With 2026 now in full swing, it’s time to announce the global podium for robotics — brought to you by the ROBO Global Robotics and Automation Index (ROBO). Cue cinematic, suspenseful music. Presenter: “And the winner for the last decade of robotics is… China! Ending 2024 with more than six times the installation of industrial robots as second-place Japan and eight times that of the third-place U.S. The numbers remain equally impressive when we look at the operational stock, where this year’s winner’s two million robots represent 43% of all global stock. Impressive work by the Asian giant.”
It won’t surprise you to hear that this year hasn’t seen an Oscar-style global event for robotics. But if it had, it would have gone just like that. And when the camera panned across the other competitors, both the U.S. and Japan, while politely applauding, would have worn the expressions of rivals who don’t want a repeat of this. China may have won this overly forced and confused metaphor, but the race for the next one is on.
Earlier in the year, we discussed how robotics is poised to benefit from the AI race, and argued that however much AI ends up reshaping the economy, robots would be instrumental to what the future looks like. This time around, we take a look at another race from which robotics is likely to benefit: geopolitics.
The Drone Warning: A Cautionary Tale
Unlike drones — which, before becoming ubiquitous in areas like defense, agriculture, and industrial inspection, were mainly seen as toys — humanoids are promising great things even before they are widely deployed. A few among the many uses being touted for the technology: a new level of factory automation and a key to solving the challenges that come with the aging demographics.
Other powers do not want a repeat of what happened with drones, where China became a world leader before the truly useful aspects of the technologies were discovered.
As recently highlighted in a whitepaper by the Association for Uncrewed Vehicle Systems International (AUVSI), the U.S. is witnessing the exact same set of circumstances play out in advanced robotics that previously hobbled its leadership in the small drone sector. Just as it did with drones, China’s government has designated robotics a national strategic priority, mobilizing massive state resources, aggressive subsidies, and coordinated industrial policy to scale domestic champions and dump products onto the global market.
In the drone market, this sustained dumping and a fragmented U.S. policy response resulted in overwhelming China dominance, the rapid erosion of American manufacturing capacity, and a dangerous long-term dependence on adversary-linked supply chains. But robotics is fundamentally different. This technology is vastly larger, highly capital-intensive, and deeply embedded across the entire industrial and defense base. If the U.S. allows a repeat of the drone market in advanced robotics, the economic and security damage could be far more impactful and costly to reverse.
The Great AI Reset
Fortunately for those seeking to catch up with China, the coming years provide a golden window of opportunity. The last decade was defined by traditional, pre-programmed industrial arms welding car frames in predictable environments. China undoubtedly mastered the scale and subsidization of this legacy hardware. But the introduction of artificial intelligence into the equation, the dawn of “physical AI”, means that China remaining on top is not something that can be taken for granted, despite their undeniable lead.
We are moving from isolated machines in cages to highly adaptable, intelligent systems capable of operating in dynamic, shared spaces. This transition effectively resets the playing field. It gives the U.S., Japan and others an opportunity to leverage their respective advantages in AI software, advanced compute, and precision engineering to close the gap.
Washington Finally Gets Serious
In the U.S., the realization that it cannot afford to cede the physical AI race has sparked a flurry of legislative action.
Last month, a bipartisan coalition introduced the National Commission on Robotics Act (H.R. 7334), which proposes an 18-member panel of experts to craft a unified U.S. competitiveness strategy. They are tasked with evaluating everything from supply chain vulnerabilities to talent shortages. As Boston Dynamics’ Brendan Schulman noted in response to the bill: “Robots will not only transform core industries, help reshore critical manufacturing, and elevate job safety and efficiency — they will also redefine America’s economic and industrial future,” highlighting the importance of a unified effort by the U.S.
But it isn’t just about economic dominance, it is about security. The companion Humanoid ROBOT Act (S. 3275) highlights the risks of allowing intelligent, sensor-loaded robots manufactured by foreign adversaries to map sensitive U.S. workspaces. By pushing to prohibit federal procurement of humanoid systems from countries like China and Russia, lawmakers are now treating physical AI as critical defense infrastructure.
The private sector is not sitting idle either. Learning hard lessons from the drone sector, AUVSI recently launched the Partnership for Robotics Competitiveness (PfRC) on Capitol Hill. Their goal is to bring industry executives face-to-face with lawmakers to highlight the importance of a coordinated national strategy needed to scale domestic supply chains and reduce reliance on foreign suppliers.
Japan’s High-Stakes Pivot
Across the Pacific, Japan, the historical king of legacy industrial robots, is mounting an equally aggressive structural comeback to avoid losing even more ground. Recognizing that no single company can win the AI hardware race alone, Japan is seeing large private-sector consortiums like the Kyoto Humanoid Association pooling technological resources and accelerate prototype development.
The Japanese government is throwing its full weight behind this transition. Earlier this month, Tokyo designated physical AI systems as a top national priority, setting an incredibly ambitious target to capture 30% of the global AI robotics market by 2040. To ensure their domestic robots have the necessary computing brains, Japan is putting forward one trillion yen per year in state subsidies to improve domestically produced semiconductors. They are planning to deploy these new physical AI systems across areas like healthcare and disaster relief to combat their severe demographic labor shortages, guaranteeing state-backed demand for local manufacturers.
The Race for the Future Economy
China holds an undeniable lead in pure hardware volume and deployment today. But the integration of advanced AI has triggered a global reset. With the U.S. pivoting its policy machinery to secure the physical tech stack, and Japan aggressively mobilizing its massive industrial base around state-backed AI targets, the next decade is poised to be fiercely contested by the technological superpowers.
While robotics as a whole is likely to benefit from these events, navigating a space moving this quickly requires more than just chasing headlines about the latest government bill or humanoid startups. It requires a deep, fundamental understanding of the underlying technologies making these advancements possible. This is exactly where a research-driven strategy, guided by world-renowned robotics pioneers and industry experts, becomes an invaluable advantage.
By continuously monitoring the global value chain, our team can look past the noise to identify the true foundational winners of this revolution, the companies building the core technology of the future. While the winner of the future Olympic/Oscar-style race for geopolitical dominance is up for grabs, robotics looks set to benefit, no matter the winner.
ROBO is the underlying index for the ROBO Global Robotics & Automation ETF (ROBO), the L&G ROBO Global Robotics and Automation UCITS ETF (ROBO.LN), and the Global X ROBO Global Robotics & Automation ETF (ROBO.AU).
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Originally published on ETF Trends
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