Robotics

Robotics is a long-established and mature industry, with many players engaged in the design and production of robots. However, it is now emerging as a sector with a promising growth trajectory, low production risk and a chance of upside in adoption due to technological advancements, implying medium- to long-term attractiveness.

The rationale for a robotics investment is summarised as:

• Steady demand growth from traditional sectors: Manufacturing (think cars) and logistics (think Amazon) currently dominate the use of robotics, with steady demand growth as improving robotics economics drive the business case for adoption. Annual spend in manufacturing is expected to grow from $18bn in 2023 to £40bn by 2030.
• Accelerated demand growth from relatively new sectors: Retail, delivery, surgery, food, mining, and domestic usage (latter driven by aging demographics) are some of many sectors with emerging demand. BCG estimates that the demand for “professional service robots” will grow at 20%-25% p.a. until 2030, reaching a size of between $90bn to $160bn. If robotics is viewed from a broader lens, it also includes additional growth sectors such as semi-autonomous vehicles, unmanned defence vehicles, and space and deep sea exploration. And these are without more futuristic potentials such as humanoids.
• Technological advancements indicate a step change in capabilities: Improved technologies in connectivity, imaging systems, feedback and control, and dexterity will enhance robotics applications and density. AI integration will further improve unsupervised usage, flexibility, and task sharing, and allow for machine learning.
• Positive economic case for adoption: A backdrop of high employment and wage growth in developed markets, political trends to reduce offshoring, and a search for increased productivity, all provide a supportive backdrop to robotics adoption.

On the risk side, competitive success and market share are key to succeeding in an evolving sector, and there will be winners as well as losers over the next few years. It is also unclear which part of the value chain will benefit the most (e.g., core manufacturers or software and integration providers).

A mature sector with a significant second wind triggered by technology advancements, robotics presents an steady medium- to long-term growth opportunity, albeit with the potential for relatively high sensitivity to the backdrop economic environment.