Asia-Pacific industrial deals grow against the trend: PwC predicts regional M&A activity will rise by 2% in 2026

Against the backdrop of a generally cooling global M&A market, the Asia-Pacific region is emerging as a bright spot. PricewaterhouseCoopers' (PwC) latest mid-year M&A outlook indicates that industrial and services deal volume in the Asia-Pacific region is expected to grow by 2% in 2026, while global deal volume is projected to decline by 7% over the same period. This contrast highlights the structural drivers of regional supply chain restructuring and investment in emerging technologies.

India and Southeast Asia: Core Regions for Manufacturing Relocation

The report points out that India and Southeast Asia will continue to be primary destinations for manufacturing investment. As companies accelerate the diversification of production bases and supply chains away from China, these two regions are absorbing a significant amount of new production capacity. Japan and South Korea are also expected to remain active in automation, battery technology, and electronics. This shift in geographical distribution is not a short-term phenomenon but a long-term trend in global supply chain restructuring.

Automation and AI Infrastructure Become Core to Deals

The focus of manufacturing M&A is shifting toward assets that support AI infrastructure, grid resilience, and automation capabilities. PwC predicts that by 2030, the median proportion of industrial manufacturers with highly automated processes will jump from the current 18% to 50%. This means that technologies such as robotics, industrial software, sensors, and interconnected systems that can enhance productivity and reduce labor dependency will become core components of transaction targets.

Localized Production and Supply Chain Restructuring

Companies are reducing tariff risks and ensuring access to key markets through localized production and supply chain restructuring. PwC believes that manufacturing assets benefiting from localization trends in India and Southeast Asia, as well as corporate carve-out businesses, will offer attractive investment opportunities. However, geopolitical uncertainties, tariff barriers, and industrial policy changes continue to make cross-border deal prospects uneven.

Macro Drivers: Regionalization Replacing Globalization

The counter-trend growth in Asia-Pacific industrial deal volume is not an isolated financial phenomenon but a microcosm of the global economy shifting from "efficient globalization" to "resilient regionalization." Under the multiple influences of tariffs, industrial policies, and geopolitical games, companies are more inclined to build capacity in neighboring markets with stable policies. Increasingly close trade agreements within ASEAN and India's manufacturing incentive plans (e.g., PLI) provide institutional support for capital inflows.

Future Outlook

Although PwC's 2026 forecast is based on announced deals from the first five months and should not be viewed as a strict prediction, it reflects the basic expectations of market participants: Asia-Pacific will continue to be a stable anchor for global industrial M&A. For investors, focusing on automation, AI infrastructure, and asset classes related to supply chain migration will be key to capturing regional growth.

> Note: The analysis in this article is based on PwC reports and industry observations; data and timeframes are for reference only.