Yesterday, I wrote about how robots are about to become a part of our everyday lives.
Whether it’s preparing a tooth for a crown, delivering medication in a hospital or bringing fresh towels to your hotel room, I believe we’ll all become much more accustomed to interacting with robots over the next decade.
But where are all of those robots going to come from
This week’s chart offers a clue.
And it also highlights one of America’s biggest challenges in the age of AI.
Building the Robotic Economy
Today’s chart from Our World in Data is more than a simple comparison of industrial robot installations around the world.
I believe it’s telling us something much more important.
Back in 2011, China installed roughly 22,000 industrial robots. Japan, the United States, South Korea and Germany weren’t that far behind.
Fast forward to today, and the picture looks completely different.
Last year, manufacturers in China installed nearly 295,000 industrial robots, more than 54% of every new industrial robot installed anywhere in the world.
Global installations totaled about 542,000, meaning China alone accounted for more than all of Europe and the Americas combined. Meanwhile, Asia represented nearly three-quarters of all new factory robots deployed worldwide.
I think it would be naive to look at those numbers and conclude that this is simply about factory automation.
I see this is a concerning story about manufacturing capacity.
You see, every robot installed inside a factory helps that factory produce goods more efficiently. It reduces labor requirements, improves consistency and increases output.
Over time, those productivity gains compound, allowing manufacturers to build increasingly sophisticated products at lower cost.
That includes robots.
It’s a big reason why China’s robotics industry has expanded so quickly.
Because Chinese companies aren’t just buying industrial robots today. For the first time in its history, they’ve sold more robots inside China than foreign manufacturers, capturing 57% of the domestic market,
That’s up from roughly 28% a decade ago.
At the same time, the total number of industrial robots operating inside Chinese factories has surpassed 2 million, more than 5X the number operating in the United States.
And China’s robotics strategy doesn’t stop with factory arms.
Chinese companies have become major manufacturers of warehouse robots, autonomous delivery robots and especially humanoid robots…
Like the one that occasionally roams around our Baltimore office.
Chinese companies are also investing heavily in motors, batteries, sensors, precision gearboxes and robotic hands, many of the components every future robot will require.
And that’s something every American should be concerned about.
Because the robotics market appears to be approaching an inflection point.
Goldman Sachs estimates the global humanoid robot market could reach $38 billion by 2035, with annual shipments climbing to roughly 1.4 million units.
That suggests the robots I wrote about yesterday could arrive much sooner than most people expect.
Which brings us back to today’s chart.
If millions of robots will eventually work in our hospitals, restaurants, warehouses and homes…
Who will build them?
Here’s My Take
Today’s chart isn’t just about robots.
It’s about the next step for artificial intelligence.
Eventually, AI has to leave the data center and enter the real world. It has to drive a vehicle, move a package, assist a nurse, inspect a power line or help care for an aging population.
As that happens, the countries capable of manufacturing millions of intelligent machines will have an enormous advantage.
That’s why I think investors should pay close attention to what’s happening in robotics today.
Because we’re watching the early stages of what could become one of the world’s largest manufacturing industries, with an outsized impact on just about every other industry on the planet.
And as this week’s chart makes abundantly clear, China is already leaps and bounds ahead of everyone else.
Regards,
Ian King
Chief Strategist, Banyan Hill Publishing
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