(P1) American tech giants are increasingly turning to China for the critical components that form the physical bodies of humanoid robots, creating a complex dependency even as the US leads in the AI brains that power them. While companies like Nvidia and Tesla are at the forefront of robotic intelligence, their supply chains run deep into China's unrivaled manufacturing ecosystem for the motors, sensors, and joints that allow humanoids to move, a reliance that is drawing scrutiny from US policymakers.
(P2) "China’s microelectronics, their motors, their rare earth, their magnets—which is foundational to robotics—they are the world’s best,” Nvidia CEO Jensen Huang said in a podcast in March. “The world’s robotics industry will have to rely a lot on it.”
(P3) Tesla is actively assembling a team in China to manage suppliers for its Optimus humanoid robot, with employees visiting Chinese manufacturers in preparation for mass production. The components in focus include specialized motors and gears, which account for about 55 percent of a robot's total cost, according to research firm TrendForce. This strategy is driven by significant cost advantages, with Morgan Stanley estimating that the Chinese supply chain could reduce the cost of manufacturing a humanoid robot by as much as two-thirds.
(P4) This dependence, however, exposes US firms to significant geopolitical risks, including potential tariffs or export controls that could disrupt production. Beijing has identified embodied AI as a strategic future industry and aims to establish a resilient domestic supply chain by 2027, insulating itself from external pressures. For investors, this creates a volatile landscape where the rapid development of US robotics is tethered to the geopolitical climate and China's industrial policy, affecting companies like Tesla (TSLA) and the broader automation sector.
Beijing is not merely a passive supplier; it is executing a national strategy to dominate the humanoid robot sector. The government's 2023 announcement of its goal for a self-sufficient supply chain by 2027 was followed by the release of the first national standards for humanoid technologies in February. This state-level support, combined with government subsidies, has fueled a surge in domestic innovation and production.
Chinese companies brought 28 humanoid models to market last year, nearly triple the number from American firms, according to Morgan Stanley. One leading Chinese firm, Unitree, reported shipping over 5,500 humanoids in 2025 and is targeting a $610 million IPO in Shanghai. This scale provides Chinese companies with significant bargaining power over their own upstream suppliers, creating a "sustained cost advantage," as noted in Unitree's IPO filing.
For US companies, the trade-off is clear: speed and cost versus supply chain security. Accessing China's mature manufacturing base allows for faster prototyping and lower production costs. Silicon Valley's Figure AI, for instance, has used Chinese suppliers for joints, sensors, and motors in its earlier models. However, this reliance has already shown its vulnerability. Tesla had to reduce its use of rare-earth magnets in Optimus after China tightened export restrictions last year.
Some Chinese suppliers are preparing to mitigate potential US tariffs by establishing manufacturing capacity in Southeast Asian countries like Thailand. Yet, the core dependency remains. A Chinese screw manufacturer, a critical component supplier, is working to meet Tesla's demanding specifications—higher durability and a 25 percent price undercut compared to European rivals. "Once we close the gap," a manager at the supplier said, "our cost structure will become an unbeatable advantage." This highlights the narrowing quality gap and the intense cost pressure facing non-Chinese component makers.
This article is for informational purposes only and does not constitute investment advice.
