The global smart factory market size was worth USD 85.5 billion in 2022 and is estimated to reach an expected value of USD 195.10 billion by 2031, at a CAGR of 9.6% during the forecast period (2023-2031). The many fully integrated automation technologies used in industrial facilities are called "smart factories." This integration facilitates the efficient movement of materials throughout the factory floor by streamlining the material flow throughout all manufacturing processes.
The primary factors driving the market include growing demand for high-quality products (which need proper end-to-end visibility of the manufacturing process), increased adoption of products across several industries, such as robotics systems, and the rising demand for energy conservation.
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Growing Adoption of Internet of Things (IoT) Technologies across the Value Chain
Smart factory technology and IoT devices have far-reaching implications for efficiency, product quality, and safety across the manufacturing value chain. IoT technology can empower elements of smart manufacturing, such as quality assurance, equipment maintenance, warehouse operations, inventory management, and other manufacturing operations. Furthermore, the market penetration of AI and machine learning capabilities may enhance speed, accuracy, and data analysis, significantly driving the market further. The advancement in the field devices market, sensors, and robots may further expand the scope of the studied market.
IoT technologies are overcoming the labor shortage in the manufacturing sector, especially in developed countries like the United States. Due to this, the Federal Government and the private sector in the United States are investing in Industry 4.0 IoT technologies to increase the American industrial base, which China and other low labor-cost countries have taken over. Therefore, IoT technologies may mainly drive the adoption of smart factory solutions worldwide.
Rising Demand for Energy Efficiency
Growing focus on energy efficiency and green technologies provides opportunities for companies to expand their market and attract consumers by offering smart manufacturing with higher energy efficiency and low energy consumption. Investments in these green systems are expected to grow massively over the forecast period.
The smart factory mainly prioritizes sustainability and energy efficiency. The digital solutions minimizing energy consumption through data analysis also provides statistic on how to use equipment efficiently. For instance, smart factory solutions operate equipment only when required.
The implementation of international standards on Environmental Management Systems (EMSs), notably the ISO 50001 standard, has grown significantly worldwide over the last few years. This is also forcing the manufacturers to invest in energy-saving strategies, hence, developing a space for the studied market to grow.
Huge Capital Investments For Transformations
Automated systems' high costs concern effective and robust hardware and efficient software. Automation equipment requires increased capital investment to invest in the smart factory (a computerized system can cost millions of dollars to install, design, and fabricate). Additionally, compared to a manual approach, automated equipment requires more upkeep (even flexible automation is less flexible than humans, the most versatile machines of all). Given that M2M connections were heavily taxed, much like mobile device subscriptions, the slower uptake of Industrial IoT technology can be attributed to the more significant expenses of maintaining such connections.
The installation and acquisition cost of a control system for a smart factory represents half of the total cost during its lifetime. Additionally, the frequent changes in networking and technology also result in significant cost increases, which is much more than the initial investment, further restraining the adoption.
Growing Adoption of Articulated Robot Across Various End Users
Articulated robots have expanded significantly in recent years in several industries, including painting cars and component assembly. The widespread usage of articulated robots in aerospace, oil, and gas, and numerous other sectors that routinely produce large parts with articulated robots nevertheless contributed to the market's rise. For instance, strong and efficient KUKA Titan and 6-axis articulated robots can be utilized to move large steel girders. As a result, articulated robots are used to produce in large quantities with accuracy and at a much faster rate, enhancing manufacturing efficiency, reducing human error and effort, and improving end-product quality.
The market's players are making a variety of initiatives, such as introducing new goods, to increase their competitiveness. For instance, Honeywell released its most recent robotic technology creation in September 2021, intending to help warehouses and distribution centers automate the labor-intensive operation of manually unloading pallets while reducing the danger of accidents and staff shortages.
The global smart factory market is bifurcated by product type, technology, end-user industry, and region.
By product, the global market is segmented into machine vision systems (cameras, processors, software, enclosures, frame grabbers, integration services, and lighting), industrial robotics (articulated robots, cartesian robots, cylindrical robots, scara robots, parallel robots, collaborative industry robots), control devices (relays and switches and servo motors and drives), sensors, communication technologies (wired and wireless), and other products.
The sensor segment dominated the market and is estimated to register a CAGR of 8.2% during the forecast period. Proximity sensors are conventionally used for counting the number of products crossing a particular stage in fast-moving conveyor systems. When automated robots perform some action on the subject, like welding in cars, the proximity sensors are essential for determining the exact relative placement of the product. They are also used to determine the relative positioning of mold mates in various industries to ensure the correct alignment of the complementary parts. Such vital applications of proximity sensors provide market growth during the forecast period.
By technology, the global market is segmented into Product Lifecycle Management (PLM), Human Machine Interface (HMI), Enterprise Resource and Planning (ERP), Manufacturing Execution System (MES), Distributed Control System (DCS), Supervisory Controller and Data Acquisition (SCADA), Programmable Logic Controller (PLC), and other technologies.
The Product Lifecycle Management (PLM) segment dominated the market and is estimated to register a CAGR of 8.2% during the forecast period. PLM has redefined the value of data in manufacturing and gives a good return on investment (ROI). Employees of manufacturing or industrial organizations realized that they turned out to be efficient when all the information was available at their fingertips. Another significant advantage of PLMs is that companies expand their manufacturing capabilities to different geographic regions. These companies have adopted the integration of PLM and ERP systems to maintain product quality throughout their production facilities. Another significant advantage of PLMs is that companies expand their manufacturing capabilities to different geographic regions. These companies have adopted the integration of PLM and ERP systems to maintain product quality throughout their production facilities. All such advantages drive segment growth.
By end-user industry, the global market is bifurcated into automotive, semiconductors, oil and gas, chemical and petrochemical, pharmaceutical, aerospace and defense, food and beverage, mining, and other end-user industries.
The oil and gas segment dominated the global smart factory market and is estimated to register a CAGR of 12.8% during the forecast period. In the oil and gas industry processes, there is always an increased demand for safety and reliability. The industry's supply chain creates a great need for automation, industry expertise, and an extensive partner network. Furthermore, security has become a significant concern for oil and gas industry manufacturers in several cases. In countries like Mexico, where pipelines are often prone to insurgent attacks and theft, governments are increasingly spending on process automation related to pipeline security. Theft of oil from Mexican pipelines is one of the significant security issues faced by the midstream sector in Latin America. According to PEMEX, more than 4,125 illegal fuel taps were found in the region over the past four years (2014-2018). Such issues, coupled with increasing oil and gas exploration and production activity, with rising crude oil prices, are expected to create lucrative opportunities for the market studied over the forecast period.
By region, the global smart factory market is segmented into Asia-Pacific, North America, Europe, Latin America and Middle East, and Africa.
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Asia-Pacific accounted for the highest market share and is estimated to register a CAGR of 11.3% during the forecast period. China is one of the fastest-growing countries worldwide and has a very high industrial production rate. These factors act as drivers for the automation market in the country. Investments are being planned to aid the quality of growth, address environmental concerns, and reduce overcapacity, for the same. The number of companies deploying factory and process automation technologies and robotics in the country is less when compared to the enormous size of China's manufacturing base and the number of workers it employs. This trend presents an excellent opportunity for companies in the industrial automation sector in China. The country is also planning to build a vast semiconductor industry and invest USD 18 billion to acquire semiconductor technology and companies. Automation, widely adopted in the semiconductor industry, is anticipated to help drive market expansion.
Europe is the second largest region. It is estimated to reach a predicted value of USD 165 billion by 2030, registering a CAGR of 7.7% during the forecast period. The German automotive industry has significantly extended its worldwide position in automotive production over the past few years. Moreover, sustainability in the manufacturing sector is expected to be a primary driver for the market studied. The country is not only a significant consumer of automation equipment but also a major manufacturer of automation equipment in Europe. Several significant automation and control equipment players, such as Siemens, Schneider Electric, KUKA, etc., are based out of Germany, thus driving a high flow of investments toward R&D activities. The country has been witnessing rapid growth in the demand for automation solutions. For instance, in August 2019, KUKA received an order for 22 KMP 1500s from an automotive customer. These intelligent, autonomous vehicles can supply materials to robots and machines, perfectly timing the production process. Additionally, a collaboration between India and Germany in Industry 4.0 is expected to augment the market growth.
North America is the third largest region. Due to the early adoption of factory automation, the United States is a sizable market for vendors supplying solutions for smart factories. It is anticipated to develop at an effective rate throughout the projected period. Additionally, the nation is home to over 13 significant vehicle manufacturers and has one of the largest automobile markets in the world. Among the many sources of income for the nation's manufacturing industry has been the production of automobiles. The country presents enormous possibilities as the automobile industry accounts for the significant adoption of ICS and automation technologies. Robotics is being quickly added to the assembly line by manufacturers. One of the key aspects influencing the growth of the market under study is the increasing use of robots for automation.
The key players in the global smart factory market are ABB Ltd., Siemens AG, Schneider Electric SE, Yokogawa Electric Corporation, Robert Bosch GmbH, Kuka AG, Rockwell Automation Inc., Honeywell International Inc., Mitsubishi Electric Corporation, Cognex Corporation, Fanuc Corporation, Emerson Electric Company, FLIR Systems Inc.
Machine Vision Systems