Geopolitical uncertainty, shifting supply chains, rising costs, and the risk and reward of robotics and AI combine to make 2027 another year of hard choices for manufacturers, requiring them to walk a fine line between embracing bold transformations and canceling expensive experiments. For reasons that are well understood, manufacturers have always been less likely to transform at the same pace as less asset-heavy industries. But current trends around AI, geopolitics, and quantum are felt in manufacturing, too, and this sector’s business and technology leaders must find the pragmatic balance between the disruption caused by introducing them too quickly and the risk of being overtaken (or attacked) because they didn’t introduce them quickly enough. As Forrester’s team of analysts covering smart manufacturing and mobility look ahead to 2027, we predict that:

  • Physical AI will accelerate manufacturers’ adoption of automation by 25%. Done right, physical AI makes automation more flexible, adaptable, and resilient. Current enthusiasm for embodied AI deployments, particularly in China, is generating lots of real-world data for training robots. Manufacturers should eventually benefit, letting them reduce their commissioning, customization, and site testing efforts and making automation cheaper and faster to deploy and scale. Manufacturers should view physical AI as a capability upgrade for their entire automation stack and prioritize use cases where AI-driven perception, planning, simulation, reasoning, and control materially shorten deployment cycles.
  • A major automotive supplier will sell more to other industries than core auto customers. Germany’s big car brands struggle to respond effectively to competition from China, the shift to electrification, and a fluid landscape of tariffs, which complicates cross-border supply chains. Companies lower down the automotive supply chain are also under growing pressure and are diversifying beyond their traditional businesses. Bosch makes money from consumer goods, energy, and building technologies, as well as industrial equipment. Schaeffler is repositioning as a motion technology company, pushing for a bigger piece of emerging opportunities like robotics. With few signs of significantly improved prospects for their automotive customers, at least one significant player in the automotive supply chain will see side bets grow to generate more revenue in 2027 than their automotive core.
  • Over 80% of firms with industrial machinery will lag in their quantum safety preparations. Factory machinery, power grid control units, and medical devices have one thing in common: They all depend upon cryptography that’s vulnerable to the threat posed by quantum computing, and they all struggle to introduce better cryptography on the older hardware that customers might hope to run for many more years. Worse still, the companies operating these machines and devices lag in their preparations for making them quantum-safe. Indeed, many (mistakenly) appear to discount the risk altogether. It may sound like science fiction (or a cynical effort to sell new equipment), but the quantum threat is real. Companies that haven’t already compiled a cryptographic inventory and developed plans for making at least their most critical systems quantum-safe must prioritize the issue and ensure that it receives board-level attention.

Forrester clients can read our full Predictions 2027: Smart Manufacturing And Mobility report to get more detail about each of these predictions, plus two more. Clients can also join a webinar on January 19 or set up a guidance session to discuss these predictions and the ways they might influence your plans for 2027.

If you aren’t yet a client, you can download one of our complimentary Predictions guides, which cover our top predictions for 2027 across a variety of themes. Get additional complimentary resources, including webinars, on the Predictions 2027 hub.

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