AI is reshaping both soft power and hard power around the globe. The United States, to its credit, has an early lead with the former. The leading LLMs are trained on Western text, global training and inference are still dominated by American companies, and we are ahead in the global race for market share of total tokens generated.
But as it stands, China is running away with the hard power part of AI – robotics. As the incredible progress in AI continues, we start seeing intelligence embedded in the physical world – culminating in generalist robots that perform a wide variety of tasks across applications, from manufacturing to services to defense. This will redefine every aspect of our society and reshape daily life. The country betting on that future is China, not the US.
China has successfully executed what we once thought impossible. Only ten years ago we scoffed that “China can copy, but they can’t innovate,” which we then revised to, “They can innovate, but they can’t make the upstream high-precision tooling.” Maybe we shouldn’t have been so comfortable, given how Chinese companies had outcompeted the rest of the world in industry after industry – from solar photovoltaics, where competition outside of China has been practically decimated, to 5G, whose global deployment was a massive success for China’s national champion Huawei. The same pattern is playing out now with robotics. China has built a playbook to dominate strategic industries, and has used that playbook to become the robot superpower.
Homegrown Chinese companies now design and fabricate precision parts like harmonic reducers at competitive quality, cheaper prices, and – most importantly – colocated with their customers in manufacturing superclusters. This is the part that should scare the West the most. The colocation of so many robot toolmakers, assemblers, and customers in nodes like Shenzhen or Shanghai is how new combinatorial use cases are discovered, how manufacturing sequences are optimized around that new potential, and how firms develop advanced process knowledge that is completely opaque to the West. In a few years, it will be Chinese companies that are making parts that we cannot replicate – not just at low cost, but at any cost. There are parallels from the past. In the 1970s, Japan shocked the world with Toyota’s lean production methods, just-in-time inventory, and ethic of kaizen, continuous improvement to eliminate waste. Initially dismissed, by the 1980s Japanese automakers had overtaken American and European giants and reshaped the global auto industry. If we do not act to avert it, this will be another Toyota moment, but on a much greater scale.
If we don’t act soon, the United States will find it extremely difficult to catch up: we are approaching a period of compounding improvement that threatens to make China’s advantage virtually insurmountable. As with LLMs, training advanced robotics systems requires pretraining data on the scale of the internet, along with reinforcement learning to train generalist policies that can reason across a wide range of distortions in environment, perception, and task. As data from real-world deployment comes online, the country with more robots gains flywheel momentum; more deployment means more high-quality data which underwrites further deployment. The United States isn’t entirely out of the game, and our lead in AI software carries over: American companies like World Labs are at the forefront of building frontier models that could allow robots to reason about 3D space. But as these capabilities mature, it will be action in the real world – from routing cable harnesses through chassis pathways in electronics assembly to simply doing laundry – that will unlock the economic and strategic promise of generalist robotics.
Micron tolerance
To understand what China has achieved in the past few years, let’s talk about the harmonic reducer – a simple manufactured part that’s deceptively hard to make.
Harmonic reducers are a type of gear system that looks almost like a shoulder or an elbow in its socket. They transfer rotational energy from one end (usually at high speed, from an electric motor) into a much slower gearing, at high torque. They do this by offsetting an inner and outer gear ring that are slightly offset from one another, paired with a rotating oval-shaped piece on the inside. When driven by an electric motor, this creates a waveform that slowly drives the outer socket with a high gear ratio and high torque – suitable for many robotic applications, including humanoid ones.
The precision required to manufacture harmonic reducers is well beyond the reach of most machine shops. Production has historically been dominated by highly specialized German and Japanese manufacturers: the Japanese company Sumitomo and the German-Japanese firm Harmonic Drive are the two dominant players in the space, together accounting for 95 percent of global market share. But in the last few years they’ve faced intensifying competition from new entrants from China. A firm called Green Harmonic, based in the city of Suzhou near Shanghai, offers harmonic reducers with performance comparable to products from Sumitomo and Harmonic Drive, but at roughly 30 to 50 percent cheaper price points. Green Harmonic now has more than 30 percent market share within China; and will soon look abroad. In the coming years, we can expect companies like Harmonic Drive to face their “Toyota moment,” with major strategic implications: there are countless cases of Chinese firms translating cheap, reliable manufacturing into global market share and eventually driving competitors out of business.
Harmonic reducers are just one illustrative part of the robotics hardware stack. Creating a fully functioning robot requires a huge variety of other small components – precision bearings that enable smooth joint rotation, custom printed circuit boards that route power and signals between subsystems, specialized connectors that maintain reliable communication in high-vibration environments, miniature encoders that provide millimeter-accurate position feedback, force-sensitive resistors embedded in fingertips for delicate manipulation, inertial measurement units that track orientation changes down to fractions of a degree, servo motors with sophisticated current control algorithms, shielding to prevent electromagnetic interference between tightly packed electronics, thermal interface materials that dissipate heat from high-performance processors, and countless fasteners, gaskets, and protective housings engineered to withstand the mechanical stresses of real-world operation. Each component must be carefully selected not just for its individual performance characteristics, but for how it integrates with the broader system: a single point of failure can render a sophisticated robot completely inoperable.
Chinese companies, from Siasun and Estun in controllers to AVIC Electromechanical in torque sensors, are rapidly entering and starting to win the market for every part of that system. Together, these firms and countless others constitute a sophisticated and mature ecosystem that has allowed Chinese firms to locally source practically the entire robot – not only from within China, but within a megacluster like Shenzhen.
We’re at the point today where Chinese domestic manufacturers and their suppliers contribute all of the parts necessary to bring robotic dreams to life, and iteratively learn from one another. The Chinese startup Unitree has captured the global imagination with highly advanced robots cheaper than anything else offered before – agile and LLM-integrated robot dogs for as little as $1,600, a humanoid for $5,900. Those costs will keep coming down; the robot dogs will keep getting stronger and more capable.
by Martin Casado and Anne Neuberger, A16Z | Read more:
Image: uncredited
[ed. This is from Andreessen Horowitz, so little surprise they would view government subsidies (too little) and over regulation (too much) as major contributing factors. But politics, policy, and a lack of strategic planning and funding priorities are probably the more important constraints. I mean, we currently have a president and congress that give lip-service to reshoring American manufacturing, but have no idea what industries are most important, or even how infrastructure improvements and corporate incentives (and disincentives) could help. All the while re-directing trillions of dollars into the military, homeland security and immigration enforcement. No wonder China is pulling away on all fronts. They actually have a clear idea of where they want to go.]
