The Warriors of the Fourth Industrial Revolution | Robotics and AI | ITEK | Megatrends
Overview
The fourth industrial
revolution, the focus of our Technology ETF, is the current environment where disruptive technology trends such
as the Internet of Things (IoT), Robotics, Artificial intelligence (AI), Future
Cars/Autonomous Vehicles, Blockchain, Cloud Computing, Genomics and Social
Media are changing the way we live and work.
Unlike previous industrial
revolutions, these technologies are rapidly combining to create an
accelerating, virtuous cycle of nearly unlimited disruption. While previous
industrial revolutions were often localized, todays is interconnected and
global and its impact is already visible in homes and businesses across the
world.
This is a short guide to help
investors understand the main sectors of the fourth industrial revolution
and their features, applications, and growth potential. In this article we will focus on the Robotics & Automation theme.
Robotics and Automation
(Artificial Intelligence)
Robotics is a term for a mechanical device
designed to perform an operation or task. These engineering feats are
increasingly joined by advancements in software, which allow computers to work,
learn, and problem-solve- an area of computer science called artificial
intelligence. Together, these technologies are revolutionizing the way we
complete tasks, analyse data, and make decisions.
Recent technological advancements in robotics
and artificial intelligence (AI) are disrupting a range of industries from
manufacturing, to health care, defence, and transportation.
Robots are fast replacing human workers in a
variety of industries and are offering companies massive efficiencies,
increased output, 24/7 operations, predictable quality of goods and (in a post-Corona
world) less human-to-human interaction when producing goods.
Militaries and emergency services are also
likely to be significant players in the robotics and automation industries as
drones, exoskeletons and other technologies are increasingly used to replace or
augment human troops and emergency workers in dangerous situations.
Few
realize just how little human oversight is required of today’s most advanced
robots. One Japanese factory has been running in “lights out” mode for more
than 15 years, meaning there are no human factory workers [1].
Automated plants like this are capable of
manufacturing everything from electric razors to even other robots. In
addition, breakthroughs in AI allow computers to perform complex tasks by
drawing on various data sets and inputs. For example, IBM’s Watson computer is
now able to generate sports highlight reels by analysing crowd noises and
player gestures. Combining the mechanical abilities of robotics with the
intelligence of AI has resulted in machines capable of cleaning, cooking,
driving, and caretaking among other human-like tasks.
In
another example, in Singapore, ‘Spot’ the robot dog produced by Boston Dynamics
was used to help enforce social distancing in public areas during the COVID 19
outbreak.
Once unleashed, this technology is impossible to
put back in the box and robot/AI combinations are posed to replace many
repetitive, dangerous and menial tasks in industry and our day to day lives in
future.
Robotic Solutions to Human
Problems
Robotics and AI are of such interest as they
help address a host of problems resulting from an aging population, rising labour
costs, and quality improvement needs.
- Aging populations – Fewer people to produce
goods & services, more economic dependents, increased healthcare needs
- Labour costs - high labour costs can be reduced
by robots (cheaper than offshoring).
Wages in China and EM are getting more expensive.
- Performance improvements – robots more precise
and faster than humans = less wastage, high output and better quality.
Robots
and AI are drivers of improved productivity. Engaging these technologies can
yield faster, higher quality outputs without cognitive and physical problems.
The adoption of robotics in places like Germany, South Korea, China, Japan, and
the U.S. is expected to boost productivity by up to 30% by just 2025. (Gartner)
Part of the reason for the
sudden surge of robotics and automation in manufacturing lies in the skill gap.
According to a survey conducted by Deloitte and the Manufacturing Institute, up
to 2 million manufacturing jobs will be left unfilled over the next decade due
to improperly trained talent or a lack of individuals interested in careers in
the manufacturing space.
Labour costs are expensive and rising, which is a particularly
challenging prospect for competitive industries like manufacturing. While
offshoring helps, many companies are finding robots to be even more cost
efficient. One analysis found that offshoring jobs could save a firm
approximately 65% on labour costs while replacing workers
with robots can achieve an estimated 90 % in savings [2].
Production
output is increasing dramatically as robots become cheaper to produce. The cost
of industrial robotics is expected to drop to average levels of just $20K per
robot - converging with the cost of an average manufacturing worker. As the
economic case for robotic workers becomes more attractive, the industry is
expected to grow 10% p.a. hitting $83bn in 2020 [3]
In healthcare, robots are also revolutionising
the speed, accuracy and efficiency of healthcare services. (IBM Watson’s
supercomputer has 90% diagnostic accuracy already for lung cancer vs 50%
physicians. Over 5,000 Da Vinci surgical
robots in hospitals around the world helped perform over 1 million operations
(Intuitive Surgical corporate website press release 2018 4th qtr). With ageing
populations, the demand for fast and accurate diagnosis, coupled with modern
treatments for a variety of diseases and illnesses is likely to increase along
with the demand for healthcare trackers, robotic nursing assistants, robotic
surgeons and new medical devices.
The recent COVID-19 outbreak highlighted how
robots can be used in situations that would be dangerous or inefficient for
humans:
Source: R. Murphy, V. Gandudi, Texas A&M;
J. Adams, Centre for Robot-Assisted Search and Rescue, CC BY-ND
Artificial Intelligence
Artificial intelligence is already with us in
the form of digital assistants (Hey, Siri…) and self-driving cars, but the
power of computers to learn and problem-solve has applications for every
industry. Analysts predicting that the robot and AI market will exceed $150
billion this year (2020). The industries that are at the
forefront of this adoption include:
- Manufacturing: Factories will increasingly
use industrial robots that are falling in price. Supply chains increasingly
managed by smart order systems and inventory management.
- Military and Defence: Drones, autonomous
weapons, threat analysis, intelligence gathering
- Medicine: Biotech and genomics, remote
GPs, health trackers, AI diagnostics and custom medicines. For example, IBM’s
Watson supercomputer can diagnose lung cancer with a 90% accuracy rate compared
to 50% by humans.
- Transportation: Autonomous cars are
already appearing on streets. By 2030 autonomous cars could account for up to
15% of passenger vehicles sold worldwide. Self-driving trucks and self-flying
planes
- Agriculture: new ways to analyse soil,
irrigation, and crop yields, robotic harvesting and smart greenhouses / barns
- Finance: The financial sector is at the
fore of advancements in AI as Financial Technology (FinTech) such as the
introduction of robo-advisors which can create and maintain customized
portfolios for investors.
We are only scratching the surface of what AI
can deliver. Artificial intelligence could contribute an additional 1.2 percent
to annual gross domestic product growth for at least the next decade -
equivalent to $13 trillion in additional global economic activity by 2030 [4],
Investing in Robotics and
AI
The significant growth
potential, broad industrial applications and widespread consumer of AI and
Robotics has spurred investor interest in this theme. Investors who see
long-term opportunity in this theme can consider an allocation to the
HAN-GINS Global Innovative Technology UCITS ETF (ITEK). Our Technology ETF includes
Robotics and AI as part of 8 transformational technology trends that are
reshaping the world alongside Cloud Computing & Big Data, Cyber Security,
Future Cars, Genomics, Social Media, Blockchain, Augmented & Virtual
Reality.
Download the complete Whitepaper
Article Date: 17th June 2020.