TAIPEI (Taiwan News) — Global economies should bolster self-sufficiency and form non-Chinese supply chains in physical AI and advanced robotics as China seeks to dominate these industries, Taipei-based think tank Research Institute for Democracy, Society and Emerging Technology (DSET) said in a report published Monday.
China is trying to replicate its success in electric vehicles and drones, where it controls about 70% of the global market, Nikkei Asia reported. It currently has several advantages, including a large domestic market, strong foundational AI models, a robust manufacturing ecosystem, and access to rare-earth permanent magnets.
"China's 'whole of nation' strategy in physical AI is using the same playbook that brought it dominance in electric vehicles and drones," Nathanael Cheng, a DSET policy analyst, told Nikkei Asia. He added that China “has the potential to win, and even dominate, the global race in physical AI, but it has not yet reached that stage."
DSET cited US research firm Smart Analytics Global as saying that more than 85% of the humanoids and quadrupeds shipped worldwide last year were Chinese, even though the products were limited in their functionalities.
Foreign robot makers rely heavily on China for materials such as permanent magnets and battery components. There are alternatives in Western countries, but they usually cost more, Cheng said, per Nikkei Asia.
"Memory chips and high-end printed circuit boards could become the next major supply chain bottlenecks that many people have yet to recognize," Cheng said. "A single humanoid robot requires around 150 printed circuit boards, which could be far more than most people realize."
China is also the largest maker of printed circuit boards (PCBs) that the US relies on, Cheng said. However, Taiwan and Japan are major producers of high-end PCBs and the materials used to manufacture them, he said.
Despite making large strides in the robotics industry, China still has some weaknesses. Many Chinese robotics companies are heavily dependent on foreign-made chips, such as NVIDIA's Jetson Thor chip, Nikkei Asia reported.
China is also unable to produce precision components, including premium reducers, motors, and machine tools, DSET said. It still relies on Japan and Europe for high-quality precision components.
To secure physical AI supply chains, governments should gradually introduce purchasing rules that favor non-Chinese suppliers for certain parts, Cheng said, according to Nikkei Asia. He also suggested Chinese-made robots be limited in sensitive areas like government, critical infrastructure, and defense.
Cheng said, “Economies around the world need to recognize their growing dependence on China in the next phase of tech competition and invest in building greater self-reliance to have strategic autonomy in the physical AI race."
