Smartex: Transforming Textile Manufacturing With AI
Gilberto Loureiro's first exposure to the textile industry came during his teenage years, watching fabric being worked by machinery in a Portuguese factory.
Long hours spent inspecting for imperfections stayed with him, shaping what he describes as a “hate and love” relationship with clothing production.
Those early experiences laid the groundwork for a business idea that, years later, is winning the backing of Amazon, H&M and other major industry players.
Now co-founder of Smartex, Loureiro channels his factory-floor insight into one mission: reducing waste in fashion.
The solution that Smartex delivers automates flaw detection in textile manufacturing using high-tech cameras, computer vision and AI. It replaces manual inspection jobs like the one Gilberto once held, a role he calls “one of the most difficult jobs in the world.”
“I really love the textile industry and problem solving, but I hate this … inspection working and inefficiencies and the waste,” he told CNBC in a recent interview.
Automating inspection to cut waste
The fashion industry discards one truckload of clothes every second, either by burning or landfill, according to the Ellen MacArthur Foundation.
This incredible scale of waste highlights how inefficient textile production remains. Smartex's technology addresses this problem by spotting flaws in fabric as it’s being made and before it reaches the cutting stage.
While the improvements may sound incremental — Smartex claims its system allows for 0.37% more garments per kilogramme of finished fabric — these numbers scale quickly.
Applied to a manufacturer like Inditex, which uses over 678,000 tonnes of raw material annually, the gains represent serious waste reduction.
Over three years, Smartex says it has prevented one million kilogrammes of fabric waste. By eliminating human error and catching defects early, factories can improve yield and cut costs.
The technology does more than increase output — it also plays a role in a broader shift within fashion towards sustainability.
In a space where physical goods come with high energy, material and water costs, reducing waste at the source has long-term impact.
Major backers bring credibility and scale
The scale of waste and lack of digital transformation in fashion presents an opportunity for innovation, according to Gilberto: “If this is the largest industry that is still untouched by [the] internet and is one of the largest pollutants in the world, and nobody is working on this in terms of technology [then] there is a massive gap here.”
That gap has attracted high-profile investors. In 2022, Smartex secured US$24.7m in a round led by Tony Fadell, inventor of the iPod, alongside Lightspeed Venture Partners.
The same year, H&M Group also invested, aligning with its sustainability push.
“Their vision of enabling industries around the world to produce with significantly less waste aligns perfectly with H&M Group’s own commitment of leading the change to a better fashion future,” the retailer said in a statement announcing the partnership.
Smartex has since raised over US$40m in total, positioning it for larger-scale growth. One important milestone came in November 2024 when Amazon Web Services (AWS) included the company in its Compute for Climate Fellowship programme.
This support gave Smartex access to powerful computing resources and expert guidance, helping accelerate development.
Lisbeth Kaufman, AWS Head of Climate Tech Business Development, notes that climate-focused firms face extra demands: “Climate tech startups, they have so much R&D that they need to do, maybe even more than standard tech companies, they have to invent new science or new technology, as well as new business models.”
The fellowship currently supports 20 firms, with a combined US$4m investment, allowing Loureiro and his team to push forward.
Earning trust on the factory floor
For Smartex, the next challenge lies in winning over factory owners in Asia, particularly in Bangladesh and Vietnam.
These textile powerhouses run on tight margins and demand quick returns from any investment.
“If in 30 seconds he’s not convinced about the ROI, in less than one year, for example, you are out of the game,” Gilberto explains.
Buy-in depends on showing savings — in yarn, material or energy. Factory investments often total hundreds of thousands of dollars, with payback periods ranging from nine to 18 months, according to the Apparel Impact Institute.
Beyond quality control, Smartex aims to serve as an “operating system” for fashion production. That means enabling brands to trace where garments come from, understand each production step and monitor water usage.
“These are basic questions that are very difficult or impossible to answer by most fashion brands,” Gilberto says.
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