China leads in physical AI and humanoid robotics development

China is emerging as a leader in the field of physical AI, also known as embodied AI, where artificial intelligence is integrated into physical bodies such as humanoid robots. This technological shift is driven by a highly efficient ecosystem, particularly around Shenzhen, where a dense supply chain allows companies like Unitree, UBTECH, and Galbot to prototype and test hardware much faster than competitors in the United States.

While the U.S. maintains an advantage in foundational AI models, China has gained significant ground in the hardware and patent sectors. Reports indicate that Chinese firms like Baidu, Huawei, and Tencent dominate physical AI-related patents. Furthermore, the Chinese government provides substantial support through robot training centers that facilitate the collection and sale of training data, though some observers question the long-term market demand.

In response to this shift, Japan is attempting to reclaim its position by leveraging its historical strength in industrial robotics. Japanese companies, including Fanuc, Yaskawa Electric, and Kawasaki Heavy Industries, are collaborating with firms like NVIDIA and SoftBank to integrate AI into robotics. Additionally, Japan has launched the 'FRONTia' national project to develop domestic foundational AI models to protect its manufacturing data and industrial interests.