2022 Trends to Watch:
Manufacturing technology

Manufacturing Technology Analyst
askananalyst@omdia.com© 2021 Omdia

Brought to you by Informa Tech2022 Trends To Watch| December 2021

Key messages

--12

3

4

5Sustainability: net-zeroSupply chain bottlenecks

Input cost fluctuation

Shift from CapEx toOpEx :Enterprise and software

The roadmap for the top
50 manufacturing
companies.

- Critical component
shortages and prolonged
lead-times.

- Energy supply volatility in
China impacting globalmarkets.

The sustainability
challenge.

- Shipping delays andbottlenecks in majorshipping ports.

- Critical component
shortages.
- COVID-19 impacting orderfulfillment and growing
backlogs.

- Entrance of major softwareand cloud providers into
the industrial space.
- Key applications include
IIoT, factory andwarehouse automation.
- The future ofmanufacturing throughconnectivity

Information Classification: General2022 Trends To Watch| December 2021

Electric motors in manufacturing consume around one third of the world’s electricity, a total of 8.6 Trillion KWH, theequivalent of the annual electricity consumed by China and India. MEPS (Minimum Energy Performance Standards) forlow voltage motors have played an important role in helping countries to meet energy efficiency and carbon dioxide
emission targets.

Sustainability and carbon
neutrality influencing
manufacturing investment

Global LV installed base by efficiency level2018 vs 2025

Attachment rate of motors and drives

~19%

2018

in 20142025
0%

Sustainability and carbon neutrality goals influencing global
manufacturing investment from three aspects:

20%

40%

60%

IE1 - standard efficiency

IE2 - high efficiency

IE3 - premium efficiency

IE4 - super premium

Efficiency
standardsinautomation
productsDigitaltransformation inmanufacturing
facilities

Biomass,
9.9%
Hydro,
2.7%

By 2025, the number of IE3 and IE4
installed motors is projected to double;
attachment rate of drives increases to 26% .

The world primary energy demand by fuel type, 2035

Other renewables, 2.5%

Other renewables, 7.2%
Biomass,
10.2%

Oil, 30.0%

Nuclear,
5.2%

Hydro,
2.9%

Oil, 29.7%

Nuclear,
5.7%

Natural gas,
23.3%
Source: Omdia

Information Classification: General100%

in 2020

Primary energy demand shifting slowly from traditional to renewable sources, attracting investment to accelerate
infrastructure development.
The world primary energy demand by fuel type, 2020

Energy mix:
Area ofinvestment
in industrial
sectors80%~23%

Coal, 26.5%© 2021 Omdia

Naturalgas, 23.9%
Source: Omdia

Coal,20.4%© 2021 Omdia

The sustainability challenge
In 2020 35 billion tonnes of Carbon
Dioxide were emitted
One third was from manufacturing
and construction.

Industrial energy consumption estimated to reach240.2 quadrillion BTUs in 2020
Only 8.5% of industrial energy consumption was fromrenewable sources

16 billion gallons of water are consumed by US
factories every day.

3.2 billion tonnes of metal and 4.1 billion
tonnes of cement were produced in 2019.

US factories emit 1.2 trillion gallons of untreatedsewage and industrial waste every year

Industrial pollution accounts for
50% of all pollution in the US

Sustainability and carbon neutrality influencing
manufacturing investment

Information Classification: General

2022 Trends To Watch| December 2021

2022 Trends To Watch| December 2021

Rising input costs

Global supply chain disruption
Supply chain disruption worsening
caused by components shortageand lead-time delays, restricting
market growth.

Supply chain bottleneck
reshapes industrial
business models

Gas and coal prices soar as the energy supply
crunch continues globally. This will further
increase manufacturing costs and could leadto temporary closure of energy intensive
factories.

Asia & Oceania - 6.5%
EMEA - 5.3%
Americas - 6.1%

Information Classification: General

Strong order intake reported by major
automation equipment suppliers inpost-pandemic recovery.

Global industrial automation equipment
markets forecast lowest % revenue growth

16%
14%CAGR 20 - 24 (%)

Revenue CAGR 20-24 by region

Global industrial automation equipment
markets forecast highest % revenue growth
CAGR 20 -24 (%)

6.6% growth from 2021

Orders surge as Covid-19
recovery begins

Energy crunch

Industrial automation equipment
marketProjected to reach $22.5 billion in2022

Increase in freight costs, commodity
prices, and component costs areheavily impacting industrial
markets.

12%
10%
8%
6%
4%

2%
0%
Robotics

Materials Handling Semiconductor
Equipment (MHE)
Machinery

4.3%
4.2%
4.1%
4.0%
3.9%
3.8%
3.7%
3.6%
3.5%
3.4%
Oil & Gas

Pulp & Paper
Machinery

PrintingMachinerySample Report Name Here | Month 2021

Supply chain bottleneck reshapes industrial
business models
Forecast scenario automotive order inflation

Secondhand equipment market

2

Supply chain disruptions have resulted in a boom in thesecondhand equipment. Growth in 2nd hand equipment will
inevitably dilute future growth of new machinery.

Orders (2019 = 1)

1.5

Historical data
1

Minimum customization

0.5
Impact of COVID-19020192020

HistoricalSemicon Manufacturer 120212022

Automotive Manufacturer
Semicon Manufacturer 22023

2024

2025

Electronics Manufacturer

Source: Omdia

In order to remain competitive in the market, equipment
and automation vendors are targeting product markets
with basic functionality with minimal customization toreduce the impact of extended lead-times.

Freight and shipping© 2021 Omdia

Freight cost increased

Input cost spikein 2021in 2021~70-95%

Information Classification: General~15-20 %Average lead-times~12 to 15 weeks
in 2021

Increased delays and shipping costs have significantly
impacted the industrial landscape throughout thepandemic. With the continuation of geopolitical tension
with China and the US/Europe fright and shipping is
expected to return to normalcy sometime in 2023.

Sample Report Name Here | Month 2021

Fluctuation in manufacturing input cost

Manufacturing costs increasing

$90
$80
$70
$60
$50
$40
$30
$20
$10$-

Crude oil, WTI

2023Q42023Q32023Q22023Q12022Q42022Q32022Q22022Q12021Q42021Q32021Q22021Q1

2020Q4

2020Q3

2020Q2

Rising manufacturing input costs coupled with soaring logistic costs
are pressuring higher product prices for global manufactures. This isespecially prevalent in US industrial markets.
2020Q1$/bbl

Crude oil price

Crude oil, Brent

Source: IHS Markit, November 2021

© 2021 Omdia

Commodity price$2,500

Cost reduction
Manufacturers have suspended low- margin product in favor ofhigher profitability. Shortages have also impacted productfunctionality as seen in the automotive sector where some models
have been released with less features.

$2,000$1,500

Supply chain diversification$1,000$500

Hot-rolled coil,US, $/short ton
Source: IHS Markit, November 2021

Information Classification: General2023Q42023Q32023Q2

2023Q12022Q42022Q32022Q22022Q1

2021Q42021Q32021Q2

2021Q1

2020Q42020Q32020Q22020Q1

2019Q4

2019Q3

2019Q2

2019Q1$-

Cold-rolled coil,US, $/short ton© 2021 Omdia

Manufactures are seeking supply chain alternatives to saveprocurement costs. In preparation for future markets manufactures
will look to significantly de-risk supply chain dependency on Asia.
This will be achieved through closer to consumption production.

Sample Report Name Here | Month 2021

Enterprise and software companies - Newentrants into the industrial ecosystemCloud providers: Major machine vision providers are rapidly deploying deep-learning enabled solutions.
The entrance of Amazon, Microsoft and Google into the industrial vision space has accelerated
the adoption of deep learning (DL) functionality for leading machine vision providers.
This trend will impact the growth of smart cameras and smart sensors deployment outside low
volume-controlled environments. This will also be seen with the growing utility of system onchips (SOC). The impact of smart devices and DL solutions has been seen most ubiquitously inthe logistics and packaging industry. Barcode track and trace solutions are being deployed tocombat a boom in E-commerce demand constrained by manufacturing job shortages andCOVID-19 restrictions.

Artificial intelligence and machine vision

Machine vision software provider landscape- 2021
35%

32%

30%

27%

25%
21%
20%
15%

12%
8%

10%

ArtificialIntelligence(AI)

Machinelearning(ML)

Deep learning(DL)
Convolutional neuralnetwork (CNN)

5%0%
Traditional rule based software

System software

Library software

Open source tools

Deep learning / AI functionality

Information Classification: General

Top-3 products, based on amount of
newly connected nodes:- Remote I/O- PLC- Sensors

Digitalization of the industry isdriving the growth in theconnected nodes.

Connected nodes, millions

Global market for newly connected nodes
300

20.0%

250

15.0%

200

10.0%

150

5.0%

100

0.0%

50

-5.0%

0-10.0%Top-3 product, based on CAGR of theamount of newly connected nodes:
Motion controller
Servo drive2020 2021 2022 2023 2024 2025
Connected nodes

Industrial communication
marketEstimated to grow 10.3% in 2021,
after a hit in 2020 due to thepandemic
CAGR of the new connected
nodes 2020-2025 : 13,1%Discrete safety

YoY Growth0%

Market growth driver – digitalization ofthe industry/smart manufacturing:
▪
▪
▪
▪
▪
▪

Flexible and Modular production
Remote manufacturing
Sustainable production
Cybersecurity
Improved quality
Reduced costs▪
▪
▪

5% 10% 15% 20% 25%

Enabler and communication
tools are:Converged network and device
interoperability
Open architecture of the network
IT technologies growing into OT:▪ Digital Twin
▪ Edge computing▪ Cloud integration▪ Artificial Intelligence▪ Industrial Ethernet in the field

Key success factor is data availability, accessibility and data
management capacity and tools
Information Classification: GeneralMachine vision applications

Sample Report Name Here | Month 2021

Vision applications: The product does not drive the application market
From the onset of the pandemic machine vision providers have raced to deploy AI and deep learning in the hope of exploiting new applications. This has also been illustrated by boom in
M&A activity with the likes of sensor, chip and cloud providers. Ultimately the landscape of vision applications cannot be changed by short-term product launches and is still comprised oftraditional vision use-cases.

Further progress and implementation of 3D vision and recent trends such as SOC’s and event-based imaging will impact the overall landscape in a 5–10-year timeframe.

Information Classification: General@OmdiaHQ

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