(Yicai) Nov. 12 -- A recent report by Goldman Sachs raised alarm over potential overcapacity in China’s growing robot industry, but industry insiders have told Yicai that such concerns are currently unwarranted.

The US investment bank report was based on a survey of nine Chinese humanoid robot supply chain companies, including Sanhua Intelligent Controls and Tuopu Group. It said that none of them have yet confirmed receiving substantial large orders, and nor have they provided a clear timeline for mass production.

The companies are actively expanding their production capacity, with estimated annual robot production ranging from 100,000 to 1 million units. This seems worryingly overconfident, the report said, given that Goldman Sachs currently expects global humanoid robot shipments to reach just 1.38 million units by 2035.

"Due to the fact that major clients in North America have not yet placed specific orders, the company currently has no orders in hand. However, our production capacity planning is arranged based on the capacity guidance provided by these major clients," a Tuopu representative told Yicai.

Headquartered in Ningbo, Zhejiang province, Tuopu specializes in automotive parts manufacturing. According to the report, the company plans to establish production lines for humanoid robot components in Thailand, Mexico, and the US, with annual production capacity of up to 1 million units at the Thailand factory.

"Due to the need for suppliers to prepare sufficient capacity to meet future demand, we can only prepare according to our clients' requirements. Otherwise, we would face the situation of being unable to fulfill orders. As for whether future orders will be below or exceed our capacity, currently, no one knows," the representative pointed out.

Globally, the specific application scenarios and technological pathways are still in the exploratory stage, an industry analyst told Yicai, but we cannot dismiss the medium to long-term development prospects of humanoid robots simply because of a shortage of short-term orders.

Overcapacity usually occurs in mature industries, the analyst pointed out, but humanoid robots are still in the early stages of industrial development. Supply chain companies proactively layout their capacity based on future expectations as a necessary preparation for potential demand surges, so concerns about overcapacity before the actual orders arrive are premature.

Chinese firms are certainly not alone in their confidence in the humanoid robot sector. Elon Musk, chief executive officer of US electric vehicle giant Tesla, stated at a recent annual shareholder meeting that humanoid robots will become the largest-scale product in history, with a future market scale reaching billions of units.

He also revealed that Tesla will launch a production line next year with an annual capacity of 1 million humanoid robots, and a future plant in Austin will have an annual capacity of 10 million.

Confidence also remains strong in China. According to a report released by the China Academy of Information and Communications Technology, the number of humanoid robots in use domestically will exceed 100 million units by 2045, with a market size reaching CNY10 trillion (USD1.4 trillion).

Furthermore, the economic scale of humanoid robots is not only based on hardware manufacturing, Jiang Lei, chief scientist of the National and Local Co-Built Humanoid Robotics Innovation Center, told Yicai. 

Embodied intelligence models will have to be developed for robots and a huge amount of data will be generated during their use, Jiang said, and these two aspects may become the primary development direction in the future.

Editors: Dou Shicong, Tom Litting