Investing in the Future of Robotics

For many people, the term “robot” brings up a lot of preconceived notions, ranging from the stereotypical humanoid robots of 1950s science fiction films, Luke Skywalker’s android companions from “Star Wars,” or even the friendly and loveable Wall-E. But the Hollywood version of robotics has always leaned heavily on the fiction side and light on the science.

In the popular imagination, they remain the types of machines that only exist in some far-off future timeline. But today’s robots are, in fact, more capable than ever. They’re being used in everything from automotive manufacturing, to heavy machinery, to logistics and supply chain handling, order picking, meat processing and much more. Anywhere there is a repetitive, isolated task, you’ll likely find industrial robots picking up at least some of the workload in order to free up their human coworkers for more complex, higher value tasks and protecting them for dangerous work.

According to the Robotic Industries Association, there were more than 250,000 robots in use in the United States as of 2017, mostly in the form of heavyweight “automated arms” that can be used to perform industrial tasks such as welding, painting or assembly. And their ranks are growing rapidly. The association also found that the North American robotics market grew 7.2% in the first half of 2019, with U.S. and Canadian companies ordering nearly 16,500 robots in that time, worth nearly $870 million.

Automotive manufacturers accounted for most of this growth, followed by the semiconductor and electronics industries, the life sciences, and food and consumer goods.  And this is the continuation of a trend that industry watchers have noticed since at least 2010. The ongoing trend toward automation, paired with new innovations in robot technology, have ushered in a golden age for robotics, driving record-setting sales across the industry and helping it grow at a compound annual growth rate (CAGR) of 19% between 2012 and 2017, according to the International Federation of Robotics.

Demand for robots is rising, and it isn’t slowing down anytime soon.

What Is Robotics?

In terms of specifics, the Oxford English Dictionary defines a robot as: “A machine capable of carrying out a complex series of actions automatically, especially one programmable by a computer.”  It is, in effect, a machine that can carry out physical tasks in the real world. Just as R2D2 and C3P0 in “Star Wars,” they can be programmed to function both alongside and in place of human labor.

But none of this is particularly new.  Industrial robots have been commonplace in workplaces around the world for decades. In fact, the industry traces its roots back to an industrial robot named Unimate, which was installed on a General Motors assembly line in New Jersey in 1961, tasked with moving die castings from an adjacent assembly line and welding them onto automotive body panels. Its work helped save its human counterparts from a dangerous and labor-intensive job.

Since then, robots have only become more capable.

The robotics industry today is considered an interdisciplinary branch of both engineering and science that brings together a wide range of different specialties and skills in the production, development and maintenance of robot machines. This typically includes the work of mechanical engineers, electronic engineers, computer scientists, artificial intelligence experts and more, to “oversee the design, construction, operation, and use of robots, as well as computer systems for their control, sensory feedback, and information processing.”

Why Invest in Robotics?

In short, we’re still just scratching the surface of what is possible in robotics.
Advancements in Artificial Intelligence are leading to smarter, more capable robots; miniaturization is shrinking the size of these machines dramatically, opening them up to vast new markets and applications; and of course the continuing trend of falling prices across all hardware segments due to modern efficiencies means robots are becoming available to far more buyers than ever before.

According to Mordor Intelligence, a market research firm: “The robotics market was valued at USD 31.78 billion in 2018 and is expected to register a CAGR of 25% over the forecast period of 2019-2024. In the past decade, industrial robots used to be high priced, due to which, the ROI is expected to be achieved after a decade. However, presently, smaller collaborative robots are priced for companies to receive ROI in months, instead of decades, often costing around USD 20,000. Declining sensor prices and increasing adoption have further aided lower costs.”

How to Invest in Robotics

But how can investors get involved in this growth opportunity for modern robotics? A search on Magnifi suggests that there are a number of different ways to profit in robotics, including ETFs, thematic funds and more.

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The information and data are as of the October 17, 2019 (publish date) unless otherwise noted and subject to change. This blog is sponsored by Magnifi.

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