The global smart manufacturing market is expected to welcome a golden period of growth across five years, starting with annual revenue of US305 billion in 2021 and surpassing US450 billion in annual revenue in 2025 at a 10.5% CAGR, according to TrendForce’s latest investigations. This growth can be attributed to several factors, including the accelerating digital transformation efforts from enterprises, the increased demand from industrial automation and WFH applications, and the emergence of 5G, advanced AI technologies, and other value-added services.
Looking ahead to 2022, TrendForce believes that the outlook of smart manufacturing has evolved from such conservative strategies as improving the resilience of the manufacturing industry itself, to increasing the industry’s production capacity as well as efficiency while reducing both energy expenditure and carbon emissions. These advantages are expected to serve as the main drivers propelling the growth of the smart manufacturing market next year.
Smart manufacturing development will revolve around 5G, edge computing, and carbon footprint reduction going forward
The core feature of smart manufacturing lies in its ability to deliver instant feedback through the integration of virtual data and real, physical equipment. Hence, low latency, high security, and fast computing power have become increasingly important for smart manufacturing development, which will revolve around edge computing and 5G applications, including AR/VR, machine vision, digital twins, and predictive maintenance, all of which will experience considerable upgrades in functionality thanks to smart manufacturing.
Furthermore, as the issue of global warming gains more and more media coverage, 137 countries have now committed to achieving carbon neutrality. This pursuit of environmentally friendly outcomes is also reflected in the current state of industry 4.0 development. For instance, companies including Henkel, Johnson & Johnson, Siemens, and Tata Steel all operate manufacturing facilities that qualify them for membership in WEF’s Global Lighthouse Network. The aforementioned companies have ensured their facilities operate with optimized energy consumption, highly effective manufacturing processes, and reduced carbon emissions through the adoption of computer simulation/modeling and smart management. TrendForce expects the future design of smart manufacturing equipment and factories to center on the use of environmentally friendly IoT technologies.
Taiwanese manufacturers are likely to seize shares in the niche market in light of the rise of domestic micro-factories
It should be pointed out that the Taiwanese manufacturing industry possesses certain competitive advantages in the global market, including a highly consolidated supply chain, a relatively comprehensive smart manufacturing value chain, and the ability to deliver highly customized solutions. In particular, various Taiwanese manufacturers specialize in full-service, integrated smart solutions that feature equipment health monitoring and machine vision functionalities, thereby significantly lowering the barrier for adoption. Assuming that the domestic industry is able to continue leveraging their existing competitive advantages and furthering their current developments, TrendForce expects micro-factories to become the key factor through which Taiwanese companies can find commercial success in the global smart manufacturing industry.
Although the smart manufacturing value chain has historically had its various verticals spread throughout the world, recent trends such as a return of domestic manufacturing and tectonic shifts in the manufacturing industry have resulted in the rise of shortened supply chains as well as localized operations. These developments have led to the recent surge of micro-factories. TrendForce’s investigations indicate that, in addition to their high degree of automation and analytical accuracy, micro-factories deliver improved manufacturing outcomes while minimizing resource consumption and yielding such benefits as a flexible supply chain, lean human resources, and low initial cost. Micro-factories have already seen widespread usage in the global automotive and electronics industries in light of these benefits. Likewise, TrendForce believes that Taiwanese manufacturers of bicycle chains, steel nuts/bolts/screws, and suitcases will likely succeed in their respective niche markets by upgrading their manufacturing operation with micro-factories.
The onset of the COVID-19 pandemic in 2020 compelled the manufacturing industry to move towards a future of digitization and automation that attempts to reduce labor associated with production and operation. In light of this shift, the use of industrial robots quickly expanded from its earlier applications in the automotive industry to other industries, particularly pharmaceutical production and healthcare, which have grown rapidly in demand in the post-pandemic era.
The Chinese market, more specifically, has seen remarkable growths in industrial robot production, from just under 30,000 units in October 2020 to 45,000 units subsequently, according to TrendForce’s latest investigations. As of March 2021, about 30,000 industrial units were produced each month. In addition, annual sale of industrial robots in 2020 reached about 170,000 units, a 15% YoY increase. Non-automotive industries, namely, the electronics industry and the metal fabrication industry (which spans robotic machining, freight manufacturing, and rail manufacturing), accounted for about 70% of industrial robot sales in China.
While labor costs in China gradually increased, the corresponding cost advantages associated with domestic production underwent a corresponding decline. As such, industrial robots, the production of which began approaching economies of scale, became one of the key drivers of the Chinese manufacturing industry’s shift towards high-end, advanced manufacturing. Companies such as Estun, STEP, GSK, and Inovance have been either increasing their R&D funding or acquiring other companies in order to raise their technological competencies, and their efforts have been accelerating China’s goal of “domestically manufactured substitutes”.
Articulated robots and home appliances are, in order, the two most prevalent applications of industrial robots
In the industrial robot market, articulated robots comprise the most widely adopted option. Articulated robots are primarily used across three industries, namely, automotive, metal fabrication, and home appliances segments. SCARA robots, on the other hand, represent the other mainstream type of industrial robot and are mainly used for electronics, li-ion, and PV panel manufacturing. Aside from the two aforementioned options, collaborative robots are also used for manufacturing metal products, ICT products, and consumer electronics.
In the Chinese market, for instance, articulated robots from major foreign suppliers have a significant advantage in the automotive, metal fabrication, and home appliances industries. These suppliers had a 73% share in the heavy payload (>20kg) segment and a 51% share in the light payload (≤20kg) segment in the articulated robot market last year, with ABB, FANUC, KUKA, and Yaskawa possessing most of these market shares.
Relatively, Estun, STEP, Siasun, GSK, and other Chinese industrial robot suppliers were instead focused on cultivating their presence among SMEs in tier 2 and tier 3 cities. These companies’ products are now used across a wide variety of applications in the automotive manufacturing (including automotive components and NEVs), metal fabrication, home appliances, and food/beverages sectors.
In particular, industrial robot-based production lines for whole vehicles have already been deployed for automotive manufacturing industries in these cities. Unlike their foreign competitors, major Chinese suppliers had a 20% market share in the heavy payload (>20kg) segment and 22% market share in the light payload (≤20kg) segment last year. Notably, Chinese suppliers possessed a slight advantage in the latter segment because metal fabrication and home appliances manufacturing, compared to automotive manufacturing, has relatively less stringent requirements regarding product compactness and stability.