- U.S. still leads in AI software, but China is pulling ahead in robotics and factory automation—an inflection that investors and policymakers should treat as strategic.
- IFR data show ~4.28M industrial robots operating in 2023 and ~4.66M in 2024, with China installing 276k (51%) in 2023 and ~295k (54%) in 2024, operating 2M+ units and achieving higher robot density (~470 per 10k workers) than the U.S. (~295).
- U.S. adoption lags amid regulatory, labor, and supply-chain hurdles—just ~34,200 installs in 2024—prompting proposals for a national robotics strategy, supply-chain onshoring, “permissionless” testing, and tighter coordination with allies.
In today’s technology landscape, artificial intelligence is transforming both soft power (content and data) and hard power (physical infrastructure). The United States still leads in AI software – major language models are trained on Western data – but China is surging ahead in the physical realm of robotics, warns Andreesen Horowitz’s Martin Casado and Anne Neuberger.
Industrial robot deployments have exploded worldwide: The International Federation of Robotics reports over 4.28 million robots operating in factories as of 2023, more than double the count a decade earlier. In 2024, roughly 4.66 million robots were active globall.
Global industrial robot population has more than tripled since 2013.. This boom is driven largely by Asia – China in particular – while U.S. adoption has lagged. As Casado and Neuberger warn, China is “running away with the hard power part of AI – robotics.” Understanding this dynamic is critical for tech investors and policymakers in the U.S.
China’s Central Role in Factory Automation
China has executed its Made in China 2025 strategy to dominate advanced manufacturing. In just ten years, Chinese factories have leapfrogged the rest of the world in robot density and installation. A16Z notes that Chinese firms “leapfrogged the rest of the world’s density of robots per capita.” IFR data bear this out: in 2023 China installed 276,000 industrial robots (51% of the global total), and in 2024 about 295,000 (54%). China now operates over 2 million robots in its factories – by far the largest stock globally. In comparison, the United States ranks outside the top five. America’s robot density was only about 295 robots per 10,000 manufacturing workers in 2023 roughly one-third of China’s rate of 470.
China’s lead comes from massive scale and rapid adoption. Major companies like Xiaomi and BYD run fully automated “dark factories” (factories operated entirely by machines, often in the dark) around Shanghai and Shenzhen. The Chinese government has poured resources into robotics: it publicizes humanoid robot demonstrations at national events, and has even approved a $138 billion state venture fund for robotics, AI, and cutting-edge tech, as reported by the AP. Industry experts note that China’s integration of AI and manufacturing is a core part of its strategy. As one witness told Congress, “the Chinese companies are very good” and “devoting a lot of resources very quickly” to areas like robots and semiconductors. In short, as a16z analysts noted in its most recent paper, China has become “the world’s central robotics power” by building factories and supply chains that scale automation at unprecedented speed.
Precision and Supply Chains: Key Robotics Components
China’s Made in China 2025 (MIC2025) set a directional roadmap—not a granular playbook—to upgrade ten strategic sectors, with advanced robotics and automation at the core. Rather than prescribing detailed implementation, Beijing used high-level KPIs to mobilize local governments and state-linked firms, signaling national intent and channeling resources into priority technologies. The result: while gaps remain in areas like leading-edge semiconductors, China has made rapid gains in robotics and sensor technologies, pairing them with strengths in EVs, batteries, and high-speed rail to push toward high-end manufacturing.
In a June World Economic Forum article, it’s pointed out that a key advantage is China’s clustered manufacturing ecosystems (e.g., the Yangtze River Delta and Greater Bay Area), where suppliers, integrators, and end users are co-located. This density accelerates learning cycles—new components are tested on real production lines in days or weeks, not months—creating a flywheel for automation: deployment yields data, data improves systems, improved systems scale further. The smartphone supply chain’s maturation fed precision manufacturing and compact systems engineering that now benefit EVs, industrial robotics, and factory instrumentation—an example of cross-pollination that compounds cost declines and performance gains.
Underlying that momentum is process knowledge—tacit, hands-on know-how embedded on factory floors and in supplier coordination, WEF noted. China retained and deepened this experiential base as many Western economies offshored production. Engineers move fluidly between design and manufacturing roles; iteration happens in tight feedback loops; and R&D is tightly coupled to production. This “fingertip feel” is hard to codify but essential to translating prototypes into robust, scalable robotic systems and automation workflows.
Advanced robots require an astonishing array of high-precision components. Typical industrial robots include motors, gears, torque sensors, optical encoders, circuit boards, connectors, cameras, IMUs, and specialized actuators, all working together seamlessly, a16z indicated.Many of these parts must be manufactured with micron-level precision at low cost. For example, harmonic reducers – compact gear mechanisms used in robot joints – were once made almost exclusively by Japanese and German specialists (Sumitomo, Harmonic Drive). But Chinese firms have rapidly closed the gap. Suzhou-based Green Harmonic now produces drives matching the performance of legacy brands at 30–50% lower cost, according to a16z.com. It already holds over 30% of China’s market and is expanding overseas. Analysts warn this is a “Toyota moment” for robotics – Chinese-made components undercut foreign suppliers, eventually reshaping global production.
According to a16z, Chinese firms now supply “practically the entire robot” within local industrial clusters. This picture illustrates that reality: the robot arm picks and sorts components (dog-bone treats, in this demo) entirely under computerized control. Almost every part of such a system – the controllers (Siasun, Estun), torque sensors (AVIC), vision processors, high-speed drives, etc. – can be sourced from Chinese suppliers. A16Z noted that China’s dense manufacturing hubs (Shenzhen, Shanghai) let toolmakers, robot integrators, and end-users co-locate, rapidly inventing new automation sequences. In practice, China now has a mature ecosystem for robotics hardware, enabling iterative cost reductions. Even high-profile robots like Boston Dynamics’ agile machines struggle to compete with cheaper Chinese alternatives: a16z highlights Unitree’s robot dogs ($1,600 each) and humanoids ($5,900) as evidence that robotics costs are plummeting.
Barriers Facing American Robotics
By contrast, the U.S. environment has been less favorable to an automation boom. A16Z describes a U.S. regime of “permission-first” regulation, where every new robotics trial often requires lawyers, permits, and lengthy approvals, a16z noted. Even simple deployments (drones, delivery bots) get bogged down in red tape. Labor unions in the U.S. have also resisted factory automation. For example, dockworker agreements have made U.S. ports among the “slowest, least automated” in the world. The net effect is that American industries still rely heavily on human labor instead of robots. U.S. productivity has stagnated or declined in sectors with low automation – construction productivity, for instance, is down over 30% since 1970, according to a16z.
A recent U.S. House Oversight Subcommittee on Cybersecurity, Information Technology, and Government Innovation held a hearing titled “Shaping Tomorrow: The Future of Artificial Intelligence.” conlcuded with several obervations:
- Regulatory barriers: U.S. laws require explicit approvals and restrict autonomous systems (FAA rules, testing limits, etc.), making it hard to deploy robots at scale.
- Labor constraints: Existing work rules and union contracts delay or block automation projects (e.g. in ports and warehouses).
- Supply-chain gaps: The U.S. has virtually no self-sufficient robotics supply chain. Even “Made in USA” robots rely on key parts from abroad (Chinese-made imager sensors, magnets, lens optics, etc.). This dependence is strategic: a16z notes that virtually all U.S. robotics firms still source core components from China or its allies.
- Market fragmentation: Unlike China’s giant integrated market, the U.S. has 50 states with varied rules. As one congressional witness warned, China has a unified plan for AI and robotics, whereas American entrepreneurs face a patchwork of regulations that “stifles innovation.”
- Slow adoption: With these headwinds, American factories simply put in fewer robots. In 2024, the U.S. installed only about 34,200 new industrial robots (68% of all North American deployments) – roughly one-tenth of China’s installations that year, IFR pointed out.
In short, China’s massive deployments and data collection create a virtuous cycle. More robots on Chinese factory floors generate more real-world data to refine AI and control systems (a “flywheel momentum” in robotics), the a16z report indicated. Absent change, China’s lead could become virtually insurmountable, much as it was with solar panels or 5G networks in the last decade. U.S. experts now warn that a failure to act might cost the country entire industries and supply chains, the House Oversight subcommitte noted.
U.S. Government and Industry Actions
Alarmed by these trends, U.S. industry groups and lawmakers are pushing for a change. Last year the Association for Advancing Automation (A3) stated that without a national strategy “the U.S. will not only lose the robotics race but also the AI race,” the AP reported. A3 and other trade associations recommend measures such as tax incentives for robots, federally funded training programs, and a dedicated robotics office. In Congress, a bipartisan Robotics Caucus was relaunched to “help ensure the U.S. remains competitive” with China by promoting robotics R&D and public–private partnerships, Bloomberg Government reported in May. Congressional testimony echoes this: Rep. Raja Krishnamoorthi emphasizes that while U.S. tech is strong, China is “devoting a lot of resources very quickly,” so America must “maintain our innovation and our culture of entrepreneurship” to keep pace, according to the AP.
The Trump’s administration AI strategy also recognizes robotics as a priority. The White House’s America’s AI Action Plan explicitly calls for making “America and our trusted allies be world-class manufacturers” of next-generation tech like autonomous drones and robotics. It recommends aggressive investment in AI-enabled manufacturing via agencies like DOD, DOC, DOE, and NSF. mFor example, the plan instructs NTIA/DOC to convene industry and government stakeholders to identify supply-chain challenges in American robotics production. This reflects a broad push to invest in domestic automation capabilities (SBIR grants, CHIPS R&D programs, etc.) and to bring cutting-edge manufacturing onshore.
Some experts have put forward detailed policy proposals. A recent U.S.–China Commission report urges the creation of a National Robotics Strategy Committee (modeled after previous AI and biosecurity task forces). This body would map critical robotics supply chains (actuators, gears, sensors, AI chips, etc.) and identify domestic vulnerabilities. It would also recommend onshoring essential production and coordinating with allies (Japan, South Korea, Germany) to diversify trusted suppliers. The report further advises exporting controls to limit China’s access to high-end AI accelerators and robot control systems. In short, the proposed playbook includes strategic funding, trade measures, and collaboration with allies – a concerted U.S. response to China’s industrial policies.
Key recommendations from these proposals include:
- National strategy and oversight: Establish a clear federal robotics roadmap. For example, create a high-level task force or office to coordinate interagency efforts, set goals for U.S. robotics leadership, and swiftly remove outdated regulatory barriers.
- Robotics R&D and incentives: Increase public funding for robotics research (through NSF, DOD, DOE, etc.) and offer tax credits or grants to help manufacturers adopt robots. Support public–private partnerships and workforce training so that U.S. firms can innovate rapidly.
- Supply-chain security: Audit the entire robotics supply chain to identify choke points (motors, reducers, chips). Provide incentives to onshore or ally-source critical components, and use DPA Title III and export controls to reduce dependence on adversarial suppliers.
- Regulatory reform: Shift toward a “permissionless” regulatory approach in manufacturing. Simplify testing and deployment rules for robots and drones so U.S. innovators can experiment without undue delay. Remove outdated state-level restrictions (as in AB-412 for AI) that could inadvertently hamper startups.
- Allied coordination: Work closely with allies on robotics standards and supply chains. Pool U.S. strengths (chip design, software) with partners’ strengths (Germany’s precision engineering, Japan’s legacy robotics) to create a resilient ecosystem.
Meeting the Robotics Challenge
The robotics revolution is redefining manufacturing, defense, and daily life. America’s historic strengths in innovation and higher education mean it still has the talent and technology to compete. The U.S. leads in advanced AI software and supercomputer chips (with partners like Taiwan’s TSMC and Nvidia), a16z noted. However, translating that into physical automation requires action. Without a coherent strategy and investment, the U.S. risks ceding entire industries to China, much as it once did in steel or solar panels. As a16z put it, we are facing a potential “Toyota moment on steroids”– a scenario in which China’s mastery of automation reshapes global manufacturing.
There is still time to change course. IFR and industry experts agree that continued growth in robotics is inevitable – global demand is projected to rise 5–10% annually for the next few years. The question is who will supply and control that automation. American leadership in AI can be an advantage, but only if it extends into robots on the factory floor. As Casado and Neuberger urge, the U.S. must lay the groundwork now for a “defensible AI robotics stack,” partnering with allies and aligning policy with innovation. In the words of one congressional strategist quoted by a16z, “we need to get in the running” before the robotics race leaves America behind.
