The Davos World Economic Forum started today with the main theme being the fourth industrial revolution, which will see automation and robots penetrating industrial production as well as other spheres of everyday life.
Fund managers are trying to keep up with this emerging trend, with Pictet Asset Management having launched a dedicated robotics fund in September, while investment management firm Sturgeon Ventures and adviser RoboCap also unveiled a so-called ‘pure play’ robotics strategy earlier this year.
Referencing a Boston Consulting study, Jonathan Cohen, a managing partner of RoboCap, said acceleration of automation will double over the next 10 years, with robots becoming more sophisticated and cheaper.
'In another study Foxconn, a manufacturer of iPhones in China, looked at the salary of a Chinese employee, which is increasing year after year. It appeared that since 2011 it is cheaper for the company to use robots than human employees,’ Cohen told Citywire Selector.
Pieter Busscher, manager of the RobecoSAM Smart Materials fund, also sees significant growth in the robotics sector, as the focus shifts from a pure efficiency to collaborative models where machine and man work together.
‘We are moving from the current level of around 240,000 robots per year, which is especially driven by strong growth in China. We anticipate the addressable market to increase by multiple orders of magnitude. That is why we have been increasing our exposure in the automation and robotics theme,’ said Busscher in a comment to Citywire Selector.
Busscher said the industrial robotics market is expected to accelerate from 11% average annual growth since 2002, to 25-30% over the next 10 years, and could result in an installed base of 15-25 million robots by 2025.
Among the biggest trends on the horizon, Cohen highlighted the automation of industrial robotics, healthcare robotics, drones, 3D printing (pictured) and Tesla’s fully-autonomous car, which should be on the market in less than two years, as the key themes.
Busscher said the next step in automation and robotics will be connecting the hundreds of billions of devices, machines and people, resulting in the so-called 'Internet of Things'.
‘This interconnectedness will require immense quantities of sensors, robotics and related software, driving strong over 20% growth in demand for companies involved, over the next five-to-10 years,’ said Busscher.
Meanwhile, the co-managers of the Pictet Robotics fund, Karen Kharmandarian and Peter Lingen, said the key element for robotics is semiconductors, which enable them to process and compute vast amounts of data.
Another important robotic technology, in fund managers’ opinion, is machine vision, such as machine-based automated inspection. The fund managers invest in a US-based company Cognex, which is one of the leaders in the sector.
‘Cognex has a lot of intellectual property patents in the field. It has more than 300 patents in the process of being filed, which makes the company on top of the agenda in terms of machine vision technologies,’ said Kharmandarian
Kharmandarian and Lingen said one major risk for such technologies, such as like driver-less cars and commercial drones, are unclear regulations.
‘It is difficult to start a business if you don’t know where drones are allowed to fly, at which altitude, what areas they are allowed to fly over. Once you have a regulation, you can set up a company and offer some services,‘ said Kharmandarian.
Lingen said another challenge which the industry might face is the projected reduction of five million jobs. He added that this could spur political resistance to automation and robotisation, which might have a negative impact on companies in the sector.
‘With technology change you might have disruption in the employment market early. But you also see an increase in the education level and people transitioning to a new world. It is very hard to see a negative impact from the increased usage of robotics but it will require a different skill set,' said Lingen.