Fanuc and Yaskawa Electric face competition from China's AI robotics

Japanese industrial automation leaders Fanuc and Yaskawa Electric are facing a disconnect between strong financial performance and stagnant stock prices. Despite Fanuc reporting a 26.1% increase in operating profit for the April-June period, its stock has remained nearly flat year-to-date, even as the Nikkei 225 index has risen significantly.

This trend occurs amid the rise of ‘physical AI’—technology that allows AI to interact with the physical world through robotics. While Japanese firms possess deep manufacturing expertise, they face intense competition from China. Chinese humanoid robot manufacturers are accelerating mass production and driving down costs by integrating advanced AI models (VLM and VLA) with robust supply chains, much like the evolution seen in the electric vehicle industry.

Experts suggest that evaluating the competitiveness of these firms requires looking beyond simple profit figures to analyze the momentum of change and the accumulation of technological assets. The competition highlights a strategic tension for Japanese companies: how to leverage their hardware strengths while navigating the rapid AI and supply chain advancements coming from China.