Humanoid Robots: a Field to be Favored by Invetors in 2024

Credit: CFP

BEIJING, January 12 (TMTPOST) –Humanoid robots, seen by many as a potential game-changer in the technological landscape, is highly likely to be the darling for global investors.

Drawing inspiration from Aristotle's vision more than two millennia ago, which argued for liberation from mundane tasks and the pursuit of knowledge and wisdom, today's humanoid robots can be the tool to realize the sage’s vision.

Over the past few decades, the intelligence of humanoid robots has witnessed rapid advancement. From simple mechanical applications in production and daily life to robots that can run, jump, and speak, technological progress in robots has consistently exceeded expectations. Jensen Huang, the founder and CEO of NVIDIA, declares that the next wave of artificial intelligence (AI) is “embodied AI,” and humanoid robots are seen as the ideal embodiment of this evolution.

Goldman Sachs analysis forecasts a minimum $6 billion market for humanoid robots in the next 10 to 15 years, with a potential peak reaching $154 billion by 2035.

Humanoid robots have experienced three significant booms. The first occurred in 2000 with Honda's ASIMO, symbolizing groundbreaking robot technology. The second took place in 2016 when Boston Dynamics' Atlas was physically assaulted, sparking philosophical reflections on "stop bullying robots". The third boom is currently unfolding.

In the past year, the investment community witnessed a shift from the "investing in big models" frenzy to a cooling period. In contrast, embodied AI took center stage and is being showered with attention and capital. Notably, venture capitalists are joining forces in what appears to be a "bulk purchase" trend, spreading the risk across multiple promising projects.

AI scientist Fei-Fei Li authored an article in the American Academy of Arts and Sciences journal, highlighting three directions in the development of computer vision: embodied intelligence, visual reasoning, and scene understanding. The article has sparked imagination in robots, particularly embodied intelligence. Tesla's humanoid robot, Optimus, goes further to showcase the limitless potential of mass-producing humanoid robots.

Elon Musk, the CEO of Tesla, predicts a potential demand for 10 billion robots by 2023, surpassing the demand for automobiles if the human-to-robot ratio is 2:1. While humanoid robots might not immediately become Tesla's second growth driver, Musk's belief and investment in this field have boosted global industry confidence.

China has witnessed a surge in humanoid robot financing, with 12 cases in 2023 that rasied a total of over 20 billion yuan (US$ 2.8 billion). Notable participants include UBTech, Robot Era, AGIBOT, Galaxy Bot, Unitree Robotics. Heavyweight investors like Hillhouse Capital, DHVC, and Shanghai Lingang New Area Fund all jumped on the bandwagon in the Chinese market.

Venture capitalists are willing to join forces for several reasons. On the one hand, star projects are in high demand, requiring stiff competition for a stake. On the other hand, financing for humanoid robots is enormous, with many companies luring over a billion in the angel round financing. Group investments serve as a risk-sharing strategy, and institutions often prefer to bet on multiple companies within the same field.

"Some investors, who previously couldn't see the opportunities and hesitated to invest, are now joining the game. The valuations are rising rapidly, and if one of many projects can succeed, the returns will be exceptionally high," said an investor.

Many technology breakthroughs in the field of humanoid robots took place overseas. Google's DeepMind team and a team from Stanford University have jointly developed Mobile ALOHA, a versatile robot capable of household chores; Tesla's Optimus demonstrates significant advancements in motion control, environmental perception, and power; Apptronik, a start-up company at the University of Texas at Austin, teams up with NASA, and Apollo, a robot with the long-term goal of exploring the universe, is better at showing its advantages in the environment of working with human being.

The achievement of these technological milestones is closely related to capital support, and the humanoid robot development in overseas market has always been hot in investment and financing. In April 2023, Figure, a company focused on designing automatic general-purpose humanoid robots, secured a $70 million Series A financing led by Parkway Venture Capital, with the participation of multiple other institutions. Three months later, it obtained an additional $9 million in Series A+ financing from Intel Capital. Its founder, Brett Adcock, is dubbed as the "next Elon Musk."

"In the early years, many in the industry in China regarded overseas companies as benchmarks, and they are the starting point for many people's 'cyber dreams.' Overseas companies have always had the advantage of rapidly applying cutting-edge technologies, but often at the expense of cost. For example, the robot Atlas is hydraulically driven, incurring significantly high costs," remarked a Chinese investor.

On this note, Chinese companies have demonstrated the advantage of cost reduction through mass production. Guotai Junan Securities pointed out that hardware technology innovation and cost control are the core for domestic investors in the humanoid robot. With a mature manufacturing industry chain, China has a competitive edge over other countries in terms of lowering mass production costs.

On December 29, 2023, UBTECH was listed on the main board of the Hong Kong Stock Exchange. On that day, the Panda robot Uyou and the industrial version humanoid robot Walker S, along with UBTECH Chairman of the Board and CEO James Zhou, jointly took the stage to strike the gong, marking UBTECH as the "first stock of humanoid robots in China."

Despite the excitement surrounding humanoid robots, challenges persist. Investors are eager but acknowledge the complexity of the field. Challenges include the need for a foundational large model, computing power constraints, integration of multi-modal sensory perception, and the ethical considerations surrounding data collection for robot development.

China's Ministry of Industry and Information Technology released the "Guidance on Innovative Development of Humanoid Robots" in November 2023, outlining the vision for establishing a robust innovation system by 2025. The goal is to achieve significant technological breakthroughs, form a secure supply chain, and build a globally competitive industry ecosystem by 2027.

The industry chain ranges from core hardware components such as servo motors, reducers, controllers, and sensors in the upstream to software components like computer vision, human-machine interaction, machine learning, and system control. The current technological research efforts of China, as evidenced by the highest global patent applications, positions the country at the forefront. However, improvements are still needed.

Turing Award winner and Chinese Academy of Sciences academician Yao Qizhi pointed out that embodied robots currently face four major challenges: First, robots cannot have a foundational large model like large language models to achieve bottom-level control directly; Second, the challenge of computational power–even with Google's developed Robotics Transformer model, there is still much to be done to achieve the required control level for robots; Third, how to integrate the multi-modal sensory perception of robots needs to be addressed; Fourth, the development of robots requires collecting a lot of data, which also involves many issues related to security, privacy, and more.

As the humanoid robot industry is set to unleash a tidal wave through 2024, it brings both moments of glory and challenges. Early investors are trying to strike a delicate balance of predicting future high-growth potential against the risks associated with a crowded market. The era of humanoid robots has dawned after PCs, smartphones, and smart cars, marking another technology revolution. As the world eagerly watches, the journey to unlock the full potential of humanoid robots continues, promising innovation and breakthrough in the face of technological challenges.