Four key insights into the rise of RV reducers in Asia’s robotics

1. The world is hungry for more robots

The number of industrial robots deployed worldwide is expected to increase to nearly three million units by 2019 with around 70 percent of these robots to be used in the automotive, electrical, electronic and the metal and machinery industries 1. IDC indicates that the Asia Pacific market alone is estimated to reach USD 66 billion this year and USD 162 billion by 2021. This would represent more than 70 percent of the world's total robotics market (see source 2).

Looking at the distribution of robots in various countries, we’ll find that China, the so-called work bench of the world, still using a low ratio of robots versus workers and has therefore a tremendous potential to adapt automation into the production halls.

Knowing that, it is estimated that China alone would be require an annual robot consumption of about 190,000 units by 2020. China will not leave this potential to foreign companies alone and therefore they have released semi-official policies to achieve a domestically produced robot market share of 50 percent (95,000 units) by 2020 and over 70 percent of domestically-produced robots by 2025.

This turns into a market potential for manufacturers in China alone of over USD 74 billion on robotics and related services over the next five years. These are huge numbers indeed, but they are hardly surprising considering the demand for automation across all major industries and manufacturing sectors.

Under the country’s Made in China 2025 manufacturing blueprint, the Chinese robotics industry will have an unprecedented opportunity with many large enterprises putting industrial robot research and design activities as an important aspect of their company's strategic plans in the coming years.

2. RV reducers, the heart of robots

Gear Reducers are used to operate most types of industrial and household machineries. Usually made from strong, durable metals like steel, they are the gear or series of gears coming together to reduce the speed of the electric motor safely and increase the amount of torque. A rotate vector (RV) reducer is a type of speed reducer which forms the core component of most advanced robots.

Compared to other gear reducers, it has higher precision, better reliability, increased efficiency and is smaller in size. Usually cycloid gears are used for RV reducers in robots. They fulfill the mentioned specification but are more complex in design and more difficult to produce.

We estimate that about 36 percent of the cost of a modern six-axis robot are caused by the RV reducers and is therefore one or the largest costs driver but also differentiators of a robot at the same time. With differentiator, I mean that only a high-quality RV reducer will guarantee that the robot will position at the correct position over a long time with the required accuracy and with a variation of different payloads handled.

Of course, these requirements will also create additional challenges for the manufacturing process of cycloid gears:

Made from endurable material with a Gear Surface hardness of HRC 60-64, the cycloid gears are mostly grinded. The grinding is not only limited to size but also to form as the cycloid gears tooth profile is based on the epicycloid and hypocycloid curve which is not only difficult to machine but also to design. In other words, you’re grinding a form curve in hardened steel – accurate in a few micrometers. Not an easy task at all.

Once its machined, you need to have measuring technologies in place, which can guarantee the quality of the product. As we learnt that these reducers are needed in large quantities, such process steps like grinding or measuring are automated and interlinked with closed loop (meaning correcting the grinding machine automatically when the part has been measured out of the desired tolerance) whenever possible.

Of course, you need special machine tools to get this advance task done plus you need highly experienced and well-trained machine tool operators and engineers.

Because of these reasons, manufacturing such cycloid gears has been a task for only a few specialized companies in the entire world. At present, most RV reducers used in industrial robots comes from Japanese brands followed by those from Korea and the Czech Republic. Nearly 75 percent of the world's precision speed reducers used by international robot manufacturers like ABB, Fanuc and Kuka are produced by Japan-based companies (see source 3).

The main reason for Japan’s dominance is because the nation started developing robots very early on in its manufacturing era largely to overcome its reduced labor force due to an aging population. China, on the other hand, only started developing robots in recent years as it faced increasing production demand and limited labor resources.

3. Robot prices will drop

The increasing demand of six-axis robots will reduce prices substantially over the next years. Here an interesting chart from ARK Invest which predicts the decrease of average costs of a six-axis robot even more aggressively as BCG.

But not only the costs of the hardware will drop, but also the costs of integration. Visitors to EMO in Hannover in September may recognize that almost all machine tool companies work on standardized interfaces and exchange of machine-robot data under the name of industry 4.0.

This kind of standardization will make the actual technical integration of a robot into a manufacturing process easier and less expensive and therefore it will open the doors of applications which have so far not been considered as economically to automate. However, knowing this, we should be aware that a profound process knowledge is always the very basis of any successful automation.

4. Playing catch up with Japanese makers

China, which has not only had the highest sales volume for industrial robots over the last four years but also the largest potential in the future, has been dependent on imported precision RV reducers for the robots manufactured in the country.

However, this is gradually changing. More Chinese RV reducer manufacturers invest into turn key solutions provided by international companies such as DKSH. This helps them produce RV reducers locally that satisfies domestic robot manufacturers’ requests and demands.

At the end of last year, more than 20 Chinese companies rolled out locally manufactured precision reducers (see source 4). It is estimated that China's industrial robot reducer market demand will exceed RMB 4 billion by 2020 of which about RMB 3 billion will stem from RV reducers.

At the end of the day, the biggest benefactors are robot manufacturers and their customers in China but also overseas as robot prices will drop and therefore more applications will become affordable. China will not miss the chance to play an important role in this market.

If you are in the business of robot manufacturing or utilize RV reducers in your business, reach out to me to share your insights into the market’s latest development.