TECHNOLOGY AT WORK

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32 Citi GPS: Global Perspectives & Solutions February 2015 monitoring of equipment and infrastructure, and with algorithms able to identify anomalous conditions, installation, maintenance and repair jobs are becoming increasingly automatable. Sensors have improved the monitoring of people in health and workplace scenarios Advances in machine learning technologies have directly contributed to the growth of wearables Perhaps more profound are the implications of using the IoT to improve the monitoring of people. Particularly relevant are recent innovations in wearable devices such as the Apple Watch and FitBit Surge, which are equipped with increasingly sophisticated sensors capable of measuring heart rate and activity levels. Healthcare occupations will be affected by such sophisticated sensors and algorithms, including the clinical staff responsible for monitoring the state of patients in intensive care. Remote health monitoring may decrease the need for hospitals and attendant workers, with technology allowing some patients to stay at home, with their anomalous health conditions identified by machine learning algorithms. The comprehensive monitoring of consumers with wearables may allow stores to further automate retail. For example, a business may use heart rate measurements to assess a customer's emotional reaction to the product they have just picked up (as detected by the sensor on the product) and, depending on the assessment, then use the wearable device to make product recommendations. Employees equipped with wearable devices would also be much more thoroughly monitored than is currently possible, enabling employee compensatory schemes that are much more difficult to 'game'. Similar devices, again reliant on machine learning techniques to identify anomalies, might allow also for further automation of fraud detection and tax evasion. Advances in machine learning technologies have directly contributed to the growth in wearables by permitting improved user interfaces. In particular, intelligent user interfaces that can understand a wider range of user intentions are enabling smaller and more intuitive devices. For example, the predictive text capabilities of companies such as SwiftKey can correct for user's typing mistakes by learning their distinctive patterns of writing. Apple's Siri and Google Now use intelligent software to recognise spoken words, interpret their meanings, and act on them accordingly, even in the presence of ambient noise. These technologies allow a more efficient means of obtaining rich data from a human user, enabling automation by better access to human tacit knowledge. Moreover, these technologies may directly substitute for occupations requiring human interaction. For example, a company called SmartAction now provides call computerisation solutions that use advanced speech recognition software that have realised cost savings of 60% to 80% over an outsourced call centre consisting of human labour. 60 The IoT finds significance in that the volume of rich, heterogeneous data it delivers will better allow algorithms to understand and influence the physical world. This is in contrast to most current sources of big data (e.g. e-commerce), which are relevant only to our digital behaviours. Increasingly intelligent algorithms can hence be brought to bear on the automation of the many jobs that involve interacting with our physical environment. Sensors are Driving Automation Jim Suva, CFA US IT Hardware & Supply Chain Analyst Arthur Lai Asian Display and Touch Panel Analyst Manufacturing has continued to adapt — first shifting to low-cost labour, then to tax holiday havens, and now to lowest landed total costs (a mixture of shipping, labour, taxes, real estate, etc.) — all the while embracing technology innovation of which sensors and connectors have become increasingly important. 60 Canadian Automobile Association (2012). © 2015 Citigroup
February 2015 Citi GPS: Global Perspectives & Solutions 33 Sensors have not only improved industrial manufacturing processes but also have expanded to consumer items Sensors are one of the most important parts for modern factory automation systems. Contemporary industrial automation systems rely on intelligent sensors (not only for monitoring and measurement, but also analysis) connected via lowlatency and real-time networks to high-performance programmable logic controllers and human-machine interface systems. With the reliability brought by advanced sensing technology, industrial automation systems are able to reduce labour costs and have transformed electronic manufacturing for many industries (i.e. surface mount technology in electronic manufacturing which place hundreds of parts together in seconds and robotics in automobile production, both of which have historically used a meaningful amount of manual labour while at the same time increased quality and lowered defective rates). In addition to the industrial manufacturing process to ensure/improve quality, sensor applications have expanded to consumer items like cars. Auto-use sensors are the eyes of electronic systems, monitoring information inside and outside the vehicle. There are more than 20 types of sensors in today’s automobiles with fuel economy and emission regulations leading to engine oxygen and nitrogen oxide sensors becoming commonplace. We estimate growth of total automotive sensor content with a weighted compound annual growth rate (CAGR) of +10.8% from 2008 to 2013 and annual average sensor content growth is forecast at +7-10% versus just over 2% for electronic control units (ECUs). Robotics themselves require a lot of high quality components such as LED sensors. The high level concept is that automation equipment requires a lot of invisible light sensors (infrared light) to give the robots the correct input. It includes infrared components for integrated ambient light and proximity sensors (ALD). The total market size for infrared sensors likely reached $1.665 billion in 2014, up from $1.461 billion in 2013, a 14% year-over-year increase which is greater than other industrial LED applications (Figure 17). Figure 17. Infrared-related components (US$ millions) 2013 2014E Infrared LED 191 197 Photodiodes 263 269 IrDA Transceivers 54 51 IR Receivers 169 176 Ambient Light Sensor 240 282 Proximity Sensor 14 13 Others 531 6778 Total 1,461 1,665 Source: HIS, Citi Research Connectors also benefit from the rise in sensors We also note that connectors will benefit from the expanding application of sensors, as every sensor is connected by a connector and the trend towards wireless connection doesn’t mean fewer connectors but potentially more as wireless antennae need connectors for power and transmission. Automotive “electrification” is a driver for connectors as cars become smarter, connected and environmentally friendly. We forecast annual average connector volume growth of 4-6% per vehicle in addition to annual auto production growth of 2-3% less average price declines of 0-2% resulting in organic connector growth of 6-8%. © 2015 Citigroup
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TECHNOLOGY AT WORK

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