(Yicai) Jan. 23 -- "It's impossible for the United States to build an equally competent system racing against China in the physical artificial intelligence world," according to the chief executive of leading Chinese maker of light detection and ranging sensors Hesai Technology.

There is a fundamental gap in manufacturing capabilities between the US and China, Li Yifan said at a special meeting hosted by China's Tencent Holdings during the World Economic Forum in Davos on Jan. 21. While both countries have "unlimited money, computational power, and talent" for digital AI development, physical AI requires deep manufacturing ecosystems that the US no longer possesses, he noted.

"There is no established manufacturing chain system anymore" in the US, Li noted, adding that relocating supply chains is not merely about moving factories. "Even if you move the top layer, there are like five thousand companies in the layers below that cannot be moved."

There is a sharp distinction between digital and physical AI, Li said. The former handles thinking, and "even if you have the smartest AI in the world, somebody is going to have to clean your house, cook your dinner, and do your laundry. Your GPT is not going to get you that."

China and the US face demographic pressures, the former with its aging population and the latter with reindustrialization without sufficient labor, making physical AI critical, Li stressed.

"It's very likely that the number one in Silicon Valley will be behind the number one in China," with Tesla as the likely exception because its approach is "50 percent Chinese in a good way and 50 percent American," according to Li. The US will eventually embrace China's manufacturing strength rather than decouple when it recognizes the gap, he noted.

In addition, Li revealed his new humanoid robot firm Sharpa at the Tencent Finance WEF Vision Dinner, which had Yicai Global as media partner. The firm aims to build systems compliant across countries from inception while leveraging China's supply chain advantages, Li said, adding that it focuses on hand dexterity, representing "90 percent of our productivity," rather than dancing.

Li named the new company after Himalayan Sherpas who "do the difficult, sometimes dangerous work, so that we can be free to climb mountains." Sharpa's robots showcased precise assembly, book handling, and manipulation tasks skills, with its mission being "robots are about returning your time back to you," Li said.

Li returned from Silicon Valley over a decade ago to build Hesai into a lidar powerhouse, and used the company's trajectory to illustrate the stakes of US-China tech competition. The firm drove lidar costs down to USD200 per unit from USD50,000 per unit, a 99.7 percent decrease, eventually taking more than half of the global market, he pointed out.

However, Hesai's success triggered a backlash, with the company placed on the US Defense Department list after local competitors lobbied Washington, leading to its stock plunging 80 percent below net asset value, Li said. Despite acknowledging the lack of direct evidence, US authorities kept the firm on the list, so it pivoted to focus on China and Europe, Li noted.

Editor: Martin Kadiev