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Alex Cook’s 13 May 2020 blog highlighted the role of robotics and artificial intelligence (A.I.) technologies in fighting the spread of COVID-19.
In today’s post, we look behind the ticker of the BetaShares Global Robotics and Artificial Intelligence ETF (ASX: RBTZ) at some of the leading companies in this space, and how they have contributed to fighting the pandemic, or are well-placed to benefit from economic, social and geo-political shifts borne out of the crisis.
Robots and automation in healthcare applications
The most visually obvious contribution of robotics and A.I. to combating COVID-19 has been the development of autonomous robots in healthcare – such as Omron’s LD-UVC, shown in Figure 1 below. Omron makes up 4.5% of RBTZ’s index (as at 21 August 2020). Their ground-breaking LD-UVC disinfects a particular premises by eliminating 99.9% of bacteria and viruses, both airborne and droplet, with a precise dosage of UVC energy1.
Figure 1: The LD UVC, developed by Omron Asia Pacific, in conjunction with Techmetics Robotics
Reducing the risk of human exposure to the coronavirus is one application of robotics, while scaling up our capacity for clinical testing is another critical element of the fight.
Swiss Healthcare company, Tecan Group, which makes up 5.3% of RBTZ’s index (as at 21 August 2020), is a market leader in laboratory instruments, reagents and smart consumables used to automate diagnostic workflow in life sciences and clinical testing laboratories.
Tecan has experienced strong demand for its products to help in the global fight against the coronavirus pandemic, resulting in a substantial increase in sales and a surge in orders in the first half of 2020.
Automation is critical for countries attempting to scale up their COVID-19 testing capacity. Tecan is aiming to double production of its laboratory automation solutions and disposable pipette tip products, and has accessed emergency stockpiles to keep up with the massive demand2.
Artificial intelligence: a critical tool
Californian company Nvidia makes up 9.4% of the index which RBTZ aims to track (as at 21 August 2020), making it the Fund’s largest holding. Nvidia is at the forefront of deep learning, artificial intelligence, and accelerated analytics. Nvidia was able to design and build the world’s seventh fastest supercomputer in three weeks, a task that normally takes many months, to be used by the U.S. Argonne National Laboratory to research ways to stop the coronavirus3.
Supercomputers are proving to be a critical tool in many facets of responding to the disease, including predicting the spread of the virus, optimising contact tracing, allocating resources and providing decisions for physicians, designing vaccines and developing rapid testing tools.
Industrial robotics: re-tooling supply chains
Then there are companies and products that are helping us adapt to a post-COVID world and beyond.
Keyence Corporation, from Japan, positioned itself at the forefront of several key trends in an era of increasing factory automation. In the wake of the COVID-19 crisis, factories have never faced such an urgent need to replace humans with machines to keep production lines running.
Keyence specialises in automation systems for manufacturing, food processing and pharma – machine vision systems, sensors, laser markers, measuring instruments and digital microscopes. Think precision tools and quality control sensors that eliminate or detect infinitesimal assembly-line mistakes, improving throughput, and reducing wastage and costly shutdowns.
Its focus on product innovation and direct-sales model give it a competitive advantage, making it better able to adapt to new manufacturing processes and workflows while introducing high-value client solutions.
Keyence has maintained an operating profit margin >50%, has no net debt and managed to increase its dividend for the 2020 financial year, to become Japan’s third-largest company by market value4.
Unmanned vehicles and drones: a new world order
One unfortunate consequence of the virus crisis has been the straining of international relations and a deterioration of the rules-based order. AeroVironment is a global leader in unmanned aircraft systems, or ‘drones’, and tactical missile systems. It is the number one supplier of small drones to the U.S. military. The Australian Defence Force is also an AeroVironment customer5, with spending on drone and military technology expected to increase after the release of the 2020 Defence Strategic Update in July6.
Beyond weapons systems, AeroVironment is also leading the evolution in stratospheric unmanned flight with the development of the Sunglider solar-powered high-altitude pseudo-satellite (HAPS), currently undergoing testing at Spaceport America in New Mexico. AeroVironment recently announced it was building a drone helicopter that will be deployed to Mars along with NASA’s Perseverence rover in 20217. The ‘Mars Helicopter’ will be the first aircraft to attempt controlled flight on another planet, in its mission searching for signs of habitable conditions and evidence of past microbial life.
How to gain exposure to the Robotics and Artificial Intelligence thematic
A simple and cost-effective method of accessing the dynamic and fast-growing robotics and A.I. thematic is available on the ASX through the BetaShares Global Robotic and Artificial Intelligence ETF (ASX: RBTZ). The Fund invests in companies from across the globe involved in:
- Industrial robotics and automation: industrial supply chains
- Non-industrial robots: healthcare, agriculture, consumer applications and entertainment
- Artificial intelligence: A.I. for data analysis, predictive analytics, task automation
- Unmanned vehicles and drones: hardware and software, consumer and military applications.
This includes exposure to the companies mentioned in this article, and other leaders expected to benefit from the increased adoption and utilisation of Robotics and A.I. Over the 12 months to 31 July 2020, RBTZ returned 23.7%, outperforming the broad global MSCI World Index (AUD) shares benchmark by 20.6%8.
There are risks associated with an investment in the Fund, including concentration risk, robotics and A.I. companies risk, smaller companies risk and currency risk. For more information on risks and other features of the Fund, please see the Product Disclosure Statement, available at www.betashares.com.au.
1. News Desk. “OMRON’s UVC Disinfection Robot eliminates 99.9% of airborne and droplet bacteria and viruses” Australian Manufacturing, 15 July 2020, https://www.australianmanufacturing.com.au/127378/omrons-uvc-disinfection-robot-eliminates-99-9-of-airborne-and-droplet-bacteria-and-viruses
2. Wu, Katherine, “‘It’s Like Groundhog Day’: Coronavirus Testing Labs Again Lack Key Supplies” The New York Times, 23 July 2020, https://www.nytimes.com/2020/07/23/health/coronavirus-testing-supply-shortage.html
3. Condon, Stephanie, “How Nvidia built Selene, the world’s seventh-fastest computer, in three weeks”, ZDNet, 14 August 2020, https://www.zdnet.com/article/how-nvidia-built-selene-the-worlds-seventh-fastest-computer-in-three-weeks/
4. Reidy, Gearoid, Maki, Ayaka, “A $100 Billion Robotics Supplier Is Japan’s Second Biggest Firm”, Bloomberg, 3 June 2020, https://www.bloomberg.com/news/articles/2020-06-02/automating-factories-creates-100-billion-japan-corporate-giant?sref=6EQWk76O
5. Blenkin, Max, “Unmanned Systems Finally Taking Off in ADF Service”, Australian Aviation, 5 April 2018, https://australianaviation.com.au/2018/04/unmanned-systems-finally-taking-off-in-adf-service/
6. “Defense Industry and Innovation Factsheet”, Australian Defense Department, 1 July 2020, https://www.defence.gov.au/StrategicUpdate-2020/docs/Factsheet_Industry_and_Innovation.pdf
7. AeroVironment Press Release, “AeroVironment Marks 50 Years of Achieving the Impossible”, AeroVironment, 27 July 2020, https://www.businesswire.com/news/home/20200727005463/en/
8. As at 31 July 2020. Past performance is not indicative of future performance.