Citi Global Wealth UNSToPPABLe TreNDS | | 66 Investments tomorrow. The vast “cloud” storage facilities the adoption of robots and automation. automated processes, suppliers of components where the newly created data will be held are The pandemic lockdowns reinforced the such as chips and sensors, and software makers. also chip intensive. vulnerabilities that arise from overdependence And there may be an even wider range of on human labor in everything from logistics to companies that could achieve productivity gains This potential growth is not without risks, of advanced healthcare delivery. It also led to a by integrating robotics into their business. course. The US’ moves to block Chinese access surge in industrial robot installations, especially to the most sophisticated chips and related in Asia. In 2023, industrial robot installations equipment also means less business for US are expected to grow by 10% to almost The internet’s new dawn and other manufacturers for the foreseeable 570,000 units.2 future – see A greater separation between The worldwide web has become an ever-more East and West: G2 polarization intensifies. Nevertheless, we think that much more is ubiquitous feature of daily life since it first Tough competition and sharp cyclical swings needed. Currently, just five countries account went mainstream in the mid-1990s. Of course, have long impacted the industry. But given our for 78% of global installations: China, Japan, today’s internet experience is much slicker outlook for chip demand, we believe equity price the US, South Korea and Germany. Assuming than in those early days of dial-up connections, weakness may represent a way to build long- continued gains in innovation, we expect the basic webpages and little functionality beyond term portfolio exposure. robots of tomorrow to be able to undertake browsing information. Now, though, cyberspace many more tasks than they already do, either may be on the cusp of a much greater The age of automation independently or alongside human workers. As leap forward. such, the global market size for industrial robots could slightly more than double from $92.8bn to Widely considered the next generation of Slow productivity growth and labor shortages $165.3bn by 2028. the internet, the metaverse is an immersive are intensifying challenges for many countries, 3D world that brings together physical and especially in the developed world. From a Aside from labor force shrinkage and upward digital realities. Within this world, avatars pre-global financial crisis peak of in 2007, pressure on wages, the trend toward onshoring of ourselves will interact with one another productivity growth worldwide has slowed. manufacturing activity argues for more and businesses in a landscape that draws Meanwhile, aging populations are contributing automation. The US and other nations are keen strongly from the physical world but with many significantly to a dearth of workers. By 2030, to secure their supply chains for certain vital hi-tech enhancements. there could be a global deficit of some 85.2 products. Using robots could ultimately mitigate million workers globally, causing a shortfall the costs of relocating production facilities While still in its infancy, the metaverse or in output of $8.5 trillion, according to a from low-wage to high-wage countries. Further “Web 3.0” may in time prove transformative report by Korn Ferry, a global organizational progress in robot capabilities will also make for consumers, technology companies and 1 adoption more attractive. investors. By 2030, Citi Research estimates consulting firm. that the metaverse economy may be worth Given the threat to growth and living standards, Among the potential investments we see in between $7.7 trillion and $12.8 trillion.3 In we believe it essential that the world accelerates this area are in the creators of robotic and 1 Future of Work: The Global Talent Crunch – Korn Ferry, as of Oct 2022 2 Executive Summary World Robotics 2022 Industrial Robots – International Federation of Robotics Executive_Summary_WR_Industrial_Robots_2022.pdf (ifr.org) 3 Citi GPS report: Metaverse and Money: Decrypting the Future, June 2022