Disruptive Intelligent Automation (Based on AI, Robotics, and Cloud Digital Platforms)
back to investment strategyRobotics and automation stand to benefit from unprecedented demand as a result of the COVID-19 crisis, digital transformation acceleration, and the importance of flexibility, scalability, and resiliency. Our thinking about robots will change radically in the next few years as machines become autonomous with artificial intelligence (AI) enabling them to learn on their own.
A new wave of automation is becoming visible in all broad non-traditional markets and general purpose (GP) applications. A value shift from function-specific automation hardware to software is forecast, with GP applications growing 2x within the next 5 years. The total addressable market (TAM) for automation could potentially expand from ~USD 0.5 trillion in 2020 to USD 2 trillion in 2025.
We expect the market for non-traditional automation applications to grow twice as fast as traditional applications. We see retail, consumer goods, pharmaceuticals, medical supplies, and equipment at the epicenter of the automation reborn cycle. These industries will become more efficient and flexible in their manufacturing and logistical processes. Besides lowering the impact of labor shortages and ageing populations, the working environment will improve, and greenhouse emissions will be reduced.
With the convergence of 5G and higher speeds of computation, the transition to autonomous manufacturing has started. Shorter reaction times with increased efficiency and process intelligence should raise broader global productivity.
Disruptive automation tools capable of achieving zero downtime, thereby significantly reducing expenses due to failure, will help lower overall costs for manufacturers in the future. Zero downtime depends on online inspection and preventive maintenance through data-monitoring of production plant equipment to avoid breakdown. This leads to possibilities of cost-effective productivity improvement. A close to 100% utilization rate is also achievable for potentially reasonable fixed service costs and a corresponding reduction in total production costs.
We focus on 3 areas of intelligent automation:
A new wave of automation is becoming visible in all broad non-traditional markets and general purpose (GP) applications. A value shift from function-specific automation hardware to software is forecast, with GP applications growing 2x within the next 5 years. The total addressable market (TAM) for automation could potentially expand from ~USD 0.5 trillion in 2020 to USD 2 trillion in 2025.
We expect the market for non-traditional automation applications to grow twice as fast as traditional applications. We see retail, consumer goods, pharmaceuticals, medical supplies, and equipment at the epicenter of the automation reborn cycle. These industries will become more efficient and flexible in their manufacturing and logistical processes. Besides lowering the impact of labor shortages and ageing populations, the working environment will improve, and greenhouse emissions will be reduced.
With the convergence of 5G and higher speeds of computation, the transition to autonomous manufacturing has started. Shorter reaction times with increased efficiency and process intelligence should raise broader global productivity.
Disruptive automation tools capable of achieving zero downtime, thereby significantly reducing expenses due to failure, will help lower overall costs for manufacturers in the future. Zero downtime depends on online inspection and preventive maintenance through data-monitoring of production plant equipment to avoid breakdown. This leads to possibilities of cost-effective productivity improvement. A close to 100% utilization rate is also achievable for potentially reasonable fixed service costs and a corresponding reduction in total production costs.
We focus on 3 areas of intelligent automation:
1. Robotics
As industrial robot prices decline, we expect robot sales to quadruple during 2021-2023, reaching 1.6 million units in 2024. Research from Forrester indicates there will be 4 million service robots in office admin roles in the next few years. Service robots will be used in logistics, cleaning (vacuuming), and delivery. They will serve also as nurse assistants.
2. 3D printing
Industrial solutions in the 3D printing space can now cut production costs by 30-50% for many production processes. For example, Lockheed Martin estimates that it will be able to produce 3D printed satellites twice as fast at half the cost. We think 3D printing will revolutionize manufacturing, growing from USD 10 billion in 2018 to USD 97 billion in 2024 at an average annual rate of 65%.
3. Digital manufacturing
Digital manufacturing allows engineers to create a complete model of a manufacturing process in a virtual environment, including tooling, assembly lines, work centers, facility layouts, ergonomics, and resources.
When numerous supply chains were disrupted during lockdowns, digital production offerings proved important for many medical device customers, who were looking to fill gaps in supply chains affected by the pandemic, particularly those related to China.
When numerous supply chains were disrupted during lockdowns, digital production offerings proved important for many medical device customers, who were looking to fill gaps in supply chains affected by the pandemic, particularly those related to China.
We have made the following investments in the digital manufacturing segment:
Protolabs claims to be the largest and the only vertically integrated digital manufacturer of custom prototypes and low volume/on demand parts. The company is potentially a model of the factory of the future.