Blog Angus Muirhead: You Can’t Sit Still in Technology Investment
The theme of this year’s Credit Suisse Asian Investment Conference is 'Disruption as Usual'. Is disruption in technology the new normal?
Angus Muirhead: I think it is. But it's been becoming “normal” since the introduction of silicon-based semiconductors in the 1970s. For some reason people still expect that technology will suddenly change and bring us all into the future. But we tend to see technology creeping into our lives slowly, little by little, and often we don't really notice any change until afterwards. It seems clear that technology disruption accelerates over time.
Isn’t it too late to invest in robotics then?
AM: No, it is not. The levels of penetration of robotics are still very low: we don't yet have fully autonomous vehicles on the road, most people don't have a robot vacuum cleaner, and so much of the manufacturing sector is only now starting to experiment with robotics. So we believe we still have a long way to go and this is just the very start.
Would you say that disruption is a friend or foe for investors?
AM: Whenever we see rapid technology change, like we're experiencing now in robotics and automation, often the old guard struggles to adapt. Desktop PCs lost share to laptops, laptops to tablets, and tablets, digital cameras and feature phones and pagers lost share to smartphones. You can’t sit still in technology investment. You need to be sensitive to who owns the critical technologies and IP, and who is the likely long-term winner and equally importantly who is the likely loser.
You can’t sit still in technology investment. You need to be sensitive to who owns the critical technologies and IP, and who is the likely long-term winner and equally importantly who is the likely loser.
What sectors do you think automation and robotics will have the biggest impact on and when could that happen?
AM: Impact in terms of the greatest market opportunity is likely to remain in manufacturing because most manufacturers do not use robotics at all, or only in a very limited way.
Today, to justify the cost, the danger and the difficulty of use, only very large-volume, very narrow product range manufacturers use robots. But current technologies are reducing the cost significantly as well as allowing robots to be easier and safer to use. As this happens, the opportunity for the use of robots in manufacturing sectors is expanding massively.
There are also greenfield opportunities for automation, robotics and artificial intelligence in the healthcare sector, in infrastructure where “smart-cities” is becoming a buzz-word, and more on the software-side of automation in the “white collar” office environment. It is in these areas that I think we will most feel the impact, because until now we haven’t seen so many robots in use.
Asia seems to be in the leading position when it comes to robotics and technology. Why is it so? Is there a broader social acceptance of robotics and automation?
AM: There does seem to be a broader acceptance of robotics in Asia, whereas in Europe people often seem rather wary of robots. Perhaps countries like Japan are more aware of the need to find a solution to the shortage of labor as the population ages and is living longer. We sometimes forget that robotics are not just about improving productivity, but are in many cases a critical solution to labor shortage and to perform dangerous or dull and repetitive tasks.
As to Asia’s leading position in robotics, China has been the largest buyer of industrial robots in the world for several years, accounting for about a third of global demand, and South Korea and Japan together account for another third. But currently around 70% of all the robots that China buys are produced outside China. We expect that to change. The “Made in China 2025” (“MiC2025”) agenda of reforms aims to put the country into the top 10 of the most automated nations, and the government is giving generous incentives to both robot makers and companies that automate. Estimates made in 2017 suggested there were over 800 start-up robotics companies now in China.