Physical AI Powering the New Age of Industrial Operations 2025

Introduction Manufacturers today find themselves at a crossroads. Persistent labour shortages, escalating cost pressures and fragile global supply chains – amplified by geopolitical and market uncertainty – are converging to threaten productivity, profitability and resilience. At the same time, growing consumer expectations for speed, customization and sustainability demand a step-change in operational flexibility. These intensifying pressures are accelerating the search for transformative innovations through frontier technologies. At the forefront is one undergoing profound transformation: robotics. No longer confined to isolated efficiency gains, robotics is emerging as a strategic enabler of resilience and competitiveness. Robotics is entering a new era – in which intelligence allows for autonomy, and physical AI redefines what machines, and by extension humans, are capable of. Then: Robotics for the few. Inflexible. Static Since their initial deployment in the 1960s, industrial robots have reshaped manufacturing. They played a pivotal role in sectors such as automotive and electronics, where high-volume, standardized production justified the investment. However, adoption remained limited to large enterprises with highly standardized production processes. Small and mid-sized manufacturers, as well as those with variable operations, were left behind due to prohibitive cost, complexity and inflexibility. Now and next: Intelligent robotics for the Intelligent Age But this is changing. Robotics is evolving into intelligent systems – capable of learning, adapting and acting autonomously. This shift marks a pivotal moment in the history of automation, driven by the convergence of robotics hardware, AI and vision systems. Today, robotics is scaling – and fast. By 2023, more than 4 million industrial robots had been installed globally.4 At the same time, advances in robotics software and hardware are enabling broader capabilities – ranging from dexterous manipulation to autonomous navigation – and significantly reducing the engineering effort required for deployment. Innovations are accelerating in response. Start-up activities and investments are surging, driven by the promise of physical AI. From foundation models for robotics (e.g. SKILD AI, Covariant, DeepMind, TRI) to general-purpose robots (such as the humanoid robots from Figure, Neura, Boston Dynamics and Apptronik), delivery in the innovation pipeline is accelerating. As the pace of change accelerates, leaders face a set of critical questions: What technological breakthroughs are driving this shift? How is robotics already reshaping manufacturing operations, workforce roles and industrial competitiveness? And how should the technological and people foundations be laid to prepare for what’s next? This white paper provides a timely, in-depth look at how the robotics landscape in industrial operations is rapidly evolving. It goes beyond surface-level trends to provide real-world use cases, and presents a forward-looking vision of how physical AI can enable flexible, resilient and scalable automation. With achievable insights for manufacturers, technology leaders and policy- makers alike, the paper aims to serve as a strategic guide to lead – not follow – in the Intelligent Age.5Manufacturers must embrace intelligent robotics now. No longer confined to isolated efficiency gains, robotics is emerging as a strategic enabler of resilience and competitiveness. Physical AI: Powering the New Age of Industrial Operations 5