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Once the best, today a pale shadow: iRobot goes bankrupt
iRobot, the American company best known for its Roomba smart robot vacuum cleaners, has filed for bankruptcy protection. The decision comes after years of increasingly fierce competition from Chinese manufacturers and additional pressure from high import tariffs that have significantly increased operating costs.
The process is being conducted under a so-called pre-arranged Chapter 11 bankruptcy procedure, meaning that the restructuring structure is determined at the time of filing. As part of this process, ownership of the company will be taken over by iRobot's main manufacturer, Shenzhen-based Picea Robotics, a long-standing manufacturing partner with development and manufacturing facilities in China and Vietnam.
The documents show that iRobot has been operating in an extremely challenging market environment in recent years. In order to remain competitive, it has been forced to lower the prices of its products and at the same time invest large sums in the development of new technologies, which has further burdened the company's financial picture. The situation has also been worsened by US import duties. As many as 46-% tariffs on goods from Vietnam, where most of the devices for the US market are produced, have caused the company approximately $23 million in additional costs this year.
iRobot was valued at $3.56 billion in 2021, during the pandemic, when demand for home products skyrocketed. Today, the company is valued at about $140 million, illustrating how quickly its situation has deteriorated. The market reacted sharply to the news of the bankruptcy, with iRobot shares losing more than 13% of their value.
The company emphasized that the bankruptcy proceedings should not affect the operation of the mobile application, supply chain, or support for existing users, which should ensure that customers continue to use their devices in the future.
iRobot was founded in 1990 by three members of the Artificial Intelligence Laboratory at the Massachusetts Institute of Technology. In its early years, the company focused primarily on defense and aerospace technologies, but the turning point came with the introduction of the first Roomba in 2002, with which iRobot practically created the market for robotic vacuum cleaners for home use. According to its own data, Roomba has approximately 42-% market share in the US and as much as 65-% in Japan.
The company's troubles also began to pile up after a planned $1.7 billion takeover by Amazon fell through last year. The deal was halted by the European competition authority, which raised concerns about the merger's impact on the market.
Picea Robotics, which will now own iRobot, is one of the largest manufacturers of robotic vacuum cleaners in the world. The company employs more than 7,000 people and has sold more than 20 million robotic vacuum cleaners to date.
