To what kind of world will we recover?
Delve into seven world-shaping megatrends, analyse the data that defines them, and plot their potential impact on individual industries.
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by UBS
The content in this infographic was relevant when it was published on 18 June 2020.
Current views may differ.
Automation always picks up sharply following a recession, though this time a confluence of circumstances could spark a shift from the factory to the mainstream.
Firstly, business may read the current health shock as a signal to limit reliance on labour where possible.
Sectors characterised by low labour productivity and high potential for automation include consumer goods, wholesale trade and e-commerce.
Automation potential vs. annual labour productivity - sector overview
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Annual labour productivity growth
4%
3%
2%
1%
0%
-1%
-2%
20%
30%
40%
50%
60%
70%
80%
Low
Automation potential
High
Source: Brookings analysis, BLS, EMSI, Moody’s, McKinsey, UBS. Note: Annual labour productivity growth is from 2000 to 2016.
Next, the Internet of Things effect.
UBS expects so-called general purpose robots to be at the epicentre of automation’s next wave, permeating sectors including Retail, Consumer Goods, Food and Beverages and Healthcare.
The shift is enabled by digitalization and AI technologies – which drive the Internet of Things.
Robot average selling price: Average price by application
0
2
4
6
8
10
12
14
FPD
Receiving/ shipment
Arc welding
Load/ unload
Injection moulding
Spot welding
Semiconductor
Material handling
General assembly
(JPYm)
Nominal average price
Source: Jara, UBS
Cost is key. Despite soaring demand, prices of robots fell over the past decade, driven by general-purpose robots gaining market share.
Add age. Ageing populations motivate companies to use automation to reduce their reliance on humans.
Funding is a factor. The greatest amount of AI investment goes to autonomous vehicles, but health tech, facial recognition, e-commerce, augmented reality and fashion retail are all receiving strong funding too.
Percentage of world AI private investment, start-up cluster (2018-19)
0%
1%
2%
3%
4%
5%
6%
7%
Autonomous Driving
Drug, Cancer Study
Facial Recognition
Digital Content
Finance, Identity Authentication
Real Estate and Property
Semiconductor
Data, Database Management
Lending, Loans
Fashion Retail
Cybersecurity
Healthcare and Medical
Robotic Automation
AR/VR
Software Platform
Cloud, Data Center
E-commerce, Marketing
Cryptocurrency
Sales Automation
Supply Chain Management
Source: CAPIQ, Crunchbase, Quid-2019, Stanford University - Institute for Human-Centered Artificial Intelligence, UBS, Note: The chart shows the sum of total private AI investments from January 2018 to October 2019.
Add the desire to shrink value chains to the mix, and the status quo of the last 20 years, where three industries – autos, electronics and metal – and five countries – China, Korea, Japan, the US and Germany – drove nearly 74% of all robotic installations, seems ripe for an upset.
China should remain the biggest market, but demand should spread, with Italy, France, the Nordics and Spain likely to contribute significantly to new demand.1 Elsewhere, the UK, Israel, Canada and France have made strong investments in AI, and there is clear room for an upside surprise in the demand for robotics globally – particularly in the US.
Total private investment in AI from January 2018 to October 2019
$0.0bn
$0.5bn
$1.0bn
$1.5bn
$2.0bn
$2.5bn
$3.0bn
United States
China
United Kingdom
Israel
Canada
France
Japan
Singapore
Germany
India
South Korea
Australia
Switzerland
Finland
Sweden
Spain
Hong Kong
Belgium
Mexico
Ireland
Source: CAPIQ, Crunchbase, Quid-2019, Stanford University - Institute for Human-Centered Artificial Intelligence, UBS, Note: Amounts in current USD bn
UBS’s base case estimates suggest that the compound annual growth rate for automation will grow by 8-10% until 2025, with a total addressable market of $2trn by that year, up from about $0.5trn in 2020.
Sectors in focus
As e-commerce further displaces bricks-and-mortar set-ups, the automated warehouse segment of the Capital Goods industry should continue its secular growth.
Technology software should benefit from the use of AI, automation and analytics to meet the combined interest of improving efficiency while reducing the need for workers located at physical worksites.
Sources:
1. IFR, UBS estimates, Global robot demand growth by region (2018-2025E)
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