(Yicai) Dec. 18 -- Picea Robotics plans to develop the iRobot brand in China and abroad after acquiring the bankrupt US maker of Roomba robot vacuum cleaners, an official at the Chinese contract manufacturer told Yicai.

“Picea’s main motivation for acquiring iRobot is its brand value and accumulated technology,” the person said yesterday. IRobot has built deep capabilities in smart navigation, path mapping, automated cleaning algorithms, and tightly integrated hardware and software, along with a strong understanding of home cleaning scenarios and consumer needs, they added.

IRobot filed for chapter 11 bankruptcy protection in Delaware on Dec. 14 after struggling amid increasing competition from Chinese rivals. The Massachusetts-based company also signed a deal with Picea, its largest creditor, by which the Chinese firm will convert its debt claims into 100 percent equity through a court-supervised restructuring.

“We hope both sides will work together to expand the smart cleaning robot market, allowing more households to experience robot vacuum cleaners, given that their adoption rate is below 10 percent worldwide,” the official noted.

IRobot fell out of the global top five robot vacuum makers by shipments for the first time in the nine months ended Sept. 30, with those spots taken by Chinese companies, according to data from International Data Corporation. Stone Technology led with 22 percent, followed by Ecovacs Robotics with 14 percent, Dreame Technology with 12 percent, Xiaomi with 10 percent, and Narwal Robotics with 7.5 percent.

Picea bought USD190.7 million of iRobot's debt from US investment firm Carlyle last month, making it the firm’s largest creditor when combined with the USD161.5 million in manufacturing costs it was owed. It has extended its covenant waivers until Jan. 15.

Picea also secured iRobot's regional distribution rights for China in August, positioning itself ahead of the acquisition. The Chinese firms is one of the world's largest original design manufacturers of robot vacuum cleaners and has overseas supply chain capabilities, with annual shipments in excess of 6.5 million units and cumulative shipments of over 20 million.

If the deal goes well, Picea could potentially reshape the competitive landscape in the global and US robot vacuum cleaner market, with iRobot holding around 20 percent to 30 percent of the North American market, a senior industry source said to Yicai. 

"The industry is essentially still in a demand cultivation phase, where it's about growing the pie, not dividing it," the Picea official pointed out. With global robotic vacuum adoption below 10 percent, what matters more is working together to expand market space and enhance product value, they added.

The acquisition's ultimate impact on market dynamics will depend on subsequent technology synergies, product execution, and global operational effectiveness, Stone Technology told Yicai.

Strategic missteps in technology direction and tariff pressures were the two key reasons for iRobot's struggles, according to industry analysts. The company had stuck with visual navigation, missing the market shift toward laser and hybrid navigation, while higher US import tariffs have significantly increased its costs, they added. 

In 2019, iRobot founder Colin Angle told Yicai that even a 10 percent tariff costs the company USD25 million a year. In addition, because of supply chain relocation risks and tariffs, it began posting losses in 2021, which reached USD240 million in 2022.

To circumvent tariffs, iRobot shifted production from China to Malaysia and Vietnam, but when the US imposed tariffs of up to 46 percent on imported Vietnamese robot vacuum cleaners this year, it triggered additional costs of USD23 million for the firm. 

Editor: Martin Kadiev