China Thematic Research: Spotlight on Physical Al

Research evidence excerpt

Global Markets Strategy

15 August 2026

China Thematic Research

Spotlight on Physical AI

Unitree’s A-share IPO and AgiBot eyeing a HK IPO this year have brought the

physical/embodied AI theme back in scope, particularly the humanoid robot

supply chain. Please see page 5 for the Top 5 questions asked about China’s

physical AI by global investors. The investment case for China’s humanoid robot

industry rests on three facts. First, the mass-production inflection point appears

close, as we forecast global shipments to rise from 18,000 units in 2025 to 60,000

in 2026 and 1.75 million by 2030 (a c150% shipment CAGR, Figure 5), with

China shipments expected to hold over half of the market share. Second,

localization offers clear upside, with high-entry-barrier components such as

planetary roller screws and six-axis force sensors remain below 50% localized,

creating localization upside for Chinese leading component makers. Third,

domestic policy supports can accelerate commercial validation. The "Six

Networks" buildout provides communication, compute, and logistics foundations,

while the 2026 Special Action for Real-Scenario Training by MIIT and SASAC,

encouraging SOE procurement, accelerates commercial validation. Our screen on

China stocks in various segments of humanoid production based on market

cap and 3m ADT is in Figure 21, with the top holdings by onshore mutual

funds listed in Figure 2. We see upstream components subject to localization

opportunities to benefit disproportionately from volume ramp, notably

planetary roller screws (40–50% localized) and six-axis force sensors (<30%

localized). Advanced cutting tools and upstream materials should also

benefit. Following the positioning reset, we believe the AI names’ fundamental

resilience shown in 2Q earnings season could fuel a recovery of the AI trade in

August.

Humanoids: global shipments to show a 150% CAGR over 2025-30E, China

taking 50%-plus market share. Currently, humanoids (Rmb3-8.5bn/US$0.41.3bn market size) account for only a small part of China’s embodied AI market

(Rmb1trn/US$148bn) in China, but are expected to grow rapidly. JPM Industrial

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