March 21, 2017      

As the first quarter of 2017 winds down, it’s worth pausing to look back at the biggest robotics acquisitions and fundings of the past year. What trends do they indicate, if any, and how is the robotics industry maturing? There’s no doubt that adoption and suppliers are growing, but applications and profitability are another matter.

Business Takeaways:

  • The largest artificial intelligence and robotics acquisitions of the past year demonstrate the level of interest in the Internet of Things, connected and autonomous vehicles, and advanced manufacturing.
  • Not every deal was welcomed with open arms, however, as the acquisition of Germany’s KUKA by China’s Midea Group raised alarms in Europe.
  • Processor makers were behind some of the biggest transactions, but market-share grabs don’t show much strategy just yet.

SoftBank builds a $1B Vision Fund

SoftBank Group’s October 2016 launch of its $100 billion Vision Fund for technology investments accounted for about half of the year’s 13 largest corporate-financing pledges and commitments.

We are defining the largest deals as those with a disclosed (not necessarily final) value of $1 billion or more.

SoftBank has actually promised to put up to $25 billion over five years in the fund, which is intended to accelerate development of automation, the Internet of Things (IoT), and other technologies.

The Public Investment Fund of the Kingdom of Saudi Arabia promised to put in $45 billion over the same period. (And days into 2017, Apple Inc. pledged another $1 billion.)

Combining SoftBank’s fund pledge with its $32 billion buyout of chipmaker ARM Ltd., announced in July, puts the Japanese telecommunications company in the top slot in its own right. SoftBank coveted ARM for its early expertise in IoT microprocessors, but the British chipmaker is also involved in automation-related products.

Electronics firms look forward to IoT, connected cars

Chips also figured in one of 2016’s next-largest robotics acquisitions — the proposed $47 billion purchase of NXP Semiconductor by wireless-technology giant Qualcomm Inc., announced in October. Qualcomm executives said the buyout addressed a technology expected to benefit from current trends: connectivity.

Qualcomm's robotics acquisition of NXP is expected to help connectivity.

NXP’s product development focuses on providing the chip infrastructure for the coming Internet of Things — things including connected robotics, vehicles, appliances, and manufacturing equipment.

It should not be surprising that the next-biggest robotics acquisition centered on connectivity, too. Samsung Electronics bought Harman International Industries for $8 billion.

Harman is a familiar name to audiophiles. Among other things, it makes high-end consumer audio and video systems. But far more profit lies in Harman’s vehicle telematics, connected vehicle, and wireless security products, all of which will be foundational elements of autonomous cars.

In announcing the deal in November, Samsung executives said they expected the automotive electronics market to top $100 billion by 2025. Samsung expects to gain entry to the many vehicle makers that today buy from Harman for their higher-end models. The combined entity is hoped to create an end-to-end product platform, shutting out myriad smaller competitors.

Samsung plugs into Viv’s voice interface

Also last fall, Samsung said it would buy Viv Labs Inc., which makes software that enables people to speak detailed, natural-language questions and instructions to electronic products. It reduces the need to speak in awkward and stilted sentences or to type the input.

Buyers of Viv’s product plug their products into the open (as opposed to proprietary) platform, eliminating the need for them to write their own voice-interaction code. This saves companies development time and expense.

Viv was co-founded by the three software engineers — Adam Cheyer, Dag Kittlaus, and Chris Brigham — who launched Siri on the world. Neither company has disclosed what Viv’s price was.

Global powerhouses court controversy

Among the year’s top deals, only one generated significant controversy.

China-based appliance maker Midea Group Co. offered $5.2 billion in cash last May for Germany’s storied robotics maker, KUKA AG. The worry was that core technology developed indigenously was being uprooted to China.

While those opposed to the deal, including at least one trade union, tried unsuccessfully to scuttle the acquisition or to find a local buyer, the German government examined the deal. Ultimately, regulators decided not to order a probe, saying that a sale would not harm the nation.

According to a report by the South China Morning Post, Midea immediately began building a $1.5 billion factory in China to churn out new robots. Its capacity initially will be 7,000 machines annually, but Midea executives say the plant will make 17,000 robots by 2025.

GE brings 3D to life

Also of note was General Electric Corp.’s double-fisted 3D printing buyouts in September. The global manufacturing conglomerate had already invested $1.5 billion in printing when it bought industry leaders Arcam AB and SLM Solutions Group AG for a combined $1.4 billion.

General Electric is expanding its 3D printing portfolio.

GE’s interest in additive manufacturing has surged from quick prototyping to making parts for use in jet engines. In September, company executives said that their aviation unit, GE Aviation, has designed hundreds of engine parts in ways that were impossible before 3D printing.

In fact, the company claims to have cut 845 parts for its advanced turboprop engine. Combining parts saves weight (including that of part connectors and fasteners) and reduces assembly and maintenance complexity, and, thus cost.

Where necessary, printed parts can be created in ways that are much stronger than joined components. The computing infrastructure required for designing and building part is radically smaller than that for introducing parts using conventional manufacturing.

Little wonder, then, that GE surprised the industry by acquiring Arcam and SLM Solutions. Arcam has proprietary electron beam melting (EBM) technology. EBM uses beams of electrons in a vacuum and at high temperatures to print metal objects faster and using more materials than can be accomplished competing technologies. And the resulting objects are better than what can be achieved with metal casting.

SLM Solutions makes selective laser melting systems to fashion objects out of materials including aluminum, stainless steel, nickel-based alloys, and titanium. Its printers are used today to make titanium implants for medical use.

Foxconn and Sharp do purchase dance

One of the year’s more unusual robotics acquisitions was a $3.8 billion buy involving the world’s largest contract electronics manufacturer, Taiwan-based Foxconn Technology Group and Sharp Corp., a fading Japan-based consumer electronics maker.

Foxconn, which bought Sharp, has made its fortune assembling Apple’s phones and tablets. Foxconn executives have committed to replacing 1 million workers with robots in the next couple of years. To date, it has given pink slips to 60,000 employees, thanks to automation.

Sharp’s lure was its highly regarded organic light-emitting-diode (OLED) technology used in Apple iPad screens. It also has a number of robotic initiatives including autonomous vacuum cleaners, security, and surveillance systems.

Foxconn originally had bid $5.5 billion for Sharp, and everything was going well until hours before the contracts were to be signed in February, Sharp executives reportedly told the buyer that it might be liable for about $3 billion in potential liabilities as part of the sale.

Many tense meetings later, the buyout price was $3.8 billion, a significant let-down for Sharp shareholders, no doubt, but still better than the next-highest bid, $2.6 billion, offered by the Innovation Network Corp. of Japan, a government-backed investment fund.

Robotics acquisitions and investments all over the place

“There’s no real trend right now,” said Elizabeth Lim, Americas research editor at the Mergermarket Group. “There are so many different kinds of manufacturers and so many different kinds of [robotics] buyers, and the technologies are still forming.”

In practical terms, that indicates that there will be no merger-and-acquisition boom in the next few years, Lim said. Mergermarket tracks business combinations and analyzes deals.

“Everyone in the robotics market is into the hype, but no one knows what to do with it,” she said, adding that would-be “bidders don’t know where to focus yet.”

Obviously, some robotics acquisitions and other deals are being signed, but it’s limited mostly to the biggest firms.

“It’s a market-share grab for those companies,” said Lim. “They’re buying even if they don’t know exactly how to scale up [acquired technologies] or add value.”

Here is the $1 billion-and-up club:

Mover Target Total (in billions) Type Announced
SoftBank SoftBank Vision Fund $100 (pledged) Investment fund Q4
Qualcomm NXP Semi $47 Acquisition Q4
SoftBank ARM $32 Acquisition Q3
Samsung Harman International $8 Acquisition Q4
Midea Group KUKA $5.2 Acquisition Q2
Foxconn Sharp $3.5 Acquisition Q1
Kion Group Dematic Group $2.1 Acquisition Q2
Honeywell Intelligrated $1.5 Acquisition Q2
General Electric Arcam AB and SLS Solutions $1.4 (combined) Acquisition Q3
TDK Corp. InvenSense Inc. $1.3 Acquisition Q4
ThermoFisher Scientific Affymetrix $1.3 Acquisition Q1
Medtronic HeartWare International $1.1 Acquisition Q2
ChemChina and Guoxin International Investment KlausMaffei Automation $1 Acquisition Q2