Evan Lee Salim
These recent measures are not isolated incidents but represent an escalation of a broader U.S. strategy to safeguard its technological infrastructure and supply chains from perceived foreign threats, particularly from China. The foundation of this strategy can be traced back to the Federal Communications Commission’s (FCC) "Covered List," established in 2021. Initially, this list targeted telecommunications and surveillance equipment from specific companies, including Chinese tech giants Huawei and ZTE, as well as video surveillance provider Hikvision, citing concerns over national security risks and potential espionage. Over time, the scope of this list has progressively expanded, first to include foreign-made drones, and most recently, in July and August, to encompass advanced robotic devices. This methodical expansion highlights a deliberate and evolving policy to restrict access for foreign technologies across a widening array of strategically important sectors.
The timing of these restrictions is particularly noteworthy, coinciding with Chinese manufacturers having established dominant positions in both the drone and humanoid robot markets. These companies frequently offer products at price points that U.S. and European competitors struggle to match, creating a significant competitive challenge. This cost advantage, coupled with massive production scale, has allowed Chinese firms to capture substantial global market share, raising alarms in Washington about the long-term implications for U.S. technological leadership and economic security. The overarching question now confronting the global robotics industry is profound: if Chinese drones and humanoid robots are increasingly barred from the lucrative U.S. market, what will be the new battlegrounds for competition, and how will the global landscape of robotics manufacturing and deployment be reshaped?
While these new restrictions are intended to shield segments of the American market and foster domestic industry growth, they do not directly address the fundamental advantages held by China in terms of manufacturing scale and cost efficiency on a global stage. Industry analysts and executives, many of whom shared their insights with TechCrunch, anticipate that the outcome will be less of a clean, decisive U.S.-China split, and more of a fragmented global marketplace. In this emerging scenario, Chinese companies are expected to intensify their expansion into other international markets, particularly those keen on affordable automation solutions. Concurrently, U.S. and allied manufacturers are poised to concentrate their competitive efforts in markets where stringent security requirements and advanced technological capabilities are prioritized over sheer cost.
The Genesis of Restriction: A Timeline of U.S. Policy Shifts
The recent actions by the U.S. government are the culmination of several years of evolving policy aimed at securing critical technology sectors. The FCC’s "Covered List" has served as a primary tool in this endeavor, providing a framework for identifying and restricting equipment deemed a national security risk.
- March 2021: The Secure Equipment Act is passed, directing the FCC to establish and maintain a list of communications equipment and services that pose an unacceptable risk to national security. This act forms the legal basis for the "Covered List."
- November 2021: The FCC designates Huawei, ZTE, Hytera, Hikvision, and Dahua as posing national security threats, effectively banning their equipment from U.S. telecommunications networks. This initial step primarily focused on traditional telecom and surveillance gear.
- Early 2023: The scope of concern expands to include foreign-made drones, particularly those from Chinese manufacturers like DJI, which dominate the consumer and commercial drone markets globally. Lawmakers and defense officials express concerns about data security and the potential for surveillance.
- July-August 2026 (current events): Washington tightens restrictions on foreign-made advanced robotic systems and imposes steep tariffs on imported drones and their components. These moves are explicitly tied to national security concerns, signifying a significant broadening of the targeted technology categories.
- September 2026: The drone tariffs officially take effect, immediately impacting import costs and market dynamics for unmanned aerial systems in the U.S.
- 2027: Additional component tariffs for drones are scheduled to be implemented, further solidifying the U.S. strategy to reduce reliance on foreign supply chains for critical drone technologies.
This chronology illustrates a consistent and accelerating trend of the U.S. government identifying and mitigating risks across an expanding technological spectrum, moving from foundational telecom infrastructure to cutting-edge robotics.
The Scale Gap: China’s Manufacturing Might in Robotics
The U.S. and Chinese robotics industries, while still interconnected in various ways, approach this intensifying competition with fundamentally different strengths. Unlike the semiconductor industry, which often hinges on a few critical, highly specialized technologies that can be controlled by a limited number of entities, robotics is a more multifaceted field. As Ankur Saxena, an investment director at TDK Ventures, points out, robotics does not depend on a single technology that one country can easily monopolize. Instead, it involves a complex interplay of hardware, software, AI, and manufacturing capabilities.
In the crucial segment of humanoid robot manufacturing, China currently holds an undeniable global lead. A recent report by Counterpoint Research revealed staggering figures: global humanoid robot shipments hit 22,000 units in the first half of this year alone. The vast majority of these units—an overwhelming 86%—originated from Chinese manufacturers. To put this into perspective, the world’s five largest humanoid robot makers by shipment volume in the first half of 2026—AgiBot, Unitree, Galbot, UBTECH, and Leju Robotics—are all Chinese companies. In stark contrast, U.S. companies are operating at a significantly smaller scale, struggling to match the sheer volume and cost efficiency of their Chinese counterparts, according to Soumen Mandal, a principal analyst at Counterpoint Research.
This manufacturing advantage is not merely about production volume; it creates a compounding effect that further entrenches China’s dominance. Lower prices enable Chinese manufacturers to deploy more robots into various real-world applications. This widespread deployment, in turn, generates vast amounts of invaluable operational data, which is crucial for refining and improving their technology through iterative development cycles. Higher production volumes also lead to greater economies of scale, driving down per-unit costs even further, creating a powerful virtuous cycle of improvement and cost reduction, as explained by Saxena.
Chinese humanoid robot makers are also actively pursuing strategies to reduce costs by enhancing vertical integration. Mandal notes that many companies are bringing more of the technology stack in-house, designing and producing a greater proportion of components internally. This approach reduces reliance on external suppliers and provides greater control over the cost structure. Furthermore, Chinese manufacturers are leveraging the country’s extensive and mature existing manufacturing base. For instance, companies like Unitree are developing more components internally, while established automakers such as XPeng are entering the robotics space, drawing upon their substantial experience in chip design and large-scale vehicle manufacturing to gain a competitive edge in robotics.
Saxena succinctly summarizes the distinct advantages of the two economic superpowers: "The United States leads in frontier AI, software and semiconductor innovation. China leads in manufacturing scale, supply-chain depth and cost." This manufacturing edge has allowed Chinese companies to aggressively cut humanoid robot prices at a pace that most U.S. competitors simply cannot match. The implication, as Saxena starkly puts it, is that "You cannot sanction your way around a cost curve. You can only out-build it, and America has yet to begin making the decade-long investment that will require." This underscores the long-term strategic challenge facing the U.S. in competing with China’s established manufacturing prowess.
Where Does China Go Next? Global Diversification
The U.S. market restrictions, while significant, are unlikely to cripple China’s robotics ambitions. Even if Chinese robotics companies face limited or no access to the American market, they still possess an immense domestic market to serve and substantial opportunities for expansion elsewhere. Ankur Saxena suggests that Chinese firms will increasingly look beyond U.S. borders, particularly to regions where the demand for affordable automation solutions is growing rapidly.
Soumen Mandal indicates that Chinese robotics companies are already actively targeting price-sensitive markets experiencing severe labor shortages. These include regions across Europe, Southeast Asia, Latin America, and the Middle East, all of which represent fertile ground for the deployment of cost-effective robotic solutions. Mandal anticipates that humanoid robot makers will likely follow a strategic blueprint similar to that employed by Chinese electric-vehicle companies: first, build substantial scale within their large domestic market, then progressively expand into various overseas markets, eventually establishing local production facilities to serve those regions more efficiently. Countries grappling with demographic decline and persistent labor shortages, particularly in industrial and manufacturing sectors where robots can efficiently perform repetitive tasks, are expected to become early and key markets for Chinese humanoids.
The drone market offers an illustrative preview of what this more fragmented robotics landscape might entail. The industry is already showing clear signs of splitting into two distinct ecosystems. One is a U.S.-led market, increasingly built around American-made, NDAA-compliant (National Defense Authorization Act) systems, emphasizing security and reliability. The other is a China-led market, which remains focused on high-volume, low-cost production for broader global appeal. This observation comes from Bentzion Levinson, founder and CEO of Virginia-based drone manufacturer Heven AeroTech.
Levinson believes that Western manufacturers are unlikely to effectively compete with Chinese companies in the low-end consumer drone market, where cost remains the paramount factor for consumers. Instead, he projects that U.S. and allied companies will increasingly specialize and compete in more sophisticated segments, such as long-range autonomous systems designed for defense applications and critical infrastructure monitoring, where stringent security requirements and advanced capabilities outweigh price considerations. Levinson further identifies the next major competitive frontier as shifting beyond the drones themselves to the underlying technology that powers them and the sophisticated equipment they carry. He posits that "The next battleground is over who owns the next-gen energy and payload architecture," specifically highlighting battery constraints. As drones become more capable and complex, the limitations and advancements in power systems, particularly battery technology, are expected to become an increasingly vital point of competition and innovation.
Agility Robotics, a prominent U.S. developer of humanoid robots, publicly welcomed the FCC’s decision in July. The company expressed that the restrictions could proactively address security concerns related to foreign-made advanced robots before they become deeply integrated into the U.S. market, thereby preventing a situation similar to what has unfolded in the drone industry. Agility Robotics highlighted its Digit humanoid, which is designed and assembled in the U.S., as an example of a secure domestic product. Concurrently, the company also advocated for continued access to the essential tools and technologies necessary to advance robotics research and development within the United States, underscoring the delicate balance between security and innovation.
Towards a More Regional Robotics Market: Diversified Alliances
The response to China’s dominance and the U.S. restrictions is unlikely to result in a purely insular U.S. supply chain. As Ankur Saxena suggests, "The alternative to China isn’t a purely domestic U.S. supply chain; it’s a diversified allied one." This perspective points towards a future where various allied nations play crucial roles in building resilient and secure robotics supply chains.
This strategic diversification could unlock significant opportunities for other Asian nations with established strengths in manufacturing and technology. Japan, for instance, boasts decades of experience in industrial robotics and precision manufacturing, making it a natural partner. South Korea brings formidable capabilities in electronics, batteries, and advanced automotive manufacturing, areas highly relevant to modern robotics. Taiwan, a global leader in semiconductor fabrication, is indispensable for the microprocessors and components that power advanced robots. However, Saxena cautions that none of these nations can individually or collectively simply "replace" China in the global robotics ecosystem, primarily due to the deep and pervasive integration of Chinese components across the entire global industry.
Soumen Mandal further elaborates on the potential role of Asian manufacturers, suggesting they could emerge as a crucial "middle ground" in the global market—offering products that are more advanced or secure than lower-cost Chinese robots, yet more economically accessible than premium U.S. offerings. Several prominent Asian automakers are already making significant investments in robotics, leveraging their existing expertise. South Korea’s Hyundai, which notably owns Boston Dynamics, and Japan’s Toyota are among those drawing on their deep experience in vehicle design, manufacturing processes, and autonomous systems as they increasingly venture into humanoid robotics. Their existing industrial infrastructure and technological know-how provide a strong foundation for such expansion.
Yang Fang of Beagle Technology, a California-based agtech startup specializing in using AI and robotics software to transform conventional farm equipment into autonomous machines, provides another key insight. He told TechCrunch that the robotics market is likely to become more regionalized, with companies designing machines specifically tailored to the unique labor needs, working conditions, and customer preferences of their home markets. For example, Chinese robotics companies may concentrate on developing products best suited for China and nearby Asian markets, while U.S. companies will more likely focus on building solutions for industries across North America, addressing its specific demands and regulatory environments.
The cumulative effect of these restrictions and strategic realignments is unlikely to result in two neatly separated U.S.- and China-led robotics industries. Instead, these policies are expected to accelerate the emergence of distinct regional markets, each with its own competitive dynamics and specialized focus. Chinese companies are set to continue competing aggressively on cost and scale across vast swathes of the world. Concurrently, U.S. and allied manufacturers will likely gain ground in sectors and markets where security requirements are paramount and advanced technological leadership is crucial. Meanwhile, manufacturers in Japan, Taiwan, and South Korea will endeavor to carve out a significant space for themselves, strategically positioning their offerings between the cost-driven Chinese market and the security-focused U.S./allied market.
The challenge for the United States, as articulated by Ankur Saxena, remains formidable: to out-build China’s cost curve rather than merely sanctioning it. This necessitates sustained, decade-long investments in research and development, advanced manufacturing capabilities, and talent development within the U.S. The intricate entanglement of global supply chains also means that a complete decoupling, particularly in a sector as complex as robotics, is an arduous and multifaceted endeavor. However, these policy shifts could also foster significant innovation in niche areas for U.S. and allied firms, potentially leading to new technological standards and diversified partnerships that will define the future of global robotics.
