How Telcos Power AI-Driven Smart Factories Worldwide
AI delivers more cost savings in manufacturing than in any other industry, according to McKinsey. Working alongside robotics and the IoT, factories now run many processes automatically. This industrial transformation creates demand for the networks that carry data between machines and cloud systems for telecoms providers.
Smart factories rely on four main building blocks, which include industrial IoT, big data and analytics, digital twins and robotics. Together these technologies generate large volumes of operational data which moves across private networks and public cloud infrastructure.
When these technologies connect effectively, maintenance becomes predictive and production lines become more agile as operational efficiency rises.
Adding AI to these environments accelerates decision-making and allows systems to act on data automatically. Telecoms infrastructure, including private 5G networks, fibre connectivity and edge platforms all become the backbone that carries these workloads.
AI factories expand network demands
The World Economic Forum’s Global Lighthouse Network recognises manufacturing facilities that lead in Fourth Industrial Revolution technologies. It was launched in 2018 and the programme now includes more than 220 sites across 35 countries.
Within these sites, analytical and generative AI tools embed directly into production processes. The WEF says that while some organisations explore generic AI systems, lighthouse factories focus on specialised industrial applications. Analytical AI and machine learning support the majority of these deployments and generative AI accounts for 23%.
These technologies rely on constant data flows between factory equipment and analytics engines. Telecoms infrastructure therefore plays a central role in enabling real-time communication between machines and cloud platforms and low latency networks allow automated systems to respond immediately to changes.
The WEF points to clear transformation roadmaps and agile teams as factors that help scale digital technologies beyond individual facilities. This scaling effect then increases the importance of resilient connectivity across multiple sites and supply chains.
Deloitte’s 2026 Manufacturing Industry Outlook suggests the sector moves from experimental AI pilots to full implementation. Its survey of 600 manufacturing executives finds that 80% plan to invest at least 20% of their improvement budgets in smart manufacturing initiatives.
Workforce readiness remains a major concern. In a 2025 Deloitte survey, more than one-third of executives identify their top challenge as “equipping workers with the skills and knowledge they need to maximise the potential of smart manufacturing and operations”.
Agentic AI also gains attention in the report. Deloitte describes the technology as “poised to elevate smart manufacturing and operations” and states it “lays the foundation for physical AI”.
Global technology firms build connected factories
Technology vendors play a central role in building the digital platforms that depend on telecoms' connectivity. Companies including Siemens, ABB and Schneider Electric supply AI software and digital twin platforms used across global manufacturing networks.
Siemens demonstrates this approach through its Global Lighthouse factory in Nanjing, China. The facility is the company’s fifth site recognised by the World Economic Forum’s programme, joining three locations in Germany and one in Chengdu.
The Nanjing facility operates as Siemens’ largest research and production centre for computer numerical control systems, industrial drives and electric motors outside Germany.
Cedrik Neike, Member of the Managing Board of Siemens and CEO of Digital Industries, says: "We call our Nanjing facility a 'digital-native factory'. It was designed, tested and optimised entirely in the virtual world before a single brick was laid.
“By combining our global manufacturing expertise with local insight and a digital-first mindset, we continuously optimise every part of the operation, making it one of the most efficient and flexible factories in the world.”
Siemens also develops technologies that support connected factories worldwide, including its Digital Twin Composer platform, AI copilots and systems such as Building X and Power Intelligence.
ABB approaches smart manufacturing through automation and energy management systems that connect factory equipment into a single operational environment. Its ABB Ability platform collects information from industrial devices into one analytics dashboard and digital twin simulations allow manufacturers to test production changes before altering physical systems.
As these factories link machines, sensors and control systems to the cloud, cybersecurity becomes critical. ABB deploys industrial firewalls and secure edge gateways designed to protect connected production environments.
Automation and industrial connectivity
Schneider Electric focuses on combining power management with automation through its Electricity 4.0 framework. The strategy centres on digital platforms that integrate energy systems and cloud software.
The EcoStruxure platform forms Schneider’s digital backbone. Using IoT sensors and edge computing, the platform connects factory floors directly to cloud analytics services.
Following its integration of AVEVA, Schneider provides end-to-end digital twins that simulate entire production lifecycles. These simulations reduce commissioning times by up to 30%.
In late 2025, Schneider’s Advanced Lighthouse Factory in Kentucky piloted Universal Automation. The system separates automation software from the hardware it runs on, allowing factories to operate machines from multiple vendors without rewriting control code.
Energy consumption also becomes a growing challenge as AI systems expand. Schneider’s ProClima and Microgrid Advisor tools use predictive AI to balance electricity demand across industrial sites. The systems maintain stable operations as computing workloads increase by coordinating local renewable generation with grid power.
