Artificial intelligence (AI) adoption in Singapore continues to rise, with nearly half of all businesses now integrating the technology into their operations. According to new research from Amazon Web Services (AWS), approximately 170,000 businesses in Singapore are currently using AI, up from 143,000 last year—a 20% year-on-year increase.
The financial services sector leads AI adoption at 71%, followed closely by technology at 70% and healthcare at 63%. Among companies using AI, 82% reported higher revenue, with an average increase of 19%, while 90% saw productivity gains. Businesses also expect average cost savings of 17% as AI systems become more embedded in their operations.
AWS collaborated with Strand Partners for the study titled “Unlocking Singapore’s AI Potential”, which surveyed 1,000 business leaders and 1,000 members of the public to better understand the pace and depth of AI adoption across industries and company sizes.
Basic adoption still dominates
While AI usage is becoming more widespread, most Singaporean businesses are still at an early stage of implementation. About 65% of companies that use AI apply it to basic tasks such as process automation, rather than developing new products or services. The retail sector, in particular, shows the highest proportion of businesses in this early phase, with 71% still relying on elementary applications.
Only 17% of organisations in Singapore have reached what AWS defines as the “transformative” stage—where AI becomes central to decision-making, innovation, and business models. The technology sector remains the most advanced in this area, followed by financial services and healthcare, which are beginning to incorporate AI more deeply into their operations.
Startups outpace large enterprises
Startups are proving to be the most dynamic adopters of AI. The study found that 82% of startups in Singapore use AI, and 42% of them are building entirely new products based on the technology. In comparison, 62% of large enterprises have adopted AI, but only 16% are developing new AI-driven products, and just 30% have a roadmap to guide their long-term AI strategy.
This difference has led to what AWS describes as a “two-tier” economy, where innovative startups are outpacing larger, established companies in applying AI to create new value.
Skills shortage remains the biggest obstacle
Despite the strong momentum, a shortage of skilled talent remains the top challenge for AI adoption. Around 43% of businesses cited the lack of expertise as the main factor limiting their ability to expand AI initiatives. Many companies possess the necessary tools and ambition but struggle to find qualified personnel to execute their plans.
In response, organisations are prioritising workforce development. About 30% have implemented AI-specific training programmes, while 40% of employees across various sectors have undergone some form of digital upskilling over the past year.
Building an AI-powered economy
The report outlines three key actions to strengthen Singapore’s AI ecosystem. First, industries need more targeted skills programmes, as AI literacy is expected to be essential for nearly half of future jobs, yet only a third of businesses feel adequately prepared. Second, Singapore should continue promoting an innovation-friendly regulatory environment to encourage experimentation and cross-border collaboration. Third, accelerating public sector AI adoption in healthcare and education could inspire broader uptake, with 71% of businesses saying they are more likely to follow government-led initiatives.
Priscilla Chong, Country Manager for AWS Singapore, said, “Singapore stands at a critical inflection point where early AI adoption success must now translate into deeper integration—moving from experimentation to being AI-powered. Getting past the proof-of-concept stage for promising AI projects requires more than just good technology – it also requires capital investment, dedicated skills development and organisational commitment in fostering a culture that prioritises innovation, embraces continuous learning, and adapts readily to change. We see tremendous potential in public-private funding partnerships that could jumpstart the AI journeys of businesses, particularly in helping them bridge the gap between basic and transformative implementation. By bringing together government initiatives with private sector expertise and resources, Singapore can accelerate its transition to an AI-powered economy.”
