Historic Industrial Companies Split Up


Three major industrial leaders: General Electric, Toshiba, and Johnson & Johnson announced major break ups of their business units this week. General Electric will split up into three businesses: Aviation, Healthcare, and Energy, Power, and Digital. Toshiba will similarly split into three companies to focus on infrastructure, electronic devices, and semiconductor memory. While Johnson & Johnson will retain its pharmaceutical business and spin off its consumer health business. Per Toshiba, the goal is “to strengthen shareholder value by creating independent companies that have different profit structures and growth strategies.” The same could be said for General Electric and Johnson & Johnson.

The split of General Electric could be similar to Siemens. But will it produce similar levels of success as Siemens or follow in the footsteps of DowDuPont? Following the spin off of Siemens Healthineers in 2018 then Siemens Energy in 2020, Siemens was able to focus on faster-growing and higher-margin software and technology. So far, this has worked out with success as sales are up 18% in the latest quarter. General Electric, however, makes no mention of software in its press release and moves its Digital business within the combined Energy business. As industry increasingly digitizes, General Electric will need to figure out its software strategy to remain globally competitive within Industry 4.0 and transition to Industry 5.0.

Toshiba, facing similar pressure as General Electric, also realized a split can create additional value for their stakeholders. Besides taking advantage of a relatively new Ministry of Economy, Trade and Industry tax rule that allows companies to defer payments when spinning off business units, the synergies of the split are less clear. Toshiba realizes, “the speed of change is accelerating. [They] cannot keep pace with change when operations (as different as semiconductors and infrastructure) are within the same organization.” The newly created infrastructure company will include their core digital technologies related to the internet of things, factory automation, smart grids and quantum computing. This presents and opportunity for Toshiba to maintain leadership in the development of smart cities.

Johnson & Johnson’s split of its medical device and pharmaceutical business from some of the most iconic consumer brands highlight a divergence in their end-markets. As consumer products become increasingly personalized the consumer business must invest in different strategies for connecting with consumers and sales via e-commerce. While pharmaceuticals require a much longer investment cycle to develop and depend heavily on the choices of doctors and hospitals as well as payment by health insurers. The types of technology investments needed to grow each business likely do not have much overlap.

The break ups of these historic conglomerates creates opportunities for investors, banks, and technology providers. Investors who are interested in health care businesses can buy the health care business rather than a business that also has aerospace and energy divisions. The banks will generate large investment banking fees, but for technology providers the benefit is vague. Technology providers, both internal and external, can now start smaller and find technology fit faster before worrying about large scale distribution. GE Digital struggled with Predix in part because they focused on the distribution first, hoping the applications would scale, rather than the providing just enough infrastructure and letting engineers work together to find solutions and productizing them later. The latter has enabled companies like Augury to become a unicorn. Also with a slimmed down corporate structure, startups and legacy vendors may find it easier to gain adoption of their technology in each organization. Lines that were previously left behind because they had little impact on revenue or profit in a large corporate structure may be re-evaluated for refurbishment. Ultimately, industry change continues at a rapid pace and each of these new organizations must figure out how to digitize operations and re-connect with the markets they serve. Managing that change and seizing the opportunity is best done with an injection of technology.

Visual Inspection

Chip floorplanning with deep reinforcement learning

Acoustic Monitoring

Assembly Line

What’s Harder to Find Than Microchips? The Equipment That Makes Them

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🏭 Vertical: Semiconductor

🏢 Organizations: TSMC, Intel

We typically associate microchips with the latest and greatest technology, but it turns out that most of the chips that go into the products we use are made with older manufacturing techniques. No one knows precisely what proportion of the world’s microchips is made on used equipment, but Mr. Howe, owner of SDI Fabsurplus, estimates it might be as much as a third.

TSMC is expanding its capacity to make older chips by building a new plant for that purpose in Japan. Intel has no plans to build new capacity for manufacturing older kinds of chips, and continues to concentrate on making bleeding-edge chips, says Lisa Spelman, a vice president in Intel’s data-center group.

Read more at Wall Street Journal (Paid)

12 factors heating up the popularity of digital twins and simulations

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🔖 Topics: digital twin, metaverse

Observers see significant demand for multi-physics simulations that present a holistic view across different physical domains like electronics, structures, and heat. This is critical for areas like noise and vibration. Top simulation techniques include computational fluid dynamics (CFD), multi-body systems (MBS), or finite element analysis (FEA) technologies.

Others expect to see simulation advances used to improve various aspects of operations, particularly with the rise of the so-called “omniverse” for rendering models — referring to the use of things like VR and AR, automated data labeling, AI-powered physics, and improved supply chains.

Read more at VentureBeat

Germany’s va-Q-Tec stays cool as Covid vaccine demand heats up

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✍️ Author: Martin Arnold

🔖 Topics: COVID-19

🏢 Organizations: va-Q-Tec

The result of the successful development of the COVID-19 vaccine is a surging demand for insulated containers to transport the doses. Va-Q-Tec, a German packaging company that makes containers for COVID-19 doses, tells their story on how their business has been transformed by the race to vaccinate the world.

Read more at Financial Times (Paid)

GITAI’s Autonomous Robot Arm Finds Success on ISS

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✍️ Author: Evan Ackerman

🔖 Topics: robotics, Robotic Arm

🏭 Vertical: Aerospace

🏢 Organizations: GITAI

In this technology demonstration, the GITAI S1 autonomous space robot was installed inside the ISS Nanoracks Bishop Airlock and succeeded in executing two tasks: assembling structures and panels for In-Space Assembly (ISA), and operating switches & cables for Intra-Vehicular Activity (IVA).

Read more at IEEE Spectrum

How Green Hydrogen Is Made

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✍️ Author: Kevin Hand

🏭 Vertical: Chemical

Hydrogen has promise as a fuel that burns without creating greenhouse gases. But the production of hydrogen isn’t necessarily as clean. Only 1% of current hydrogen production is produced from renewable sources, according to the International Energy Agency. The Wall Street Journal looks at some of the major production processes, which are often differentiated by color.

Read more at Wall Street Journal (Paid)

GE Plans to Form Three Public Companies Focused on Growth Sectors of Aviation, Healthcare, and Energy

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🏢 Organizations: General Electric, GE Aerospace, GE Healthcare, GE Renewable Energy

GE Aviation, GE Healthcare, and the combined GE Renewable Energy, GE Power, and GE Digital businesses to become three industry-leading, global, investment-grade public companies

Read more at GE Press Releases

Johnson & Johnson Announces Plans to Separate Consumer Health Business

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🏢 Organizations: Johnson & Johnson

Johnson & Johnson announced its intent to separate the Company’s Consumer Health business, creating a new publicly traded company. The planned separation would create two global leaders that are better positioned to deliver improved health outcomes for patients and consumers through innovation, pursue more targeted business strategies and accelerate growth.

Read more at Johnson & Johnson Press Releases

Toshiba Announces Strategic Reorganization to Separate Into Three Standalone Companies to Enhance Shareholder Value

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🏢 Organizations: Toshiba

Toshiba Corporation (TOKYO: 6502) (“Toshiba” or the “Company”) today announced its intention to separate into three standalone companies:

  • Infrastructure Service C o. 1, consisting of Toshiba’s Energy Systems & Solutions, Infrastructure Systems & Solutions, Building Solutions, Digital Solutions and Battery businesses;
  • Device Co. 2, comprising Toshiba’s Electronic Devices & Storage Solutions business; and
  • Toshiba, holding its shares in Kioxia Holdings Corporation (KHC) and Toshiba Tec Corporation (TOKYO: 6588).

Read more at Toshiba Press Releases

Surge Demand

Industrial companies order a record number of robots in Q3 with incredible growth outside of automotive sector. The chip shortages are grinding Mexico’s automotive lines to a halt. Some question the effectiveness of the European Union’s carbon scheme to cut industrial carbon emissions. 3D printing is starting to fill in the gaps in the supply chain for energy companies. Robots turn to the sewers to automate “the labor-intensive process of cataloging defects in sewer pipes and storm water culverts, and for giving priority to repairs based on need and location.”