China’s robot makers have mastered the moves. Now comes the race for AI brains
Firms are racing to train their creations using real-world data and simulations
Chinese robot manufacturers have made significant progress in humanoid robotics, advancing capabilities like running, dancing, and performing backflips. However, the next frontier for these companies is developing artificial intelligence that enables their robots to operate more effectively in various job settings. This shift is driving a surge in investment in a field known as embodied AI, which focuses on software that allows robots to understand and interact with their environment, learn new tasks, and adapt without being explicitly programmed for each task.
Chinese firms have raised a remarkable 93.5 billion yuan (US$14.1 billion) across 322 deals in the first half of 2026, marking a fivefold increase from the previous year, according to ITjuzi, a data research firm. As hardware prices drop due to increased competition, robot makers are realizing that the key to profitability lies not in the hardware but in the AI "brain" that powers it, according to Dermot McGrath, founder of Shanghai-based technology consultancy ZenGen Labs.
This burgeoning sector represents a new battleground in the ongoing US-China tech rivalry. While American companies lead in certain advanced robot AI systems, Chinese developers argue that their manufacturing prowess and access to real-world data will allow them to challenge their US counterparts. The country that combines AI with robotics most effectively could gain a significant edge in automating factories, logistics, and other industries, potentially reshaping global industrial productivity and the market for robotics technology.
Dermot McGrath emphasized that "the brain is indeed the weakest link in the complete robotics stack." Spirit AI co-founder Gao Yang concurred, stating, "The leading American labs are setting a demanding benchmark, particularly in how quickly robots can acquire and reuse skills." Chinese startups like X Square, Galaxea, and Spirit AI have already achieved valuations of around US$3 billion, according to company disclosures.
These developers are exploring various methods to gather the necessary data for training their AI systems. Some rely on human demonstrators, while others use computer simulations or a combination of both. However, regardless of the approach, the quality of the data remains critical. Chinese companies face challenges such as shortages of advanced Nvidia chips due to US export controls and a reduced influx of initial public offering funding amid concerns over inflated valuations and market saturation.
Nevertheless, experts believe that Chinese robot firms are emerging as credible competitors to American startups in the embodied AI space.
Written by urgent.news from The Business Times - Companies & Markets's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
