2026 is the year of embedded intelligence
Fujitsu / January 8, 2026
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Mahesh Krishnan
Chief Technology Officer for Oceania, Fujitsu
Fujitsu / January 8, 2026
Australia just experienced its worst decade of productivity growth in 60 years, putting our long-term economic prosperity at risk.
For the Australian economy, AI will help drive productivity growth.
Domain-specific models and ‘physical AI’ - small, specialised models running directly on robots, vehicles, and devices on the edge - will increasingly connect today’s IoT sensors with fleets of task-specific robots on factory floors in Western Sydney, in Pilbara mines, and across ‘paddock-to-plate' supply chains. This allows machines to sense, decide, and act in real time.
This is made possible by techniques like quantisation and distillation, which shrink large AI models for efficient edge deployment, turning ‘physical AI’ into a key driver of future productivity growth.
This is where Fujitsu partners with organisations, using our Kozuchi AI platform and Takane technology to integrate these intelligent agents directly into their operations and turn that vision of cross-country collaboration into measurable productivity gains.
Productivity will be further improved by flattening organisational structures.
This allows a hybrid worker in Melbourne to collaborate seamlessly with an automated process in a Perth warehouse, guided by AI agents, without the bureaucracy of a traditional hierarchical corporation.
Australia is facing a dual challenge: a critical skills shortage and a wave of retiring baby boomers who hold decades of irreplaceable institutional knowledge.
Instead of seeing this as a workforce problem, we see it as an AI opportunity to redefine the contribution of our most experienced employees through AI.
We’re now developing AI agents that act as 'digital mentors'. By automating routine tasks and surfacing critical information, these AI partners free our experts to focus on the high-impact work that requires their unique judgment. This not only boosts their immediate productivity but also enhances job satisfaction, keeping them motivated and engaged for longer.
Simultaneously, these AI partners learn from every interaction, creating a living system that captures deep domain expertise. This allows us to support our most experienced workers to remain in the workforce longer and more flexibly, while ensuring their invaluable knowledge is captured, scaled, and passed on to the next generation.
The current geopolitical environment is forcing countries like Australia to re-evaluate what ‘sovereign capability’ truly means in a national context.
For Australia, which sits at the intersection of Indo‑Pacific supply chains and is ramping up investment in national security, this trend points to a future where sovereign control over critical technology and data is strategically important. This includes building viable alternatives to US-based hyperscalers, ensuring our digital infrastructure is as resilient as our physical borders.
With AUKUS driving a once-in-a-generation investment, the dual-use of private-sector technology is opening significant new markets. As major countries lower barriers to using private tech in military contexts, innovations in areas like autonomous drones, AI vision, cyber security, and geospatial analytics are becoming foundational to modern defence.
This is creating a significant new high-tech market and proves that investing in our local technology industry is fundamental to reinforcing our national security.
For most Australian businesses, quantum computing has felt like it's perpetually 'ten years away'.
That's changing. But not in the way people think.
While truly scalable, commercial quantum computers are still likely a decade away, the first tangible results are emerging now through a different path: the hybrid quantum-HPC model.
This hybrid approach acts as a crucial stepping stone. By blending early-stage quantum processors with powerful simulators running on High-Performance Computing (HPC), this allows organisations to explore and test quantum-inspired solutions today, solving complex challenges in logistics, simulation, and materials discovery without waiting for fully mature quantum machines.
As this model moves from experimentation to early pilots, it is shaping up to be one of the most important technology trends for Australian enterprises to watch in 2026.
It’s the bridge that makes quantum commercially relevant today.
The classic definition of ESG (environment, social and governance) is no longer sufficient for the economic and geopolitical challenges Australian businesses face.
A new ‘ESG’ definition will emerge in 2026 and beyond: ensuring Energy security through our national transition, fortifying digital Security against advanced threats, and driving real Growth from AI investments.
This is where an AI-driven platform stops being a reporting tool and starts running the business, autonomously shifting production to align with renewable energy or re-routing supply chains to avoid security risks.
In this future, sustainability and security become the automatic drivers of profitability.
Cyber security will only grow in importance as Australia and New Zealand roll out more AI across critical industries, from banking and healthcare to energy, transport, and government services.
As AI agents proliferate, new vulnerabilities in models, data pipelines, and orchestration layers will surface. The same advanced analytics that make AI so powerful will also be weaponised by threat actors to probe for weaknesses and automate attacks.
This means AI will sit on both sides of the fence: attackers will use it to find and exploit gaps at machine speed, while defenders must rely on multi-agent security systems to detect anomalies, contain threats, and adapt in real time.
In response, Fujitsu is developing advanced multi-AI agent security technologies, partnering with governments and industry to help solve critical national security challenges.
