Key Takeaways

Robotics is central to the application of AI to the real world. Advancements achieved in AI in the last few years should help unlock new robotics use cases across industrial and services sectors.

Industrial applications of robotics, particularly to manufacturing, stand to benefit from growing labor costs in the U.S. as well as growing demand from precision industries such as semiconductor and EV manufacturing.

An inflection point in robotics may emerge when humanoid technology development speeds up and sees broader adoption.

Industrial Robotics: The Backbone of Modern Manufacturing

The use of robotics in industry dates to the 1950s, when industrial robots were used for simple tasks such as printing, welding, and assembly.² With the advent of microchips and software, the capabilities of fixed robotic setups transformed dramatically, making them faster, more precise, and programmable. This evolution not only enhanced their performance but also broadened their range of applications across various industries and smaller scale production.

Today, with the availability of sophisticated AI algorithms, more powerful chips, improved sensors and actuators, and a deeper understanding of electro-mechanical systems, the capabilities of industrial robots have advanced significantly.

This has also spurred their adoption and use. In 2023, global manufacturers installed nearly 4.3 million industrial robots, marking 10% year-over-year (YoY) growth.³ Demand is particularly strong in markets like North America, supported by catalysts such as reshoring of manufacturing. For example, manufacturers in the United States installed 44,303 industrial robots in 2023, reflecting a 12% YoY increase.⁴ Canada saw even stronger growth, with 4,616 units installed—a 43% YoY jump—primarily driven by the automotive sector.⁵

Amidst reshoring, manufacturers also favor robotics as the solution to tackle the dual pressures of rising labor costs and maintaining production cost parity. In the United States, manufacturing wages increased nearly 4% in 2023, making it challenging for companies to produce locally while sustain unit economic advantages associated with globally outsourced production.⁶ By 2030, U.S. manufacturing wages are expected to grow even higher, by roughly 35% compared to 2023 levels.⁷

Moreover, investments targeted at reshoring precision-heavy industries such as electronics goods, semiconductors, and automotive further necessitate the adoption of advanced robotic systems to ensure quality and price parity. These sectors demand exacting production standards that only state-of-the-art robots can reliably meet.

Lastly, the cost of deploying industrial robots is also rapidly coming down, with a nearly 25% decline in the last decade due to advances in sensors, software, and hardware.⁸ Declining prices could make this technology even more accessible.

Services Robotics: Adding Efficiency to Human Operations

Unlike industrial robotics, where robot usage can be confined to a fixed range, robotics applications in the services industry must be far more versatile. Robots operating in environments such as retail services or entertainment venues need to be both adaptive and safe to function effectively around humans. This puts a high barrier for acceptance, requiring near-perfect engineering of robotic technology.

However, recent technological advancements and development of robotics across growing use cases promise progress. In healthcare, robots are seen playing a growing role as assistants to surgeons, adding precision and reliability to surgical procedures. Intuitive Surgical, a pioneer in surgical robotics systems, most recently disclosed nearly 2.2 million surgeries conducted on its da Vinci surgical systems in 2023, which grew 22% year over year (YoY) and highlighting growing use of such technologies.⁹

In logistics and transportation, the use of robots in well-defined indoor and outdoor geographic spaces enables e-commerce companies to operate more efficiently. Amazon operates nearly 750,000 robots across its operations worldwide - roughly one robot for every two employees.¹⁰ The robots help the company stay productive amidst turnover rates as high as 150% annually in its warehouses.¹¹ Walmart’s warehouses, for their part, have been getting a boost from robotic fork-lifts.¹²

Similarly, the restaurant sector, , can benefit from robotics in counter work, order serving, food preparation, and even security.¹³ As of 2022, only one service robot is engaged per 1,500 restaurants globally, suggesting growth potential.¹⁴

Factors such as safety and ability to work alongside humans prolong the adoption curve for services robots, but we see steady expansion of the technology playing out this decade, benefiting the broader automation theme.

Humanoids: The Next Big Thing in Robotics

Our physical environment is designed primarily for humans. Naturally, robots taking humanoid form could find it much easier to function effectively around us. Human-like shape is also anticipated to enhance social acceptance of robots, making it easier to integrate robotics into domestic applications.¹⁵ For these reasons, the arrival of humanoids could mark a key inflection point for robotics.

Advancements achieved in AI, particularly in making AI interact with humans through technologies like large-language models, bring us closer to this reality. Technological progress has also attracted capital support. For example, there has also been a noticeable uptick in private funding targeted towards humanoid development in 2023 and 2024.¹⁶

The market for humanoids could easily surpass fixed robots as industrial and domestic use cases emerge. In industries, humanoids could surpass collaborative robots (co-bots) by handling more complex tasks—ranging from heavy lifting to adapting to varied work environments, delivering unmatched flexibility and driving significant productivity gains. At home, humanoids could revolutionize daily life by assisting with tasks such as cleaning, cooking, and caregiving.

By 2036, humanoid sales are projected to approach 100 million cumulative units.¹⁷ The trajectory of humanoid technology may well mirror the rise of automobiles in their earliest days, marking the beginning of a profound technological shift. Across industries and domestic applications, humanoids could address a $4.8 trillion market by 2035.¹⁸

Conclusion

Robotics is key to bringing AI into the physical world. As AI becomes more advanced, affordable, and accessible, automation will grow faster. Parallelly, short-term industrial catalysts such as demand for greater precision, efficiency, and flexibility are only expected to strengthen, allowing the technology capital and resources to expand. The industry’s most profound disruption yet will likely come with humanoid robots, which are set to reach a tipping point by 2030, transforming how we live, work, and operate our economy. As this interconnected innovation unfolds, we believe the automation and AI theme is a growing opportunity for investors looking for disruption.

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Robotics: Breakthroughs in Automation

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Key Takeaways

Industrial Robotics: The Backbone of Modern Manufacturing

Services Robotics: Adding Efficiency to Human Operations

Humanoids: The Next Big Thing in Robotics

Conclusion