On October 8th, a bombshell announcement rocked the global industrial and technology communities.
SoftBank paid $5.375 billion to acquire ABB's robotics business. This was a significant sum, equivalent to 38.4 billion RMB, representing more than half of SoftBank's net profit last year. Following the announcement, ABB's share price in Switzerland rose 3%, while SoftBank's share price in Tokyo also surged 1%.
This signifies that, in addition to investing in AI, SoftBank is further expanding its presence in "physical artificial intelligence" and smart manufacturing.
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Source: Internet
ABB's "Severing a Limb to Survive": Why Was Its Robotics Business Abandoned?
Rumors of SoftBank's acquisition began early this year, but ABB was still hesitant about whether to spin the business off and list it as an independent company. After six months of negotiations, SoftBank raised the price by 15%, exceeding market expectations by $800 million. Now, ABB can simply sell its robotics business to SoftBank without the hassle of a separate spinoff. Shareholders will receive $4.7 billion in cash, exceeding the original spinoff plan. ABB's robotics business is no small undertaking. With 7,000 employees worldwide, it generated $2.3 billion last year, representing 7% of the group's total revenue. Its robots are used in automotive plants and logistics warehouses, tightening screws and moving boxes, serving clients like Tesla and Amazon. With the sale, ABB is effectively handing over its most profitable "arm" to SoftBank, allowing it to focus on electrification and automation.
In 2024, ABB's Robotics and Discrete Automation division is expected to generate approximately $2.3 billion in revenue, representing approximately 7% of the group's total revenue, with an operating EBITA margin of approximately 12.1%. While this level is not low, it does appear to be struggling compared to ABB's other core businesses.
The Electrification and Process Automation division has long maintained a profit margin of 16%-18%, enjoying low market volatility and robust cash flow. In contrast, the discrete manufacturing industries, such as automotive and electronics, on which the robotics business relies, are highly cyclical and experience significant order volatility. Last year, when the automotive industry slowed, ABB's robotics division experienced a double-digit decline in orders. This "cycle mismatch" problem is not uncommon among Western industrial giants. Siemens sold its low-voltage motor business to Nidec (Nidec) as early as 2022, citing the segment's disconnect with its core industrial digitalization strategy.
ABB's sale of its robotics business is also a strategic refocus: divesting a highly volatile and weakly synergistic segment to strengthen resource allocation in core sectors such as electrification, process automation, and high-voltage direct current (HVDC).
Competitive pressure is also a factor. Across the industry, Fanuc's robotics business profit margin is projected to exceed 19% in 2024, while Yaskawa Electric's servo motor advantage will maintain a profit margin of 15%-16%. Kuka has also significantly improved its profitability through localization transformation after its acquisition by Midea.
In contrast, ABB's robotics product line is relatively traditional, and it lags behind in emerging segments such as collaborative robots and automated mobile robots (AMRs). Faced with pricing pressure and technological catch-up from East Asian manufacturers, continuing to invest in high-cost competition is unwise for ABB.
After the sale, ABB will receive approximately $5.4 billion in cash. The company plans to invest this capital in high-value-added areas such as high-voltage direct current (HVDC), smart grids, and process automation. A portion of the funds will also be used for shareholder returns and share buybacks to maintain capital market confidence. Organizationally, the former "Robotics and Discrete Automation" segment will be split: the machine automation division will be integrated into the process automation segment. ABB will focus on its core "electrification + automation" combination.
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ABB, a century-old giant: the backbone of the global industrial robotics industry
ABB is one of the global leaders in automation and electrification. Along with Japan's FANUC, Yaskawa Electric, and Germany's KUKA, it is considered one of the "Big Four" global companies and consistently holds the second to third largest market share. Its business covers industrial robots, collaborative robots, and production line automation systems, serving customers in high-end manufacturing sectors such as automotive, consumer electronics, metalworking, logistics, lithium batteries, and photovoltaic equipment.
It's worth noting that ABB's leadership in AI algorithms and digital twin technology gives its robots greater flexibility and self-learning capabilities. For example, its "GoFa" collaborative robot can complete human-robot collaborative tasks without complex programming and is widely used in new energy vehicle factories and electronics assembly lines. ABB has also invested in the world's most advanced robotics superfactory in Shanghai, expanding its presence in the Chinese and Asian markets.
Opportunities and Challenges for Chinese Companies
As the world's largest robotics market, China faces unique opportunities and challenges in this changing landscape. Currently, China has only 17 robots per 10,000 workers, far lower than South Korea's 365 and Japan's 211.
Local manufacturers such as Siasun Robotics and Estun are expected to find market niches in this changing landscape, but they will need to rapidly enhance their technological capabilities. Midea Group, the owner of Kuka, needs to reassess its robotics strategy to address the new competitive landscape posed by SoftBank.
Internet giants such as Alibaba and Tencent, with deep expertise in AI, may accelerate their expansion into industrial robotics. They may seek partnerships with FANUC or Yaskawa Electric to counter SoftBank's lead.
The Chinese government has been promoting smart manufacturing and industrial upgrades. This transaction is likely to accelerate China's independent innovation in industrial AI and robotics.
Forecast for Industry Trends Over the Next Five Years
SoftBank's acquisition of ABB's robotics business will accelerate disruptive changes in the industrial robotics industry. We foresee the following trends over the next five years:
The deep integration of AI and robotics will lead to the gradual establishment of autonomous learning and decision-making capabilities by 2028.
The industry landscape will be reshaped, and the concept of the "Four Major Robotics Companies" may become a thing of the past, replaced by competition between "AI-native" robotics companies and traditional enterprises.
Emerging application scenarios are exploding, and robotics applications will grow rapidly in non-industrial sectors such as healthcare, logistics, and services.
The competition for talent is fierce, and multi-talented individuals with both AI and robotics expertise will become the most scarce resource.
Regulatory and ethical issues are becoming prominent. As intelligent robots become more prevalent, relevant laws, regulations, and ethical standards will gradually be established.
What should ordinary people and business owners pay attention to? For the average person, this acquisition could mean the following:
• There will be fewer factory workers in the future, but the remaining positions will be high-paying ones that require the ability to operate intelligent robots (such as robot programming engineers and AI trainers, whose hourly wages are 3-5 times that of ordinary workers);
• Your products may be cheaper (robots working 24/7 reduce costs), but the competitive barrier to entry in the manufacturing industry will become increasingly high (small factories may be eliminated).
For business owners (especially factory owners), it's recommended to focus on three key points:
Technology Update: Starting in 2026, the price of AI-enabled robots may plummet (SoftBank is trying to capture this market), so it's recommended to quickly evaluate whether to introduce them (for example, replacing manual labor with AI quality inspection could save millions annually);
Talent Pool: No longer just hiring "operators who can push buttons"; it's also important to cultivate AI trainers who can "teach robots to do their jobs" (there's a domestic shortage of over 500,000 such talent);
Partnership Opportunities: Small and medium-sized factories can await the SoftBank-ABB "standardized intelligent solution" (expected to launch in 2026) and upgrade their production lines at a low cost (for example, spending 1 million yuan on a system could increase efficiency by 40%). Let me be frank: The era of 'physical AI' in the robotics industry has truly arrived, and SoftBank and ABB have already secured the first tickets. Are you ready?
