iRobot files for bankruptcy; Chinese supplier to acquire Roomba maker under pre-packaged Chapter 11

iRobot, the U.S.-based maker of Roomba robotic vacuum cleaners, has filed for bankruptcy protection in the United States, with Shenzhen-based Picea Robotics set to take ownership of the company under a pre-packaged Chapter 11 plan. The arrangement would see the Chinese contract manufacturer acquire iRobot as it struggles with competition from lower-cost rivals and a cost environment shaped by tariffs.

iRobot said tariffs of about 46% on goods imported from Vietnam, where most of its devices for the U.S. market are made, increased its costs by roughly $23 million this year. The company, once valued at about $3.56 billion in 2021 as demand for home-cleaning robots surged during the pandemic, is now valued at around $140 million. The bankruptcy filing came as iRobot’s shares slid on the Nasdaq, declining by more than 13% on the news. The company stressed that the filing is not expected to disrupt its app, supply chains or product support for customers.

The deal underscores how shifts in the competitive landscape and policy measures have weighed on iRobot. A planned takeover by online retailer Amazon, valued at about $1.7 billion, collapsed in January last year after the European Union’s competition watchdog raised concerns that the merger could reduce rival visibility on the Amazon marketplace. The EU investigation added to the pressure on iRobot as tariffs and market competition intensified.

iRobot traces its roots to 1990, when it was founded by three alumni of MIT’s Artificial Intelligence Lab. The company initially focused on defense and space technology before launching the Roomba in 2002. Today, Roomba holds roughly 42% of the U.S. market for robotic vacuums and about 65% in Japan, according to iRobot’s own disclosures, making it the dominant brand in several key markets.

The restructuring follows a period of cost-cutting and investment in new technology as iRobot attempted to maintain price discipline amid aggressive competition from domestic and overseas manufacturers. The company has emphasized that Picea, which already manufactures iRobot devices under contract, would acquire all outstanding shares under the plan. Picea employs more than 7,000 people globally and has sold more than 20 million robotic vacuum cleaners, according to statements associated with the process.

The bankruptcy filing reflects broader tensions in the consumer electronics manufacturing sector, where tariff regimes and trade policy have heightened input costs for firms reliant on overseas production. For customers, the takeaway is that Roomba’s future availability and service are tied to the orderly execution of the pre-packaged plan, with iRobot noting that app functionality and customer support should remain uninterrupted as ownership shifts. As the market contends with continued competition from cheaper alternatives, the outcome of the restructuring will hinge on how effectively Picea can scale production, maintain supply lines, and manage the transition of ongoing software and support operations.

The case adds another chapter to a turbulent period for iRobot. The company had previously faced scrutiny over the implications of a potential merger on competition and the dynamics of the U.S. and EU markets for smart home devices. While the pre-packaged Chapter 11 approach aims to preserve value and salvage operations under new ownership, observers will be watching whether the shift to a Chinese contract manufacturer can stabilize margins and position iRobot in a market crowded with rivals from Asia and beyond.