Industrial robot price hikes continue as raw material price increases affect the supply chain

An industrial robot industry practitioner in Beijing told the Science and Technology Innovation Board Daily reporter that his company’s suppliers are located at home and abroad, and many suppliers will also increase prices starting in November, with the increase reaching 30%. “Add to that the exchange rate, and the cost is actually very high.”

The price hike of industrial robots continues. Mitsubishi, a Japanese industrial automation giant, recently announced that it will increase the prices of its entire product line by 10-20% from February 1, 2023. Among them, the price of industrial robots will increase by 15% and the price of industrial computers will increase by 20%.

Mitsubishi Electric explained the reason for the price increase as the cost of the main materials of the products continued to remain high, coupled with the increase in logistics costs. Although Mitsubishi Electric is committed to implementing cost-reduction measures such as production optimization and trying its best to ensure a stable supply of raw materials and products, it is really "difficult to maintain the current prices unchanged", so it decided to increase prices.

Raw material price increases affect the supply chain

Since the beginning of 2022, the industrial industry has seen a wave of price increases. The reasons for this are, on the one hand, global inflation, rising commodity prices, and continued increases in the prices of bulk materials such as copper, rare earths, silicon steel, and aluminum, which have raised the manufacturing cost of industrial robots; on the other hand, affected by the international situation, the supply of overseas parts and chips has dropped sharply this year, affecting the stability and sustainability of domestic robot production.

An industrial robot industry practitioner in Beijing told the Science and Technology Innovation Board Daily reporter that his company’s suppliers are located at home and abroad, and many suppliers will also increase prices starting in November, with the increase reaching 30%. "Add to that the exchange rate, and the cost is actually very high."

As the company that fired the first shot in the price increase of domestic robots, Huichuan Technology said in a survey in March this year that the overall price of the company's products is affected by two factors: market demand and the supply situation of raw materials. "For the company, it is currently mainly affected by the supply situation of raw materials."

In terms of chips, in the field of robots, chips are usually used in control systems and servo systems. An industrial robot generally needs to be equipped with (microcontroller chips), (digital signal processing chips) and other chips.

However, with the rapid development of industries such as smart electric vehicles, power batteries, photovoltaics and other new energy, chip manufacturers mostly choose these industries with greater expected "money prospects" and strategically postpone the delivery schedule of slow-growing industries, such as the robotics industry.

In other words, chip manufacturers will choose to maximize their production capacity in industries such as new energy, and then allocate it to other industries when they have spare capacity. The supply and demand of key materials such as chips will be unbalanced, and prices will rise accordingly.

The aforementioned Beijing robotics industry insider told the reporter that although he was unclear about the decision-making logic of chip manufacturers, "the actual situation is that they will give priority to manufacturers with large purchasing volumes, such as car companies."

The source also mentioned that the current supply cycle of raw materials is also very long. A staff member of Robot also told the reporter of "Science and Technology Innovation Board Daily" that the delivery period of foreign brands' products is also relatively long.

This directly affects the business stability of related companies. In the research minutes in June this year, Efort, which is in the first echelon of China's industrial robots, talked about the impact of the epidemic in the second quarter and analyzed that most of the company's manufacturing resources are in Wuhu, which is relatively less affected by the epidemic. However, the company's supply chain is mainly in Jiangsu and Zhejiang, and some secondary and tertiary materials come from overseas. For example, some parts of the motors purchased by the company and some chips of the controller need to be imported from abroad. The logistics in Jiangsu and Zhejiang regions caused by the epidemic have been blocked, and the imported materials in Shanghai cannot be picked up on time, which has a certain impact on the company's robot business.

"A long supply cycle means a long project execution cycle, and capital circulation is stagnant. The capital management capabilities of small companies are greatly tested," the above-mentioned Beijing robotics industry insider told the Science and Technology Innovation Board Daily reporter.

Local brands are more cost-effective amid price increases

The underlying logic of the price increase is to hedge costs on the one hand, and is also determined by market competition on the other. However, by comparing the price increases of domestic and foreign industrial robot manufacturers this year, it can be found that the price increases of foreign robot brands are mostly around 10%, while the price increases of domestic robot brands are mostly 2%-8%.

AVIC Securities pointed out that the overall demand for industrial robots is strong, and the industry's growth rate has declined significantly in the first half of the year, mainly due to the impact of the epidemic in April and May on production and delivery. As the epidemic is brought under control, the demand for automation in the manufacturing industry is still increasing under the background of machines replacing people. Some core components of my country's domestic industrial robots have the ability to be replaced by local ones, and are more cost-effective in the tide of price increases. We are optimistic about the growth potential of local brands.

Huichuan Technology was the first local industrial robot manufacturer to raise prices in April this year. A reporter from the Science and Technology Innovation Board Daily previously called Huichuan Technology's investor relations department as an investor. The person who answered the call said that it might not have much impact on the company's performance in the short term, "because compared with foreign brands, local brands still have a good price-performance ratio with the current price increase."

According to MIR DATABANK data, China's industrial robot market shipments exceeded 130,000 units in the first half of 2022. Foreign-funded enterprises still accounted for the majority of the top 20, with a total of 8 domestic manufacturers on the list. Benefiting from the significant increase in demand for industrial robots in the high prosperity of the photovoltaic and lithium battery industries, domestic manufacturers Estun, Huichuan Technology, and Efort have seen rapid growth in shipments in the first half of this year, effectively promoting their rankings. Estun and Huichuan Technology have become the only two domestic companies in the top ten.

Editor: Huang Fei