Risk of bubble in humanoid robot sector, China warns. So, what if it bursts?

We’ve been hearing a lot lately about the so-called “AI bubble,” a phenomenon caused by overinvestment in AI technology, pushing its prices and valuation far beyond its actual, proven value, thereby creating a metaphorical balloon that could eventually burst.

Well, the first warnings are now being sounded regarding a similar bubble emerging in another growing sector — humanoid robots.

Over the last year especially, there have been numerous reports focusing on humanoid robots and the growing number of companies spending time — and plenty of money — developing them, with a view to one day deploying them in the workplace, and even the home. But mass production has yet to happen, as engineers grapple with design challenges such as creating super‑dexterous hands and robust whole‑body control systems that can safely handle real‑world tasks, from lifting awkward loads in factories to tidying up and folding laundry in people’s homes

This week, Li Chao, a spokesperson for the National Development and Reform Commission — China’s top economic-planning agency — has cautioned about a homegrown bubble occurring in the humanoid robotics industry as more companies around the world join the race to create the definitive robot.

“Frontier industries have long grappled with the challenge of balancing the speed of growth against the risk of bubbles — an issue now confronting the humanoid robot sector as well,” Li said in comments reported by Bloomberg.

In China alone, more than 150 companies are currently engaged in the development of humanoid robots, with Li warning that a flood of “highly similar” models could overwhelm the market and restrict opportunities for research and development.

Next year looks to be key in the development of the humanoid robot market — as well as the development of any associated bubble — with Citigroup forecasting “exponential” growth in robot production in the Asian nation, Bloomberg noted.

If China’s humanoid robotics bubble does eventually burst, it could lead to the slower rollout of affordable humanoid robots globally, as Chinese firms are pushing hard to scale humanoid robots and cut costs.

The sector would likely face a sharp funding squeeze, too, and consolidation around a number of the stronger players, with smaller firms merging with the larger companies, or simply failing.

A reset could also result in a drop in competition for U.S.-based companies in the same sector, which could potentially benefit from cheaper Chinese components and talent, though that would likely only be in the short-term as the Chinese firms restructure and consolidate.

You’d also likely see a cut in funding as a more cautious investment environment emerges.

While it’s not certain that any humanoid robotics bubble will burst, China’s warning suggests that the industry could be in for some serious disruption in the coming years.