Non-Auto Industries Are Quietly Driving the Next Wave of Robot Adoption

For most of the history of industrial robotics, one sector ruled above all others. As recently as 15 years ago, the automotive industry accounted for 70% to 80% of all industrial robot demand, Morten Paulsen, head of research and managing director at CLSA Japan, said during a recent webcast.Key Takeaways Automotive accounts for roughly 45% of North American industrial robot demand today. This is down from up to 80% just 15 years ago. Global factory automation companies reported top-line revenue growth accelerating from 14% in Q1 to 24% in Q2. This is driven largely by tech and electronics end markets. Approximately 80% of U.S. warehouses still only use standard forklifts. This could present a massive growth runway for automation as labor markets tighten. The Industrial Customer Base Is ExpandingToday, even in North America, just about 45% of all industrial robot demand comes from the automotive industry. However, the shift is not due to automotive decline. In fact, it’s an entirely new industrial customer base coming online, across sectors that were barely touched by automation a decade ago. The trend began quietly, then accelerated sharply, according to Paulsen. The non-automotive adoption curve was already building before the pandemic. COVID acted as a significant accelerant, pushing industries to automate faster than they otherwise would have.Electronics & Defense Lead the Current UpcycleOutside the U.S., China offers the clearest preview of this multi-industry transition. The country’s electronics industry has already overtaken automotive as the single largest driver of robot adoption. That shift is now coming to the U.S. market, where electronics and technology companies have been among the highest-growth end markets in the current upcycle. Global factory automation companies reported top-line growth accelerating from 14% in the first quarter to 24% in the second quarter of this year, Paulsen said. Aerospace and defense have also emerged as strong performers in the current cycle. Furthermore, since March, a meaningful pickup in oil and gas related industries has been recorded, signaling that sector drivers are continuing to broaden. Looking ahead, growth is expected to spread further from tech and electronics into consumer goods.Logistics & AI Create the Next Growth Runway for Robot AdoptionAn untapped market remains warehouse and logistics. Despite widespread media coverage of automation in this space, approximately 80% of U.S. warehouses are still using standard forklifts, according to Paulsen. With labor shortage tightening across the economy, that automation ratio is expected to rise sharply. Underpinning this expansion is AI, which is accelerating adoption across every sector by speeding up robot installation, programming, and integration into factory processes. This effectively lowers the cost of entry for industries that previously lacked the technical infrastructure to implement robotics. AI is also enabling new revenue streams for robot makers, including predictive maintenance and remote monitoring services, increasing the number of robots making robots, which itself is a growing area. This gives companies additional incentives to engage with automation vendors. Advisors seeking targeted exposure to this wave of non-automotive robot adoption can look to thematic strategies like the ROBO Global Artificial Intelligence ETF (THNQ B-) and the ROBO Global Robotics and Automation Index ETF (ROBO B). These portfolios capture the full value chain of hardware and software enablers driving the next manufacturing cycle. Paulsen is a strategic advisor for VettaFi’s ROBO Global Indexes, which underpin ROBO and THNQ. Looking for regular updates? Subscribe here for weekly insights on robotics, AI, and healthcare technology, delivered straight to your inbox. For more news, information, and analysis, visit the Artificial Intelligence Content Hub. vettafi.com is owned by VettaFi LLC (“VettaFi”). VettaFi is the index provider for THNQ and ROBO, for which it receives an index licensing fee. However, THNQ and ROBO are not issued, sponsored, endorsed, or sold by VettaFi. VettaFi and its affiliates have no obligation or liability in connection with the issuance, administration, marketing, or trading of THNQ and ROBO.