Taiwan’s Strategic Window for Building Non-China Robot Supply Chain

Taipei: Taiwan and other technology democracies have a crucial three-to-five-year window to establish an advanced robotics supply chain independent of China, with a particular focus on humanoid robots, as suggested by a Taiwan-based researcher on Tuesday. According to Focus Taiwan, a recent report by the Research Institute for Democracy, Society and Emerging Technology (DSET) delves into the competition between China and the West in the realm of physical artificial intelligence (AI) and emphasizes Taiwan's potential in developing alternatives to Chinese robot supply chains. Nathanael Cheng, a policy analyst in the DSET Economic Security Program, observed that while China leads in robot shipments, its impact on the real economy remains limited due to the unproven nature of humanoid robots. Smart Analytics Global, a market research firm cited in the DSET report, estimated that Chinese vendors would account for 85 percent of global shipments of humanoid and quadruped robots by 2025, although only about 10 per cent of these robots have been deployed in real-world applications. Despite this, China has developed a relatively mature supply chain, competing effectively with Western companies, Cheng noted. Cheng emphasized the "golden but narrowing window" for techno-democracies to invest in non-China robot manufacturing and deployment over the next few years. He highlighted the U.S. Federal Communications Commission's (FCC) recent policy moves as an example of market incentive creation, referring to the addition of certain foreign-produced advanced robots to the FCC's Covered List, which restricts their importation and sale in the United States. The DSET report, "The Age of Robotics: China-West Competition and Taiwan's Indispensable Role in the Non-Red Supply Chain," pointed out that although China's manufacturing base and deployment scale provide it with an advantage in collecting operational data, it remains reliant on U.S. AI chips, Japanese and European precision machinery, and components. Companies from technol ogy democracies still maintain an edge in traditional industrial robotics, where reliability and precision are crucial, Cheng mentioned. The U.S. continues to import over two-thirds of its industrial robots from Germany and Japan, highlighting this advantage. DSET identified approximately 180 Taiwanese entities involved in or developing capabilities related to the robotics supply chain. Taiwan's strengths lie in its electronics manufacturing services, precision component ecosystem, and advanced semiconductor manufacturing, led by Taiwan Semiconductor Manufacturing Co. Challenges include limited awareness among U.S. startups about Taiwan's capabilities and the lack of mass production by most American robotics companies. Cheng pointed out that while some Taiwanese component makers have established supplier relationships with U.S. companies, others await stronger policy support and demand signals. Cheng called for bilateral discussions between the U.S. and Taiwanese governments on physical AI and suggested of fering incentives where market mechanisms fall short. Sunny Cheung, a DSET global fellow, recommended a phased approach to developing a non-China supply chain, prioritizing the exclusion of Chinese-made software and components to mitigate cybersecurity risks. Cheung noted that Taiwanese component sales to China are on the decline as Chinese domestic suppliers grow. He emphasized the need for Taiwanese companies to explore other markets to not only survive but thrive, suggesting that meeting U.S. cybersecurity standards could position them as trusted suppliers.