全球自动化：从可用性到可靠性——中国工厂自动化崛起背后的技术驱动因素

Global Automation:Fromavailabilitytoreliability--thetechnology driversbehind the rise of Chinese FA China's import suastitution in fsctery automtion (FA) is brodly recognized (see here)but opirions differ in ettributing the unclerlying drivers. In this note, we show that Chineseplayers' market share gains are first and foremost driven by narroving technolcgy gaps,with notable inflections fter 2020. We slso provide a framework for the cverall trajectoryof industriel technology prcgressicn. Jay Huanig, Ph.D.+352 2123 2631jtyhiarc@:emslsinsgtam We bin Lisng, Ph.D.+352 2123 2666wsstsuaswscigeruqaw Across many FA segments, Chinese companies' market shares broadly correlate withtheir technology levels relative to globelleaders (Exhibit 1). At one end, such es servomation, Chinese technolcgy is indistinguishable from global peers in 90%+ of use cases,and their collective merkat shere is >50% locally. At the othar end, such as advancedsensing and CNC, substantial gacs rerrain, The most interesting and dynamic segments,such as industrial robots, lie in the midlle. In each of the three categories, we tcok oneproduct to further anelyze its evolution, end the progresses over time ere clearin all. Inservo motion (Exhibit 3, Exhibit 4, the technology gaps were closed between 2020 anc2023, accompenied by unsteppable share shift. In six-axis robots, China was able to closethe gaps in some specs (Exhibit 5) and greatly narrow others (Exhibit 6, Exhitit 7/. In CNCmachine fools, several major gaps persist (Exhibit 8 to Exhibit 11). Dien Wang, Ph.D.fienwangghirsteinsg.com+352 2123 2622 More generally we identiy three stages in the gradual closing of industrial technology gaps,ard analyze it with characteristic specs and product examples (Exhibit 2): Specifications on paperrepresent the static or theoretical perlorrnance, such as thepower censity of servo motors (Exhibit 3), the repeatability afindustrial robots (Exhibit 5)and the positioning a.ccuracy of five-axis CNC machining centers (Exhibit 8 and Exhibit 9)Overcoming these barriers allow a compary to serve the basic needs of customers, typicallynot more than 1/3 of the overallmarket demend. Specifications in use measure the actual performance at the customers and sre often notpart of the products' spec sheet Closing this gep ellows a compeny tc reach mainstreamcustomers and address 40%B05o of market derrand. Examples incluce high speed loopbandwidth in servo motion control (Exhibit 4), path accuracy in industrial robots (ExhibitS], and surface shape and roughness cf machined objects. CoTpared to specs on peger,Chinese five-axis CNC machining center, the 'error’ between the design and the actual partmarufactured is typically 10X the positioning accurecy of that machine. Reliability is often the last pein point after allother gaps are clcsed. It is especiallyindustries and welding rcbots for automotive CEMs; In industrisl robcts, the meaningfullynerrowed gap in Mean Time Between Fsilures (MTBF) has holped Chinese six-axis robotmakers further gain market share since 2022 (Exhibit 7). However, in CNC machine too'sthe significant gaps in MTBF (Exhicit: 10) and the mechining accuracy maintaining time(Exhibit 11) remain ocstecles for import substitution in the mid-to-high end. DETAILS EX-IBIT 3: Inovance matched Yaskawa / Mitsubishi in servo motor power density around 2022. EX-HIBlT G: In the more challenging spec, path accuracy, Chinese robots have shown progresses, but a small butmeaningful gap still remains. below the level of the very best. EXHIEIT T: In practice, there is a much bigger gapin reliability measured by the machining accuracymaintaningtime. INVESTMENTIMPLICATIONS Reiterate Outperferm for FANUC, Inovance, anc Harmonic Drive; Market-Perform for Estun BERNSTEINTICKERTABLE I,REQUIRED DISCLOSURES References to Bemstein’ or the “Firm’in these disclosures relsate to the following entities: Bemstein Institutional Services LLC(April 1, 2C24 onwards), Sanford C. Bernstein & Co., LLC (pre Acril 1,2024), Berrstein Autonomous LLP, BSG Frence S.A. (April 1,C. Bernslein (lndiaj Private Limited (SEBl registration no. INHOO00063 7B), Sanford C. Bernstein (Singaore) Privalte Limited andSanford C. Bernstein Japan KK (>7F · C >个>会社). On April 1,2024, Societe Generale (SG) and AlianceBernstein, LP.(AB) completed a transaction that created a new joint venturein vhich their respective cesh equities and research businesses ogerate in a new business conbination. Although their respectivepublication cfresearchis handled collaboratively ona global basis across the tworeseerch brards,“Bernstein’ and"Autononcus'Unless specifically noted otherwise, for purposes of these disclosures, references to Bemsteins*sffilistes" relate tc both SG andAB and tneir respeclive afliliates. VALUATION METHODOLOGY Estun Automation Co Ltd We use EV/EBITDA muliple as the primary valuetion method. Our price target of RMB23.0 is based on an EV/EBITDA multiole ofcr competitive trends that we b