Artificial intelligence M&A deals grew by 33.5% in the past 12 months – GlobalData

26th January 2022 By: Schalk Burger - Creamer Media Senior Contributing Editor

Artificial intelligence (AI) sector deals have grown by 33.5% in the past 12 months, with the average deal valued at $159-million, says data and analytics company GlobalData.

It adds that the number of AI deals is likely increasing as the technology becomes more advanced and more companies see market opportunities.

The current market growth in deals has largely occurred in the Asia-Pacific region but, in the last 12 months, deals in the South and Central American market increased by 200%.

This increase in mergers and acquisitions (M&As) further signals that defence primes are advancing their AI capabilities organically and through acquisitions, says GlobalData associate analyst William Davies.

“Historically AI has been the purview of the technology sector; however, these [defence] companies are increasingly attempting to bring operations in-house and develop their own capabilities without relying on larger tech companies,” he says.

AI will play an integral role on and off the battlefield. Applications range from autonomous weapons, drone swarms and manned-unmanned teaming to other functions, such as intelligence, surveillance and reconnaissance, logistics and cyber operations.

The amount of information being created by modern militaries is often referred to as a data deluge, says GlobalData, noting that the problem is significant, vexing and, given the current pace of acceleration, technologically intimidating.

AI-assisted intelligence analysis can help to ease this pressure by accurately analysing and proving insights from the information contained within large datasets.

“AI is a transformative technology in defence because of its ability to enable militaries to gather and make use of large amounts of data, potentially providing a competitive edge over their adversaries. AI will be of particular use in the development of unmanned vehicles, which have the potential to reduce operations costs while exposing personnel in the field to less risks,” says Davies.

AI technologies are rapidly evolving. The US and China are developing their AI capabilities for a range of military functions that will have a significant impact on the defence sector. GlobalData’s April 2021 report 'AI in Aerospace and Defense' highlights the transformative potential of AI, and its ability to create more efficient and effective military operations.

“Potential AI applications in the defence industry are numerous and appealing. AI is not only about speed, but also the precision and efficiency of military decision-making. It is a race to develop, procure and field AI solutions faster than the competition,” the company says in the report.

The report also signals that a race for AI dominance between the US, Russia and China will lead to significant government investment in the technology, providing more contract opportunities and more of a necessity for defence primes to integrate AI into future platforms.

The impact of AI in defence is enormous. Those looking to get ahead must recognise not only the benefits it will bring, but the challenges it will create, and perhaps more importantly, how to adapt to overcome these challenges. As AI in defence increases, so does the number of ethical questions, particularly around autonomous weapon systems, says GlobalData.

Additionally, the complexity of the defence acquisition process is a deterrent for some commercial companies to partner with governments, and cooperation on both sides is vital for technology procurement.

The Chinese and Russian governments have detailed their plans to dominate AI, and AI's rapid progress makes it a powerful tool from economic, political and military standpoints, GlobalData says.

“As with any military technology, the prospect of falling behind may put those who do not recognise the potential that AI offers at a clear disadvantage. Finding the right structural shift to accelerate AI adoption is crucial for governments,” the company says.