Internet of Things Global Megatrend – Worldwide technology spending on the Internet of Things is forecasted to reach $1.2 Trillion in 2022 currently growing at 3-4x global GDP

Steam engines, mass production, and Internet technology each brought epic revolution to business. Today we are in the midst of what is often called the fourth industrial revolution – the convergence of physical things with the Internet: the Internet of Things (IoT).

Steam engines, mass production, and Internet technology each brought epic revolution to business. Today we are in the midst of what is often called the fourth industrial revolution – the convergence of physical things with the Internet: the Internet of Things (IoT).

Today, we’re living in a world where there are more IoT connected devices than humans. These IoT connected devices and machines range from wearables like smartwatches to RFID inventory tracking chips. IoT connected devices communicate via networks or cloud-based platforms connected to the Internet of Things. The real-time insights gleaned from this IoT collected data fuel digital transformation. The Internet of Things promises many positive changes for health and safety, business operations, industrial performance, and global environmental and humanitarian issues.

It is important to understand this megatrend not only because of its sheer size and speed of growth but also because the disruption it is causing many products and services across industries. Understanding its impact will be important in identifying many of the future investment winners and also, importantly, avoiding the losers.

The Internet of Things, the embedding sensors and actuators in machines and other physical objects to bring them into the connected world, is spreading rapidly. Important applications today include:

  • monitoring the flow of products through a factory
  • measuring the moisture in a field of crops
  • tracking the flow of water through utility pipes

With remote monitoring, the Internet of Things also has great potential to improve the health of patients with chronic illnesses and attack a major cause of rising health-care costs.

TE Connectivity – A global leader in Industrial Internet of Things Global megatrend (IIOT)

TE Connectivity is a world leader in connectors and sensors particularly for harsher environments. Their products are found in a very diverse range of sectors including the extremely difficult space and subsea environments, to the automotive and aerospace sectors where technology is transforming the travel experiences. In most of these environments failure is not an option.

The markets TE serves are driven by the positive megatrends toward building a safer, greener and more connected world. Using their automotive business as an example, more sensors and connectors are needed in vehicles to support increased safety features, autonomous driving systems, higher emission standards, improved fuel efficiency and infotainment. Additional trends point to further potential for their business: the growing demand for electric vehicles in China, rapid advances in interventional and minimally invasive medicine and the need for increased capacity and greater security in global data networks.

Case Study – Factory Automation

Sensors enable the measurement of various properties and convert the measurement into a signal for processing. This enables a better understanding of a system to increase automation and efficiency. For example, with the drive towards Industry 4.0 trends, the use of robotic, automation and control systems on the factory floor have become commonplace to increase efficiency, productivity and profitability. As the need for industrial robotic automation advances, sensing technology will continue to be the foundation for data collection that will help transform manufacturing floors into connected, cost effective, and reliable facilities.

TE Connectivity (TE) offers numerous force, temperature, pressure and position sensors that provide highly accurate measurements for precise movement control and accurate monitoring of system components for preventative maintenance.

The level of content TE Connectivity provide has increased 8 fold over the past 6 years as the IIOT megatrend has started to accelerate.

Megatrends + Disruption + Highly profitable businesses

Insync’s identification of decade plus Megatrends with strong tailwinds is one major prerequisite in our search for excellent companies to invest in wherever they reside. It is not enough to simply be operating within a Megatrend but also increasingly critical to have a deep understanding of the influences of disruption on their industry. In addition to be a major beneficiary of a megatrend, the companies must have the managerial and financial prerequisites for success, as well as a proven track record of achievement. To be a future-focused enterprise is a must. Insync is searching for the one or two best firms in one or more Megatrends that meets our stringent criteria. TE Connectivity is an example of a business in the Insync portfolio that meets our stringent criteria.

For more information on other Megatrends, please visit Insync Funds Managers’ Website here.

EQT Responsible Entity Services Limited (“EQT”) (ABN 94 101 103 011), AFSL 223271, is the Responsible Entity for the Insync Global Quality Equity Fund and the Insync Global Capital Aware Fund.  EQT is a subsidiary of EQT Holdings Limited (ABN 22 607 797 615), a publicly listed company on the Australian Securities Exchange (ASX: EQT).  This information has been prepared by Insync Funds Management Pty Ltd (ABN 29 125 092 677, AFSL 322891) (“Insync”), to provide you with general information only. In preparing this information, we did not take into account the investment objectives, financial situation or particular needs of any particular person. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information. Neither Insync, EQT nor any of its related parties, their employees or directors, provide and warranty of accuracy or reliability in relation to such information or accepts any liability to any person who relies on it. Past performance should not be taken as an indicator of future performance. You should obtain a copy of the Product Disclosure Statement before making a decision about whether to invest in this product.

*The views and opinions expressed in this article are those of the author and do not necessarily reflect the views and opinions of Reach Markets.

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