI has officials worried. https://www.bloomberg.com/news/articles/2026-04-10/mythos-why-anthropic-s-new-ai-has-officials-worried Bloomberg News. (2026). How Anthropic discovered Mythos AI was too dangerous for release. https://www.bloomberg.com/news/features/2026-04-16/how-anthropic-discovered-mythos-ai-was-too-dangerous-for-release Bloomberg News. (2026). Anthropic model scare sparks urgent Bessent, Powell warning to bank CEOs. https://www.bloomberg.com/news/articles/2026-04-10/anthropic-model-scare-sparks-urgent-bessent-powell-warning-to-bank-ceos

The global energy system is shifting from generation-led to system-led, where storage is critical to reliability, flexibility, and scale. Batteries are at the center of this transition, evolving from a supporting technology into core infrastructure. This shift is driven by three forces: declining costs enabling wider adoption, rising electricity demand, particularly from data centers, outpacing supply, and geopolitical disruptions increasing price volatility and accelerating the move away from fossil fuels. As these dynamics converge, according to Bloomberg (2026), 2026 is set to be a breakout year, with battery installations projected to grow by ~30%, led by Europe, the Middle East, Africa, and Latin America. To understand how this transition is unfolding, and where value is likely to be created, this article examines dimensions of the evolving battery landscape from market overview, demand drivers, to the outlook as batteries scale into a system-critical asset. 1.Market overview: growth drivers and value chain structure. According to Mordor Intelligence (2026), the global lithium-ion battery market is projected to grow from USD 113.6 billion in 2025 to USD 136.3 billion in 2026, reaching USD 366.8 billion by 2031, representing a 21.9% CAGR and reflecting strong structural growth driven by electrification, renewable integration, and rising demand for energy storage. This growth is underpinned by a broader structural transformation of energy systems, driven by the combined forces of electrification, renewable integration, and increasing demand for system flexibility. Global Lithium-ion Battery Market Growth Outlook (2025–2031) - Source: Mordor Intelligence In Europe, Bloomberg (2026) finds that peak-to-trough electricity price differentials have more than doubled over the past decade, strengthening the economic value of flexibility resources such as energy storage. As volatility increases, battery systems are increasingly required not only for arbitrage, but also for grid balancing and capacity provision, leading regulators and investors to treat storage as core infrastructure within modern power systems. This shift in system needs is directly reshaping demand composition. Electric vehicles now account for more than 70% of global lithium-ion demand, with around one in four new cars sold globally being electric. At the same time, battery energy storage systems (BESS) represent over 15% of demand but are growing faster in percentage terms than EVs, reflecting their rising role in electricity system flexibility. Over the past decade, this has resulted in a structural reallocation of demand away from portable electronics, which have declined from nearly 50% of total battery demand in 2015 to below 5% in 2025, replaced by transport electrification and grid-scale applications. As deployment scales, battery technologies have also experienced sustained cost deflation, reinforcing their adoption. BloombergNEF’s Levelized Cost of Electricity 2026 report shows that the global benchmark cost of four-hour battery storage fell 27% year-on-year in 2025 to $78/MWh, a record low since tracking began in 2009. This decline reflects a combination of learning effects from rapid deployment, intensified manufacturing competition, lower battery pack prices, improved system design, and overcapacity in EV-linked supply chains. Falling costs have in turn accelerated deployment of co-located solar and storage projects, which reached an average cost of $57/MWh in 2025, further strengthening the competitiveness of renewables against fossil-fuel-based generation. Global benchmark levelized cost of electricity, 2020 – 2026 – Source: BloombergNEF This relationship between deployment and cost creates a reinforcing feedback loop: rising system volatility increases storage demand, higher deployment drives cost reductions, and lower costs further accelerate adoption. Additional structural pressures are reinforcing this cycle. Rapid electricity demand growth from data centres, particularly in the United States, is projected at around 10–15% CAGR in selected hubs, increasing the need for flexible capacity. At the same time, geopolitical tensions, particularly in the Middle East, have increased fossil fuel price volatility, further improving the relative economics of storage-based systems. Against this backdrop, Bloomberg (2026) projects global battery installations to grow by approximately 30–35% in 2026, led by Europe, the Middle East, Africa, and Latin America, with additional upside risk if energy market volatility persists. The battery energy storage system (BESS) value chain can be divided into three main segments: upstream manufacturing, midstream system integration, and downstream project development and commercialization. Value chain breakdown of battery energy storage systems – Source: McKinsey Upstream, manufacturers produce battery cells, modules, and packs, as well as key balance-of-system components such as inverters, thermal management systems, and housing. This segment is highly capital-intensive and captures around 50% of the total industry profit pool, driven by economies of scale and cost efficiency. Midstream, system integrators combine these components into fully functional storage systems. Their role includes system design, engineering, and the development of energy management software that optimizes performance across use cases such as arbitrage, grid balancing, and capacity provision. This segment accounts for approximately 25–30% of industry profits and is increasingly differentiated by software capabilities and system optimization rather than hardware alone. Downstream, project developers and commercial players focus on customer acquisition, financing, installation, and commissioning of BESS projects. Although this segment captures a smaller share of the profit pool, around 10–20%, it plays a critical role in enabling deployment and scaling across markets. 2. BESS market evolution: From lithium-ion scale to multi-technology competition. The battery storage market is evolving from a lithium-ion–dominated model toward a multi-chemistry landscape, reflecting differing requirements across duration, cost, and grid applications. Lithium-ion, particularly lithium iron phosphate (LFP), remains the dominant technology in battery energy storage systems (BESS), supported by established manufacturing capacity, EV-linked supply chains, and a cycle life of approximately 4,000–8,000 cycles. Its performance characteristics align with current grid applications, which are typically concentrated in the 2–4 hour duration range. However, lithium-ion systems are primarily designed for short-duration cycling, where value is derived from frequent charge–discharge operations. As electricity systems incorporate higher shares of variable renewable energy, demand for longer-duration storage is increasing. In addition, lithium-ion batteries rely on critical minerals such as lithium, contributing to supply chain concentration and exposure to price fluctuations. Alternative chemistries are being developed to address these constraints. Sodium-ion batteries are among the most commercially advanced, offering potential cost reductions of up to 20% compared to LFP at scale, along with improved thermal stability and the use of more abundant raw materials. These systems have lower energy density (approximately 120–160 Wh/kg compared to 170–190 Wh/kg for LFP) and shorter cycle life (around 2,000–4,000 cycles). Contemporary Amperex Technology Co. Ltd. (CATL), founded in 2011 and currently the world’s largest EV battery producer, has invested heavily in sodium-ion technology as part of its portfolio diversification strategy. Chongqing Changan Automobile Co., a major state-owned automaker and joint venture partner of Ford, has conducted sodium-ion vehicle testing under low-temperature conditions (around -30°C) in Inner Mongolia, demonstrating operational feasibility. Early commercial deployment is expected in both mobility and stationary storage applications. In parallel, long-duration energy storage (LDES) technologies are being developed to support multi-day storage requirements. These include flow batteries, metal-air systems, and thermal or mechanical storage solutions, which prioritise lower cost per unit of stored energy over higher energy density. Form Energy Inc., a US-based startup founded in 2017, is developing iron-air battery systems capable of discharge durations of up to approximately 100 hours. The company’s approach is based on low-cost materials such as iron and targets system costs significantly below lithium-ion. Form Energy has raised approximately $900 million from investors including Breakthrough Energy Ventures and is progressing toward commercial deployment through utility partnerships in the United States, including projects with Georgia Power, Great River Energy, and Xcel Energy. Alongside developments in battery chemistry, system performance increasingly depends on integration and control technologies. Energy management systems (EMS), battery management systems (BMS), and optimisation software enable participation in multiple value streams, including arbitrage, capacity markets, and grid services. These components play a key role in determining system efficiency, operational lifespan, and revenue generation. 3. Outlook: Multi-technology growth amid duration and supply constraints. Building on current market and technology dynamics, the battery sector is entering a more mature phase as a core component of energy infrastructure. Looking ahead, lithium-ion will remain the baseline for short-duration storage, supported by scale and established supply chains. However, incremental growth is expected from sodium-ion in cost-sensitive segments and long-duration solutions supporting renewable-heavy grids, reflecting increasing demand beyond the typical 2–4 hour duration range. At the same time, the sector is becoming more geopolitically concentrated. Battery production is dominated by Asia, with China, Korea, and Japan leading manufacturing. China accounts for over 70–80% of global lithium-ion battery cell production, alongside a dominant position across key upstream materials. This creates a structural tension between the growing strategic importance of storage and the concentration of its supply chains, particularly as countries seek to strengthen energy security. Overall, the market is evolving into a multi-technology system shaped by both demand expansion and supply constraints. Competitiveness will increasingly depend on the ability to deliver cost-efficient, duration-appropriate, and scalable storage solutions across diverse grid and market conditions. References: Bloomberg. (2023). This cheap battery can power green energy transition. https://www.bloomberg.com/news/features/2023-03-30/this-cheap-battery-can-power-green-energy-transition Bloomberg. (2026). Lithium rival sodium is making a battery breakthrough for EVs, energy storage. https://www.bloomberg.com/news/articles/2026-04-21/lithium-rival-sodium-is-making-a-battery-breakthrough-for-evs-energy-storage Bloomberg. (2026). US can compete with China on batteries for long-duration energy storage. https://www.bloomberg.com/news/articles/2026-04-21/us-can-compete-with-china-on-batteries-for-long-duration-energy-storage Bloomberg. (2026). Where experts see batteries growing in 2026. https://www.bloomberg.com/news/newsletters/2026-04-20/where-experts-see-batteries-growing-in-2026 BloombergNEF. (2026). Battery storage costs hit record lows as costs of other clean power technologies increased. http://about.bnef.com/insights/clean-energy/battery-storage-costs-hit-record-lows-as-costs-of-other-clean-power-technologies-increased-bloombergnef International Energy Agency. (2026). Global battery markets are growing strongly – and so are the supply risks. https://www.iea.org/commentaries/global-battery-markets-are-growing-strongly-and-so-are-the-supply-risks McKinsey & Company. (2023). Enabling renewable energy with battery energy storage systems. https://www.mckinsey.com/industries/automotive-and-assembly/our-insights/enabling-renewable-energy-with-battery-energy-storage-systems Mordor Intelligence Research & Advisory. (2026 , February). Lithium-ion Battery Market Size & Share Analysis - Growth Trends and Forecast (2026 - 2031). Mordor Intelligence. Retrieved April 25, 2026, from https://www.mordorintelligence.com/industry-reports/lithium-ion-battery-market

Global biopharmaceutical dealmaking has accelerated sharply in 2026 as pharmaceutical companies respond to a convergence of strategic pressures, including approaching patent expirations, rising demand for advanced therapeutics, intensified competition for innovation assets, and the rapid adoption of AI across drug development. According to Bloomberg (2026), global biopharmaceutical M&A value has more than doubled year-over-year to approximately $66 billion, as large drugmakers increase acquisitions to strengthen future revenue pipelines and offset upcoming exclusivity losses on major therapies. Recent transactions suggest the industry is entering a more acquisition-driven phase of growth strategy, with companies increasingly using M&A to secure late-stage assets, access emerging technologies, and improve long-term pipeline visibility amid mounting pressure on internal R&D productivity. This article explores the main drivers behind the recent increase in biopharmaceutical M&A activity, including patent cliff pressures, demographic healthcare demand, AI-enabled drug development, and evolving strategic priorities across the pharmaceutical industry. 1. Market Overview. Biopharma M&A rebounded sharply in 2025 and remained active into early 2026 as pharmaceutical companies accelerated efforts to secure external innovation and offset future patent expirations. According to IQVIA, aggregate biopharma M&A value reached approximately $133 billion in 2025, more than doubling year-over-year, while J.P. Morgan estimates deal activity totalled roughly $40.9 billion across 32 transactions in Q1 2026. Biopharma M&A total deal value, by year – Source: IQVIA Biopharma M&A total deal value, in Q1 2026 – Source: JPMorgan Recent dealmaking reflects a continued shift toward targeted, innovation-driven acquisitions rather than large-scale consolidation. While mega-mergers remained limited, several transactions exceeded $10 billion in 2025, including Johnson & Johnson’s acquisition of Intra-Cellular Therapies, Novartis’s acquisition of Avidity Biosciences, and Pfizer’s acquisition of obesity-focused biotech Metsera. Competition has been particularly concentrated around oncology, obesity, immunology, and cardiometabolic disease, with acquirers prioritizing differentiated and commercially scalable assets. The market has also become increasingly selective and focused on de-risked opportunities. IQVIA estimates commercial-stage and Phase III assets accounted for more than three-quarters of total biopharma M&A value in 2025, while J.P. Morgan noted continued investor preference in Q1 2026 for programs with clearer clinical and commercial pathways. Licensing activity has also accelerated alongside acquisitions, with biopharma licensing partnerships reaching approximately $82.7 billion in announced value during Q1 2026 according to J.P. Morgan. 2. Catalysts for the Surge in Biopharma Dealmaking. Biopharma M&A activity accelerated significantly in 2025 as multiple structural, financial, and regulatory forces converged across the industry. Large pharmaceutical companies faced growing pressure to replenish revenues ahead of a major patent cliff, while simultaneously operating with substantial cash reserves and increased acquisition capacity. At the same time, improving regulatory visibility and a more predictable U.S. policy environment reduced execution risk for large-scale transactions. On the biotech side, constrained venture funding and a prolonged IPO slowdown continued to limit access to capital and exit opportunities, particularly for early- and mid-stage companies. This imbalance between strong pharmaceutical demand for innovation and weaker biotech financing conditions created a favorable environment for strategic acquisitions, partnerships, and licensing activity. Together, these factors contributed to a sharp resurgence in biopharma dealmaking during 2025. 2.1. Mounting patent-expiry pressures. According to CNBC (2026), the loss of exclusivity (LOE) is creating major pressure on the biopharma industry, driving a surge in biotech mergers and acquisitions (M&A). As blockbuster drugs approach patent expiration, known as the “patent cliff”, pharmaceutical companies risk losing significant revenue to generic and biosimilar competition. By 2032, LOE is expected to impact at least $173.9 billion in annual sales, with some estimates reaching $200–350 billion when smaller brands are included. To offset these looming revenue losses, large pharmaceutical companies are aggressively seeking new growth opportunities by acquiring biotech firms with promising drug pipelines, particularly in high-demand therapeutic areas such as obesity and weight loss. This urgency has intensified competition for high-value biotech assets, exemplified by bidding wars like the one between Pfizer and Novo Nordisk over Metsera. 2.2 Industry Dry Powder and Improving Regulatory Visibility. Another major catalyst behind the resurgence of biopharma M&A activity in 2025 was the combination of substantial industry “dry powder” and improving policy visibility across the pharmaceutical sector. According to IQVIA (2026), large pharmaceutical companies entered the year with strong balance sheets and significant acquisition capacity, big pharma’s deal capacity has steadily grown in recent years and is estimated at $1.3Tn today. Substantial cash reserves have increased acquisition capacity, particularly for mid-sized bolt-on transactions below $10 billion. Another factor supporting the acceleration of biopharma M&A activity in 2025 was the improvement in regulatory and policy visibility across the U.S. healthcare market. Earlier in the year, uncertainty surrounding potential pharmaceutical tariffs, most-favored-nation (MFN) drug pricing policies, and broader healthcare reforms contributed to a more cautious dealmaking environment, as companies assessed the potential impact on profitability and commercial strategy. By the second half of 2025, however, many of these concerns had become more manageable for large pharmaceutical companies. Through commitments to expand U.S. manufacturing and R&D investments, as well as agreements aligned with government priorities around Medicaid pricing and direct-to-patient affordability, companies were able to reduce exposure to tariffs and broader pricing mandates. At the same time, dealmakers benefited from a less interventionist antitrust environment in the U.S. Although the pharmaceutical sector continues to receive scrutiny from merger control and foreign direct investment authorities, particularly around acquisitions of innovative biotech firms, the Federal Trade Commission adopted a comparatively less activist stance toward large pharmaceutical transactions in 2025. Notably, all U.S. biopharma deals exceeding $9 billion in 2025 received clearance during their initial review period, reflecting a more predictable regulatory approval environment. 2.3 Constrained Funding Environment and Limited Exit Pathways. According to Reuters (2026), a tightening biotech funding environment became another catalyst for accelerated biopharma M&A activity in 2025. Biotech venture funding across the U.S. and Europe fell to $24 billion across 410 rounds, down 14% year-over-year and marking the second-lowest annual VC funding level in the past six years. At the same time, the IPO window remained largely shut: only 11 biotech companies listed on U.S. exchanges in 2025, a 55% decline from 2024 and far below the 79 and 104 IPOs recorded in 2020 and 2021, respectively. The combination of constrained private funding and limited public market exits increased pressure on biotech firms to seek alternative liquidity and commercialization pathways, making strategic acquisitions more attractive. For large pharmaceutical companies with strong balance sheets, this created opportunities to acquire innovative assets from capital-constrained biotech firms at relatively attractive valuations. Biopharma venture investment, by quarters, from 2021 – Q1 2026 – Source: JPMorgan 3. Emerging Trends in Biopharma Dealmaking in 2026. Biopharma deal activity is expected to remain resilient in 2026, with companies balancing acquisitions of innovative early-stage assets against later-stage therapies capable of generating near-term revenue. KPMG’s 2025 survey found that 62% of firms intend to target early-stage innovative assets, while 58% are prioritizing late-stage assets, reflecting a dual strategy focused on both long-term pipeline development and immediate commercial returns. Industry momentum from 2025 is expected to continue, with total biopharma M&A projected to reach approximately $140–160 billion in 2026, driven by mounting patent-expiry pressures, abundant acquisition capital, and ongoing financing constraints across the biotech sector. A key driver remains the industry’s looming patent cliff. Major blockbuster therapies including Keytruda, Eliquis, Opdivo, and Cosentyx are among those approaching patent expiry by the end of the decade. As a result, pharmaceutical companies are expected to accelerate portfolio renewal strategies and compete more aggressively for differentiated growth assets. At the same time, large pharmaceutical companies continue to possess substantial financial flexibility, with estimated deal capacity remaining around $1.3 trillion entering 2026. Rather than prioritizing mega-mergers, companies are increasingly focusing on mid-sized acquisitions, licensing agreements, and earlier-stage innovation opportunities that strengthen long-term strategic positioning and platform capabilities. On the supply side, emerging biotech companies now account for approximately 70% of all clinical-stage assets globally, with many remaining unpartnered. However, venture funding remains below historical levels and the biotech IPO market has only partially recovered, maintaining financing pressure across the sector. This environment is expected to continue driving biotech firms toward partnerships, licensing deals, and M&A exits as important pathways to capital and commercialization. Policy and regulatory conditions have also become more manageable compared to early 2025. Concerns surrounding U.S. tariffs and most-favored-nation drug pricing reforms have moderated, while a less interventionist antitrust environment has improved deal visibility. However, uncertainty remains around Medicare pricing initiatives, FDA capacity constraints, and upcoming European pharmaceutical reforms affecting intellectual property and market access frameworks. Another emerging trend is the growing importance of China as a global innovation source. Multinational pharmaceutical companies are increasingly pursuing licensing agreements and partnership structures involving Chinese biotech assets as competition for differentiated innovation intensifies globally. Overall, biopharma dealmaking in 2026 is expected to remain driven by strategic portfolio renewal, demand for innovative assets, and continued funding pressures across biotech, with mid-sized acquisitions and licensing transactions likely to dominate activity. References: Bloomberg. (2026, April 27). Sun Pharma secures bridge loan for $12 billion Organon purchase. Bloomberg News. https://www.bloomberg.com/news/articles/2026-04-27/sun-pharma-secures-bridge-loan-for-12-billion-organon-purchase CNBC. (2026). Big pharma race to snap up biotech assets as $170 billion patent cliff looms. https://www.cnbc.com/2026/01/07/big-pharma-race-to-snap-up-biotech-assets-as-170-billion-patent-cliff-looms.html Ernst & Young. (2024). Navigating pharma loss of exclusivity. https://www.ey.com/en_us/insights/life-sciences/navigating-pharma-loss-of-exclusivity IQVIA. (2026, January). Biopharma M&A outlook for 2026. https://www.iqvia.com/locations/emea/blogs/2026/01/biopharma-m-and-a-outlook-for-2026 J.P. Morgan. (2026). Biopharma and medtech deal reports. https://www.jpmorgan.com/insights/markets-and-economy/outlook/biopharma-medtech-deal-reports Herbert Smith Freehills Kramer. (2026). Global M&A outlook 2026: Sector perspectives – Pharmaceuticals. https://www.hsfkramer.com/insights/reports/2026/global-ma-report-2026/sector-perspectives/pharmaceuticals McKinsey & Company. (2026). 2026 M&A trends: Navigating a rapidly rebounding market. https://www.mckinsey.com/~/media/mckinsey/business%20functions/m%20and%20a/our%20insights/top%20m%20and%20a%20trends%202026/2026-m-and-a-trends-navigating-a-rapidly-rebounding-market.pdf Reuters. (2026). Big pharma M&A set for mega year as patent expiries drive deal urgency. Reuters. https://www.reuters.com/legal/transactional/big-pharma-ma-set-mega-year-patent-expiries-drive-deal-urgency-2026-05-01/

Across leading robotics markets, humanoid robots are beginning to move beyond staged demonstrations into factories, warehouses, and other industrial environments. During its 2025 pilot at BMW Group Plant Spartanburg, Figure 02 handled more than 90,000 components and accumulated approximately 1,250 operating hours within an active automotive production line. Such deployments suggest that demand is beginning to emerge most clearly in structured applications where robots can perform useful work within facilities and workflows originally designed for people. However, successful pilots should not be mistaken for commercial maturity. To progress towards repeatable deployment at scale, humanoid robots must become safer, more dexterous, capable of sustaining productive uptime, and economically competitive with human labour and existing automation alternatives. Achieving this will depend not only on advances in artificial intelligence, but also on the maturity of the supply chain for actuators, sensors, batteries, processors, precision components, and supporting infrastructure. This article examines where genuine demand for humanoid robots is emerging, which commercialisation gaps still separate pilots from scale, and how China and the United States are pursuing different pathways to overcome them. It also considers where value may accrue across the broader ecosystem as humanoid robotics moves towards reliable and economically viable industrial adoption. Robot Figure 02 during its 2025 pilot at BMW Group Plant Spartanburg, where it supported production of more than 30,000 BMW X3 vehicles, handled over 90,000 components, and logged approximately 1,250 operating hours — Source: BMW Group’s official website. 1. Why Humanoids, and Why Now? Conventional industrial robots have historically created value through specialisation Many current humanoid platforms are being developed as general-purpose or multipurpose robots capable of performing different tasks within human-designed environments. McKinsey groups general-purpose robots into three principal forms: wheeled robots, quadrupedal robots, and humanoid robots. Wheeled robots move efficiently across flat, structured environments such as warehouses; quadrupeds are better suited to stairs, uneven terrain, and inspection in hazardous locations. Meanwhile, humanoids are general-purpose, bipedal robots modelled on the human form, combining human-like arms and hands with the mobility needed to operate in environments designed for people and, where safety requirements are met, alongside human workers. General-purpose robotic architectures: wheeled, quadrupedal, and humanoid systems - Source: McKinsey & Company. Why, then, build a robot in human form? The answer is not aesthetics, but compatibility. Many factories, warehouses, and commercial facilities are already designed around human reach, movement, tools, and workstations. A humanoid could therefore extend automation within existing brownfield environments while reducing, rather than eliminating, the need for major facility redesign. The near-term value proposition appears strongest in repetitive, physically demanding, or hazardous tasks that are difficult to automate economically with fixed, single-purpose systems. In material handling, machine tending, inspection, and component transfer, humanoids could reduce worker exposure to heavy lifting, heat, chemicals, or repetitive strain, while moving between workstations and adapting to changing layouts. This flexibility may also improve the economics of automation: instead of installing a dedicated machine for each task, one platform could potentially support several workflows as demand changes. 2. Beyond the Hype: Is Commercial Demand Emerging? The clearest evidence of humanoid demand is beginning to come from operating environments. At BMW Group Plant Spartanburg, Figure 02 moved from laboratory training into an active automotive production line. During its 2025 deployment, the robot retrieved and positioned sheet-metal components for welding, supported the production of more than 30,000 BMW X3 vehicles, moved over 90,000 parts, and accumulated approximately 1,250 operating hours and 1.2 million steps (BMW Group, 2026). Commercial activity is also beginning to extend beyond individual pilots. Following an initial proof of concept, GXO and Agility Robotics entered a multi-year Robots-as-a-Service agreement to deploy Digit in live logistics operations (Agility Robotics, 2024). At GXO’s SPANX facility, Digit works alongside existing autonomous mobile robots, moving totes from other robotic systems onto conveyors. Mercedes-Benz has separately entered a commercial agreement with Apptronik to test Apollo for parts delivery, component inspection, and the movement of kitted totes within manufacturing facilities (Apptronik, 2024). These programmes remain limited in volume, but they represent a stronger demand signal than prototypes alone: customers are committing facilities, workflows, engineering resources, and operating time to determine whether humanoids can create measurable value. Taken together, the strongest demand signals are emerging in factories and logistics facilities. The task categories most frequently tested in live industrial environments include material movement, component transfer, package handling, machine tending, and routine inspection. In these settings, humanoids are not replacing all existing automation; rather, they are being tested as a flexible layer between fixed industrial robots, wheeled mobile systems, and human workers, particularly where a task requires both mobility and manipulation within infrastructure designed for people. Market signals point to rising confidence in humanoid robotics, although realised demand remains at an early stage. According to McKinsey & Company (2025), investor interest in general-purpose robotics, including humanoids, has accelerated sharply. Annual funding increased fivefold between 2022 and 2024 to exceed US$1 billion, with most capital concentrated in China and the United States. Meanwhile, Mordor Intelligence (2026) projects the global humanoid market to grow from US$3.93 billion in 2026 to US$17.80 billion by 2031, representing a 35.26% CAGR. Humanoids Market - Source: Mordor Intelligence At the same time, Morgan Stanley (2025) estimates that the wider humanoid economy could exceed US$5 trillion by 2050, with more than one billion units in operation and approximately 90% deployed in industrial and commercial settings. These figures indicate substantial market expectations, but commercial agreements, repeat deployments, and operating performance remain the more reliable evidence of actual demand. Taken together, the market is moving beyond experimentation, but its commercial shape remains highly selective. Demand is real, yet it is emerging primarily in narrow, structured industrial workflows, especially within factories and logistics facilities, rather than in open-ended, general-purpose applications. More complex use cases, including household assistance and operation in highly variable environments, remain largely prospective. Near-term adoption will therefore be driven by platforms that can perform a limited set of valuable factory tasks reliably, not by robots claiming universal capability. 3. From Pilot to Scale: Four Commercialisation Gaps. The emergence of industrial pilots shows that humanoids can perform useful work under defined conditions. Commercial scale, however, requires a higher standard: robots must operate safely alongside people, remain productive throughout a working shift, perform tasks with sufficient mobility and precision, and deliver economics that justify deployment beyond a single site. McKinsey & Company (2025) frames these requirements as four bridges between pilot validation and repeatable commercial adoption. Safety readiness is the first condition for wider deployment. Humanoids will need to operate in shared workspaces without depending on constant supervision or extensive physical separation. This requires vision, proximity detection, tactile sensing, force-limited actuation, compliant joints, and fall recovery to function as a coordinated safety system. Technical safeguards must also be supported by consistent testing and recognised certification pathways; until then, many deployments are likely to remain partially segregated. Sustained uptime determines whether a robot can become a productive asset rather than an intermittent demonstration. Current humanoids typically operate for only 02 to 04 hours per charge, compared with the 08 to 12 hours expected in many industrial shifts. Battery swapping and fast charging offer practical near-term responses, while lighter structures, more efficient transmissions, stronger thermal management, and faster fault recovery can extend productive time further. Dexterity and mobility define the range of work a humanoid can perform. Current systems can already support transport, basic handling, and inspection, and low-variability conditions but remain materially behind humans in fine manipulation and adaptability. Human hands possess approximately 20 to 27 degrees of freedom, while robotic hands generally offerfewer independently controlled movements and less effective tactile feedback. Reliable manipulation also requires the continuous integration of vision, touch, force, balance, and real-time learning, capabilities that remain strongest in structured settings. Cost competitiveness ultimately determines whether technical capability can translate into broad adoption. A humanoid may perform a task successfully, but customers will not expand deployment unless its cost compares favourably with human labour, fixed automation, or other robotic alternatives. Affordability depends not only on lower component prices, but also on utilisation, maintenance, serviceability, and the amount of supporting infrastructure required. Although the four bridges address different dimensions of commercial viability, each is influenced by the maturity of the underlying component supply chain, with the most direct impact on cost reduction. Safety depends on reliable sensors, force-controlled actuators, redundant control systems, and components that can be validated consistently. Uptime is shaped by battery performance, power electronics, thermal management, spare-part availability, and ease of maintenance. Dexterity and mobility rely on precision actuators, gear systems, tactile sensing, and lightweight structures that can deliver repeatable motion at scale. Cost competitiveness, meanwhile, depends on whether these components can be standardised, sourced from multiple qualified suppliers, and manufactured at sufficient volume. The humanoid bill of materials shows where these dependencies are concentrated. Five hardware domains account for approximately 85% to 90% of total unit cost. Actuation represents an estimated 40% to 60%, followed by sensing and perception at 10% to 20%, compute and control at 10% to 15%, structural components at 5% to 10%, and battery modules at 5% to 10%. Component cost by level of differentiation in humanoid robots Source: McKinsey & Company. This also provides part of the context why the leading ecosystems are pursuing different routes to commercialisation: China is drawing on manufacturing depth and rapid field deployment, while the United States is building from strengths in AI, simulation, and software-led autonomy. 4. Two Paths to Scale: China and the United States. As humanoid robotics moves from pilot deployment toward commercial scale, competition is increasingly taking place at the ecosystem level. China and the United States approach this challenge from different starting points, although the distinction is one of relative emphasis rather than an absolute division. China benefits from manufacturing depth, component availability, and rapid physical deployment, while the United States draws more heavily on strengths in artificial intelligence, computing infrastructure, simulation, and software-led autonomy. Both are seeking the same commercial flywheel: improved hardware and models enable wider deployment; deployment generates operating data; and higher production volumes support further performance improvements and cost reduction. China’s model is supported by the depth of its industrial base. According to the International Federation of Robotics (IFR, 2025), China remained the world’s largest industrial robotics market in 2024, installing a record 295,000 units and accounting for 54% of global deployments. This was nearly six times the 50,100 units installed across the entire Americas, where installations exceeded 50,000 for the fourth consecutive year but declined 10% from 2023. China’s operational stock exceeded two million robots, while domestic manufacturers supplied 57% of its home market, up from approximately 28% a decade earlier. China’s humanoid sector can draw on established electric-vehicle, industrial-robot and electromechanical supply chains for motors, harmonic drives, batteries, power electronics, sensors and precision components. The country processes around 90% of the world’s permanent magnets, while dense manufacturing clusters in Shenzhen, Suzhou, Hangzhou and Ningbo allow OEMs to source alternatives and revise designs through relatively short production cycles. McKinsey & Company has also cited recent data indicating that approximately 7,700 humanoid-related patents over the past five years, reinforcing a model in which higher production volumes, faster hardware iteration and real-world data collection support one another. The United States approaches the same problem from the intelligence layer. Its ecosystem includes Google, Nvidia and Tesla, alongside specialised companies such as Physical Intelligence, Figure AI, Apptronik and Agility Robotics. Nvidia’s open-source GR00T foundation model and investments across the robotics sector strengthen a software infrastructure focused on autonomy and capability transfer across tasks and platforms. In 2024, US private AI investment reached approximately US$109 billion, nearly twelve times China’s US$9.3 billion, illustrating the difference in capital available for frontier-model and compute-intensive development. US companies therefore rely more heavily on simulation, teleoperation, human demonstrations and purchased training data. This approach can advance model development before large fleets are deployed, but its commercial value depends on whether skills learned in controlled or virtual environments transfer reliably into variable workplaces. According to Bloomberg (2026), the constraint is particularly important in embodied AI: capable models may ultimately require tens of millions of hours of physical-interaction data, while leading companies are currently estimated to have accumulated only around 500,000 hours. The two pathways also carry different risk: China’s manufacturing scale and cost advantages coexist with restrictions on access to certain advanced computing technologies, while overseas expansion may be constrained by cybersecurity, data-governance and certification requirements. The United States has greater strength in models and computing but remainsmore dependent on international hardware supply chains and must still demonstrate that advanced intelligence can deliver dependable customer-site performance. The distinction between the two models is unlikely to remain absolute. Commercially viable humanoids will require both intelligence capable of adapting across tasks and hardware that is safe, reliable, and affordable enough to deploy at scale. The strongest position may ultimately belong not to the purest hardware-first or intelligence-first model, but to the ecosystem that integrates both capabilities most effectively. 5. Where Value May Accrue? Humanoid robotics is entering a more commercially credible, but still selective, phase. Demand is forming around structured industrial workflows, while scale still depends on closing persistent gaps in safety, uptime, dexterity, and cost. The investment landscape is therefore broader than the race to build the robot itself. Full-stack OEMs may capture value through control of the platform, customer relationship, and embodied-data loop. Yet equally important opportunities may emerge in the enabling layers: actuators and precision components, tactile and perception systems, batteries and charging, fleet software, safety and certification, and brownfield integration. Actuation is particularly significant, accounting for roughly 40%–60% of the bill of materials. For investors, the strongest signals will be operational rather than promotional: pilot-to-paid conversion, customer-site uptime, intervention frequency, cost per productive hour, BOM reduction, and manufacturing readiness at scale. The companies best positioned to capture value may not be those producing the most striking demonstrations, but those whose deployments customers choose to repeat, expand, and integrate into everyday operations. References: Agility Robotics (2024), GXO signs industry-first multi-year agreement with Agility Robotics, https://www.agilityrobotics.com/content/gxo-signs-industry-first-multi-year-agreement-with-agility-robotics Apptronik (2024), Apptronik and Mercedes-Benz enter commercial agreement, https://apptronik.com/news-collection/apptronik-and-mercedes-benz-enter-commercial-agreement Bloomberg (2026), China sends robots out into the world to learn how to be human, https://www.bloomberg.com/news/articles/2026-07-15/china-sends-robots-out-into-the-world-to-learn-how-to-be-human BMW Group (2026), BMW Group: First humanoid robot introduced in Plant Leipzig, https://www.bmwgroup.com/en/news/general/2026/humanoid-robot-in-leipzig.html International Federation of Robotics (2025), Global robot demand in factories doubles over 10 years, https://ifr.org/ifr-press-releases/news/global-robot-demand-in-factories-doubles-over-10-years McKinsey & Company (2025), Will embodied AI create robotic coworkers?, https://www.mckinsey.com/industries/industrials/our-insights/will-embodied-ai-create-robotic-coworkers McKinsey & Company (2026), Turning humanoid supply chain constraints into billion-dollar wins, https://www.mckinsey.com/industries/industrials/our-insights/turning-humanoid-supply-chain-constraints-into-billion-dollar-wins Mordor Intelligence (2026), Humanoids market size and share analysis—growth trends and forecast (2026–2031), https://www.mordorintelligence.com/industry-reports/humanoids-market Morgan Stanley (2025), Humanoids: A US$5 trillion market, https://www.morganstanley.com/insights/articles/humanoid-robot-market-5-trillion-by-2050