China’s robotic industry will enjoy a wave of opportunities this year, thanks to improving fundamentals, favorable policies and market hype, a top securities brokerage firm said recently.
CITIC Securities said in a research note that it expects industrial, service and specialized robots to bottom out and rebound quickly in 2023, with an industrial “inflection point” looming large after the second quarter of this year.
Driven by a string of policy incentives, the domestic robotic industry has entered a fast track. In particular, the country aims to evolve into a manufacturing powerhouse at the same time it is grappling with a demographic crisis.
This suggests that demand will surge for robots, said the research note.
Policy support is also expected. Seventeen ministries and ministry-level organizations published a “robot+” action plan in January this year, in which they outline goals to develop the sector during the 14th Five-Year Plan period (2021-2025).
Another boost is market hype surrounding the robotic space, thanks to key innovations such as humanoid robots and ChatGPT.
Robots will be an important vehicle for AI technologies. When AI blends with robotics, it will make up for the shortcomings in the intelligence, ease of use and cost-effectiveness of robots today, effectively increasing their penetration across various industries, CITIC Securities explained.
Optimism currently pervades the capital market over the prospects of China’s robotic industry, following the iteration of the Tesla Bot named Optimus.
At Tesla’s 2023 Investor Day on May 17, Elon Musk presented a series of new developments in Optimus. Equipped with force control algorithms, it can jump, grip irregular-shaped items, touch the surface of an egg without breaking it, and is even able to perform some basic tasks in a factory environment — just like a human employee.
The upgraded Optimus is a far cry from when it was first unveiled in October 2022, when it could not even walk bipedally by itself.
The huge progress owes a lot to the 28 actuators placed at various parts of its body. By slashing costs, Musk believes Tesla can bring the price of Optimus down to US$20,000.
When that happens, it will push global demand for humanoid robots to between 10 and 20 billion units, he believes.
Musk’s optimism has apparently rubbed off on many Chinese industry practitioners.
CITIC Securities believes this is where Chinese suppliers of robotic components have an “evident” competitive edge.
Last month, Sanhua Group (三花智控, 002050.SZ) announced a plan to partner with Leaderdrive (绿的谐波, 688017.SH) to build a factory in Mexico, and sell closer to Tesla’s home market.
Sanhua is a core supplier of thermal management system for Tesla, while Leaderdrive is one of the world’s largest manufacturers of harmonic reducers.
CITIC Securities also issued warnings about downsides facing the sector, including slower-than-expected development of humanoid robots, worse-than-expected market demand, as well as a smaller-than-expected number of orders placed for homegrown components.
On the whole, the brokerage firm painted a rosy picture on robotics in China, saying Chinese parts suppliers stand out for their “high performance-price ratio.” The firm gave the sector an “overweight” rating.
