ROBO Brief: iRobot Soars, A Powerful AI Platform & New Diabetes Tech

    This week we're greeted with positive news across consumer robotics, diabetes technology, and AI chip performance. Please enjoy these insights from our research team.

    iRobot’s Turning the Corner

    iRobot, the world’s leading consumer robot company is the best-performing stock in the ROBO Index so far this quarter, up more than 50% year-to-date. At the crossroads of some of the most powerful trends in RAAI, its Roombas are used in more than 20 million homes worldwide. And yet, global household penetration remains in the single digits. After three years of particularly strong growth (22% per year on average) and expanding margins, iRobot’s profits got crushed under the weight of China import tariffs in 2019. However, several recent positive developments suggest the worst may be over, and iRobot may be on track to return to profitable growth.

    First, the Office of the U.S. Trade Representative agreed to exclude robotic vacuum cleaners from the list of imports from China subject to 25% tariffs starting May 2019 and 10% starting September 2018. We estimate a $40–50m windfall for tariffs paid since 2018, which will boost the company’s already strong balance sheet. Second, iRobot entered a product purchase and technology licensing agreement with China’s leading manufacturer of robotic vacuum cleaners, Ecovacs. We believe this will help expand iRobot’s offering and confirms iRobot’s technology leadership and ability to protect and monetize its intellectual property. It is also increasingly apparent that home improvement product spending has grown during the lockdown, which could benefit iRobot.

    Diabetes Tech Shows Promise

    With the annual American Diabetes Association meeting in a few weeks, we wanted to point out some new diabetes technology on the Horizon. Pun intended, HTEC member Insulet plans to present a glimpse of Horizon, its new closed-loop device currently under development. Closed-loop means that Insulet’s insulin pump will be integrated with the continuous glucose monitoring (CGM) device of another HTEC member, Dexcom, to help streamline insulin dosing for the times when it’s needed most.

    On the private company side, Companion Medical is another company to watch. It offers the only FDA-approved smart insulin pen, and is in its earliest days of adoption with a multibillion dollar addressable market. With this and other new technology on the rise, we are still in the early innings of innovation of diabetes management, and expect more disruption for years to come.

    Nvidia Leading the AI Chip Race

    Nvidia, THNQ index member, has done it again with its release of a new AI chipset platform that has ~20 times the performance of the previous generation. Based on the Ampere-based GPU architecture, the new A100 on the DGX platform is the world’s largest and most advanced 7nm chip.

    The DGX A100 “essentially” puts the capabilities of an entire datacenter into a single rack according to the company. No other chipmakers have been able to combine additional memory, CPUs, and power supplies of 56 servers into one platform to optimize and accelerate diverse workloads, especially in a supercomputer environment. Nvidia has already shipped its solutions globally to aid in the fight against COVID-19.

    With Mellanox Technologies now under the ownership of Nvidia, the company also introduced its edge computing capabilities with the new EGX A100. AI acceleration, network, and security are all integrated on a single card thanks to Mellanox’s unique interconnect technology. Nvidia is shaping the way new AI driven-data center architecture is being built.

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