Robotics makers map shift from smartphones to cars

As breakneck growth in the global smartphone market eases, the mostly Japanese companies that make the robots that build the phones are looking to automakers to take up the slack.

Robotics remains a strength in a Japanese electronics industry that has been hammered by competition from rivals in Korea and Taiwan. Panasonic, Hitachi High-Technologies, Yamaha Motor, Fuji Machine Manufacturing and JUKI together make eight of every 10 component mounting robots.

The quickest of these can mount more than two dozen parts a second, some thinner than a tenth of a millimeter. A line of 10 connected robots can put together 5,000 smartphones a day.

But, as smartphone sales growth slows, the chip mounters are feeling the squeeze.

Sales at Panasonic’s chip mounter business - one of its non-core, but niche market leading divisions at the centre of a revival plan - dropped by a tenth in the year ending March 31. The business has a 30 percent global market share.

Katsuhiko Omoto, who heads Panasonic’s factory automation unit, sees little prospect for a rebound this year. “We don’t really see big growth,” he said in Tokyo. About a third of the cabinet-sized machines made there end up in Chinese foundries cranking out Apple iPhones and other mobile devices.

The global market for chip mounters is forecast to grow to $7 billion by 2015, according to industry researcher Technavio, from $5 billion now.

Panasonic’s component mounting robots business brings in around 1.4 percent of sales, but earns 6 percent of operating profit.

SIDC smartphone sales increasing about 15 percent this year in mature markets like the United States, down from 20.6 percent last year, and this will slow to 4.6 percent by 2017. In emerging markets - China accounts for around a third of global demand - growth will slow to 12 percent this year from more than 35 percent.

Omoto reckons Panasonic could boost its share of the chip mounting market by wooing smaller Chinese mobile phone makers that are gaining ground on Apple. The U.S. firm’s Greater China sales slumped 43 percent in April to June from the previous quarter. Beyond that, Omoto, whose operating margins have slipped to 8 percent from 10 percent, is looking to reduce his smartphone related business to a quarter from 30 percent by selling more robots to the auto industry.

Automatic parking, collision warning systems, cameras, and complex engine and suspension management computers add up to an under-the-hood boom in auto electronics. Drivers are also shifting to hybrids and electric cars, which tend to have more electronics than gasoline models.

“The amount of electronics in a car is only going to increase,” said Naoki Kobayashi, deputy chief engineer at Toyota Motor’s luxury Lexus brand, noting the recently launched IS model has one fifth more electronic control units than its predecessor.

Hitachi High Technologies, a majority-owned subsidiary of conglomerate Hitachi Ltd, is also eyeing opportunities among auto manufacturers and their supply chains.

“It looks as though the smartphone and tablet markets have peaked,” said Masatoshi Kurosawa, a general manager at the Hitachi firm, adding he doesn’t yet see any new consumer gadget to make up for the slowing smartphone momentum. His company and other chip mounters typically have around 10 months advance notice of new product launches when manufacturers begin shopping around for new production equipment.

Switching to supplying the auto industry requires chip mounters to focus less on speed and miniaturization and more on component traceability, said Hiroshi Nakamura, a managing officer at JUKI.

“For the past several years the market has focused on smartphones, and that has meant everyone focused on making fast machines,” he said. “Automakers have stricter safety concerns, which means they avoid cutting edge components.” Reuters