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The chief executive of a prominent Chinese lidar sensor manufacturer stated that the United States cannot realistically develop a competitor capable of matching China in physical artificial intelligence. At a meeting during the World Economic Forum in Davos, he explained that a fundamental manufacturing gap exists between the two countries. Although both nations have substantial financial resources, computational power, and talented individuals dedicated to digital AI development, physical AI demands sophisticated manufacturing ecosystems that the U.S. has largely lost.
He emphasized that the U.S. no longer has an established manufacturing supply chain for physical AI. Moving supply chains isn’t just about relocating factories; it involves navigating thousands of interconnected companies beneath the top-tier suppliers. Even if the primary manufacturing facilities are relocated, these interconnected smaller entities remain fixed within their existing ecosystems.
He differentiated between digital and physical AI, noting that while digital AI handles reasoning and decision-making, physical AI involves tasks such as cleaning, cooking, and laundry—activities that AI cannot yet perform. Despite advances in digital intelligence, physical needs still require human intervention or specialized robotics.
Demographic challenges further underscore the urgency of physical AI. China faces an aging population, while the U.S. struggles with reindustrialization amid labor shortages. These issues make advanced robotics crucial for future growth.
He predicted that the leading company in Silicon Valley might fall behind the top Chinese competitor, with Tesla as a possible exception because of its mixed approach that incorporates both Chinese and American strategies. He believes the U.S. will eventually recognize China’s manufacturing strength and move away from decoupling policies.
Additionally, he announced the launch of a new humanoid robot company called Sharpa, focused on creating systems compatible across borders from the start while leveraging China’s supply chain advantages. Unlike robots designed for entertainment or dancing, Sharpa focuses on dexterity skills that account for about 90% of productivity, such as precise assembly and object manipulation. Inspired by Himalayan Sherpas—who undertake challenging and risky tasks to enable others’ progress—the company aims to develop robots that effectively return time to users.
Having returned from Silicon Valley over a decade ago, he used his experience with the lidar company He explained how they reduced lidar production costs from $50,000 to $200 per unit—a staggering 99.7% drop—capturing over half of the global market. Yet, this success drew backlash. The company was added to a U.S. Department of Defense blacklist following lobbying from local competitors, which caused its stock to plummet by over 80% below net asset value. Despite the lack of concrete evidence, U.S. authorities maintained the restriction, prompting the company to shift its focus toward China and Europe.
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