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Ash Sharma

Ash has spent more than 15 years in technology research on several sectors, including industrial automation and smart manufacturing, smart home, solar power and energy storage, drones and robotics, medical technology and building automation. Ash is Research Director for our commercial drone & robotics research, amongst other topics. Read more

Mobile Industrial Robots (MiR) announced yesterday it is to be acquired by Teradyne for €121m ($148m) net of cash acquired plus €101m ($124m) if certain performance targets are met extending through 2020.

Background

  • Teradyne is a supplier of automation equipment for test and industrial applications. In 2017, Teradyne had revenue of $2.14 billion and currently employs approximately 4,500 people worldwide.
  • MiR was profitable in 2017 with annual revenue of $12m USD, more than triple 2016 revenues and had Q1’18 sales of $5m and targets $30m for the full year.
  • Teradyne previously acquired collaborative robot arm supplier, Universal Robots, in 2015 for $285m. The co-founder and CEO of MiR acted as CCO at Universal Robots up until its acquisition.

Our Analysis

High valuation shows promising outlook for MiR and industry

The purchase price of €121m represents a 10x multiple on MiR’s 2017 revenues, with the additional €101m based on performance bringing this up to more than 22x. The high valuation and purchase price of MiR demonstrates the extremely positive outlook expected for mobile robots and also the high growth that MiR expects. The company reported sales of $5m in Q1’18; whilst forecasts from Interact Analysis shows the manufacturing autonomous mobile robot (AMR) market will grow 80% in 2018.

MiR, which was founded only in 2013, has grown very rapidly benefiting from high demand from manufacturing customers, particularly within the automotive and electronics sectors. The company claims to have shipped 900 AMRs last year. Whilst many smaller payload AMR vendors have chosen to focus on logistics and fulfilment centers, MiR is one of the few to be almost exclusively focused on deploying its robots into manufacturing environments.

According to our analysis, MiR was the 11th largest supplier of AMRs globally in 2017 and the 7th largest supplier to the manufacturing sector (including all AMR product types).

Forecast for Manufacturing Mobile Robots

Will the mobile robot market continue to consolidate?

Undoubtedly yes, but the question is when. During the course of our recent research, we identified more than 75 manufacturers of mobile robots (AGVs and AMRs) for material handling applications and estimate that the total number of active vendors is closer to 100. Clearly for an industry worth just over $1bn this is a lot of companies.

Continued mergers, acquisitions and exits from the market will undoubtedly occur. But with the mobile robot market forecast to grow annually at over 40 percent and reach more than $7bn in 2022, its is not surprising to see so many companies vying for a share of it.

We expect industry consolidation to occur/continue in three main ways:

  1. Early stage acquisitions. Like the Teradyne takeover of MiR, we expect industrial automation companies to continue to enter the mobile robot market through acquisition (and to a lesser extent through developing their own technology). Several other acquisitions have happened in recent years, notably Kuka’s acquisition of Swisslog and Kollmorgen recently acquired by Danaher. Mobile automation is becoming increasingly common in manufacturing environments and industrial automation vendors no doubt view it as a complementary and high-growth product line.
  2. Partnerships-to-acquisitions. Increasingly we’re seeing incumbent technology providers such as manual forklift companies offering automated vehicles as a defensive move. Leading fork-lift companies such as Raymond (a subsidiary of Toyota) and Hyster-Yale have entered the mobile robot market through partnerships with technology providers Seegrid and Balyo. Automating manual forklifts from these companies is currently one of many sales channels for these AMR companies, however, as the technology is proven, and competition becomes fiercer, more acquisitions could be on the cards.
  3. Later stage exits/acquisitions. Although the mobile robot market is currently enjoying high-growth and attractive margins, this will undoubtedly change as the industry matures. High-volume, high-margin markets rarely exist. It is almost inevitable that as industry growth starts to slow, competition gets stronger, and prices of mobile robots fall, that operating conditions will get harder and margins squeezed. According to our analysis, we don’t expect that to happen before 2022, but it will almost certainly occur in the coming years. Because of these tougher conditions, it is likely that weaker companies, and those with higher cost structures will struggle and be acquired or fail altogether.

In contrary to all the above, we do expect new suppliers to continue to emerge and we expect the supplier landscape to change considerably in the years to come. New product types and technologies will be required as the industry evolves, and new processes and workflows will look to automation as a solution.

Make Up of AGV/AMR Market by Supplier Revenue Level (2017)

UR + MiR = Arm + AMR?

The bringing together of both MiR and Universal Robots under the Teradyne umbrella should create significant synergies and accelerate growth of MiR’s mobile robots through access to new sales channels. Although MiR has worked aggressively in the past few years to penetrate industrial accounts and distributors, Teradyne’s infrastructure, brand strength and geographic reach will certainly help to accelerate its growth, whilst also potential lower its supply costs.

Perhaps more interesting however, is the potential combination of the two companies’ technology. Universal Robots is a leader in collaborative arms (our data shows it had more than a 30% share of this market last year), whilst MiR is a top 10 manufacturing AMR vendor. Combining a mobile robot platform with a collaborative arm could prove to be niche, but high-value product. Our recent report, predicts that the use of arms mounted on a mobile platform will not become widespread for many years. In fact, we don’t expect this to be worth more than $100m before 2021 (at least for manufacturing environments). However, there are other ways to combine the technology. As was seen recently with the partnership between Vecna and Righthand Robotics, a fixed articulated arm, combined with mobile conveyors feeding and moving away stock can be an attractive and more cost-effective solution. Ultimately, it combines the benefits of individual piece-picking of the arm yet lowers the impact of the additional cost of it, by instead using mobile robots to automate the material flow to and from the arm.

The news of this acquisition clearly shows the hot interest in mobile automation and the likely growth trajectory it will see. We expect to see MiR continue to grow rapidly, both as a result of high industry demand, as well as from the benefits that it’s new owner offers. MiR and its competitors have been installing low volumes of robots at a high number of customers. These customers have now concluded their piloting phase and are likely to ramp up deployment of mobile robots at their facilities which will lead to exponential growth in the next few years.

Related Research

The above analysis is taken from a new Interact Analysis report – “Mobile Robots – 2018“, an in-depth report on mobile robots used in material handling applications which was published last month. If you’d like to learn more about the report or have any questions, please contact us at info@interactanalysis.com

 

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Posted by Ash Sharma

Ash has spent more than 15 years in technology research on several sectors, including industrial automation and smart manufacturing, smart home, solar power and energy storage, drones and robotics, medical technology and building automation. Ash is Research Director for our commercial drone & robotics research, amongst other topics. Read more