A technology boom can cause as much harm as it can impress people visually. The sector of humanoid robots in China that was one of the major points of the Chinese economy is now being considered by its planners as a possible bubble. The National Development and Reform Commission (NDRC) gave a very explicit warning that over 150 companies are creating almost identical humanoid robots, and this will end in flooding the market and making it difficult for the genuine research breakthrough to be visible.
The warning was given after the industry had an exceptional year of exposure. Unitree Robotics’ dancing robots at the Spring Festival Gala were watched by the entire nation, and it led to a great investor enthusiasm. Social media has also contributed to the hype with videos of AgiBot and Galbot, in which they demonstrate their machines that are able to run marathons, kickboxing, and make coffee. AgiBot’s A2 even got a Guinness World Record for walking over 66 miles with live battery swaps. All these accomplishments have been a significant factor in pushing the Solactive China Humanoid Robotics Index to almost 30% this year. Also, the shares of UBTech Robotics Corp. increased by more than 4% in a single day.
Citigroup’s projections of the sector of humanoid robotics being worth $7 trillion by 2050 make the market look irresistible. This figure is even more optimistic compared to Morgan Stanley’s forecast of $5 trillion. China is in a good position to keep up the pace given the country’s strong base for automation. Last year, it installed more than 290,000 industrial robots, which is more than the rest of the world combined, thus China attained a density of 470 robots per 10,000 workers and has outpaced both Germany and Japan for the first time. Its fast leap from being outside of the top ten in 2019 to taking the third place globally is a clear manifestation of Beijing’s bold industrial upgrade strategy in the face of escalating US tech rivalry.
On the technology front, the industry has advanced significantly in terms of locomotion and manipulation. For example, the G1 robot of Unitree shows one-legged stability enough for dynamic sports, and at the same time, the high-tech battery-swapping systems are what allow activities to be performed continuously over long distances. Also, the AI-powered control systems are getting more advanced as well. These systems can use the fused data from different sensors in real-time for things like keeping balance, recognizing objects, and learning to grasp adaptive ones. However, on the other hand, most humanoids still cannot handle complex household tasks without human help through teleoperation, which means that there is still a big gap between the viral stunt videos and the actual practical application of these robots.
The supply chain that supports them is no less complicated. Although China’s domestic ecosystem is able to produce some the most important parts like High-Torque Servo Motors, Lightweight Composite Frames, and Machine Vision Modules, however, it is still heavily dependent on imports for the most precise reducers and the most advanced semiconductors in order to perform at optimum levels. Hence this dependence issue has created strategic vulnerabilities, especially at the moment when geopolitical tensions are escalating and access to highly developed chips for AI inference workloads in humanoid robots is becoming more and more limited.
The Chinese government’s response to the issue is two-pronged: on one hand, it must implement measures to speed up research and development in the core areas of focus-technologies such as autonomous navigation, dexterous manipulation, and energy-efficient actuation could benefit immensely from that-on the other hand, it needs to invest heavily into educational and testing facilities nationwide. Moreover, the NDRC intends also to support the “consolidation and sharing of technological and industrial resources” as a measure to curb redundant development. Operationally, this may translate into company mergers, collaboration in supply chains and the use of received standards for testing to create a uniform level of the sector’s capability.
Government worry is based on experience of the past. In the case of bike-sharing and semiconductors, bubbles resulted in dozens of companies going under after they flooded the market with identical or almost identical products, thus leaving behind unproductive capital and idle assets. In the area of robotics, such a shakeout, if consolidation is too sudden, could result in the loss of momentum, however, the proliferation that is not kept in check may saturate demand before the emergence of viable use cases.
For investors and analysts, the difficulty is to decide on the whereabouts of the surge of China’s humanoid robotics sector. On the one hand, it is a leap forward in tech, and the Chinese government is wholeheartedly backing it; on the other, it is susceptible to the same factors that led to the failure of previous frontier industries. Their future depends on whether the authorities can effectively control the excess without hindering the innovation that is needed to transform viral robots into indispensable tools for factories, homes, and, perhaps, defense.
