AI may boost robot adoption while squeezing manufacturer profits

Expanding the automation market

Artificial intelligence is set to significantly alter the growth trajectory of industrial robotics. According to a report by S&P Global, AI can make automation more economical for industrial processes that currently face high barriers to entry. Specifically, it targets tasks that require extensive programming or frequent changes in production lines.

By lowering these barriers, AI is poised to expand the addressable market for industrial robots. This growth is driven by persistent labor shortages and a constant need for higher productivity across various manufacturing sectors. The report suggests that AI will be particularly impactful in areas where process variability has previously constrained the use of automation.

Current data from the International Federation of Robotics (IFR) already shows a strong upward trend in the sector. Global industrial robot installations rose by 11 per cent to reach a record 603,000 units in 2025. Additionally, the total number of robots currently in operation grew by 9 per cent to approximately 5.1 million units.

How AI improves robotics

The integration of AI into robotics focuses on several key technical areas before full autonomy becomes a commercial reality. The report notes that improvements in robot programming, simulation, and application engineering are expected to emerge first. These tools help engineers design and deploy robotic systems more effectively than traditional methods.

One of the primary benefits of these AI-driven improvements is the ability to handle complex production environments. When a factory needs to switch between different products quickly, AI helps the robots adapt without requiring massive manual reconfiguration. This flexibility makes it easier for companies to justify the investment in robotic systems for diverse manufacturing needs.

However, the report emphasizes that fully autonomous robotic capabilities are not yet commercially viable on a large scale. For now, the focus remains on enhancing the capabilities of existing systems. The goal is to make the deployment of robots more seamless and less dependent on highly specialized, manual programming efforts.

The profit margin paradox

While AI adoption is expected to drive growth, S&P Global warns that robot manufacturers may not see the most significant financial gains. The report suggests that the customers using the robots might benefit more than the companies selling the hardware. This is because greater equipment flexibility and higher utilization rates could reduce the need for companies to purchase additional robots.

If a manufacturer can use AI to make their existing robots perform more tasks, they may not need to buy new equipment to expand their capabilities. This could lead to a situation where automation improves the profitability of a factory without generating new sales for robot makers. Consequently, the overall impact on equipment sales and manufacturer revenues remains uncertain.

The report notes that while lower deployment costs could open new markets, the economic value might be diverted elsewhere. Software providers, in particular, may capture a significant share of the resulting economic value. This creates a dynamic where the software that powers the robots could become more lucrative than the physical machines themselves.

Who wins and who loses

The primary beneficiaries of this trend appear to be the industrial customers who can improve their operations. By using AI to overcome programming complexity, these companies can achieve higher productivity and better manage labor shortages. They gain the ability to automate a wider variety of tasks using the assets they already own or are currently acquiring.

On the other side of the equation, robot manufacturers face a more complicated outlook. They may see a rise in total installations, but these might not translate into higher profit margins. If customers and competing suppliers capture most of the economic value, the manufacturers' role could become more of a commodity service.

S&P Global explicitly states that they do not assume rising AI adoption will necessarily translate into higher profitability across the entire industry. The report highlights that the distribution of value is shifting. While the market for robots is expanding, the financial rewards are being redistributed toward software and the end-users of the technology.

The road to autonomy

Looking ahead, the industry is moving toward a phase of increased efficiency rather than just raw scale. The initial wave of AI adoption will likely focus on making current robotic systems smarter and easier to manage. This transition period will be defined by improvements in simulation and application engineering rather than the sudden appearance of fully independent robots.

As these technologies mature, the focus will shift toward how companies can maximize the utility of every robot on the floor. Manufacturers will likely seek to squeeze more value out of their existing investments through AI-driven optimizations. This shift toward high utilization could fundamentally change how industrial robotics are sold and maintained.

Ultimately, the long-term growth of the sector is supported by a fundamental need for manufacturing investment. However, the success of a company in this new era will depend on how it captures the value of AI. Whether that value goes to the hardware provider, the software developer, or the factory owner remains a key question for the industry.