Speaker 1: Humanoid robots were once confined to the realms of science
Speaker 1: fiction think Terminator and Westworld, but recent tech breakthroughs are
Speaker 1: bringing this fantasy closer to reality. BMW, Amazon and Boston
Speaker 1: Dynamics are among big companies developing this tech, and Elon
Speaker 1: Musk is deploying Optimis, a general purpose humanoid robot which
Speaker 1: could be commercially available as early as twenty twenty six.
Speaker 2: Investors are already jumping on the bandwagon. According to Bloomberg Intelligence,
Speaker 2: a basket of humanoid related stocks in Asia is up
Speaker 2: almost sixty percent year to date, making it one of
Speaker 2: the best performing themes this year. You're listening to Asia
Speaker 2: Centric from Bloomberg Intelligence.
Speaker 1: I'm John Lee in Hong Kong, and I'm Kadidmitrieva also
Speaker 1: in Hong Kong.
Speaker 2: How close are we to seeing humanoid robots being commercially
Speaker 2: available on a wide scale? What are the economic implications
Speaker 2: and what role Asia, particularly China playing this.
Speaker 3: Name industry Today?
Speaker 1: We have Sean Darby, equity strategist at Mizooho Securities to
Speaker 1: discuss and it's a second time on Asia Centric. He
Speaker 1: joins us here in Hong Kong. Welcome Sean, Thank you
Speaker 1: very much really appreciate you being here to walk us
Speaker 1: through this brave new world of humanoid robotics. Maybe we
Speaker 1: could just start by explaining what is a humanoid robot?
Speaker 1: How does it differ from kind of traditional robotics.
Speaker 4: That's a very good question, I guess the traditional robots
Speaker 4: really evolved from the fact that they were labor cost
Speaker 4: saving productive machines, and principally they were deployed in the
Speaker 4: auto industry, So these were very easily to replace humans
Speaker 4: because the production line is one very long, continuous process,
Speaker 4: So most of the industrial robot makers essentially utilize these
Speaker 4: fixed robots in various tasks along the production line, and
Speaker 4: then the humanoid sort of evolved from that in two
Speaker 4: different directions. The first one was that the logistics and
Speaker 4: warehouse industry took those fixed robots and started to allow
Speaker 4: them to have some maneuverability in placing items on shelves
Speaker 4: and taking items from shelves and putting it into another location.
Speaker 4: It was fairly rudimentary, but it started the whole process
Speaker 4: of allowing flexibility to wear a robot could be situated.
Speaker 4: The other direction from where the humanoids developed was actually
Speaker 4: from the auto industry, so the auto industry had learned
Speaker 4: how well the production processes were using fixed robotic systems,
Speaker 4: and they were able to take a lot of different
Speaker 4: items from a car, like your sensors, your battery, and
Speaker 4: also your rotators. So the maneuverability of the auto when
Speaker 4: we would call that reduction gear and actuators. Essentially about
Speaker 4: three quarters of the humanoid came actually from the auto
Speaker 4: industry in the last six months. The threshold for bringing
Speaker 4: humanoids into the mainstream occurred simply from the ability to
Speaker 4: access very cheap AI. So the auto manufacturers and the
Speaker 4: traditional robot makers first of all, never thought that they
Speaker 4: could purchase or acquire processing capability and pattern recognition from
Speaker 4: device from any sort of traditional software, and essentially AI
Speaker 4: came into that sort of mainstream and allowed them to
Speaker 4: absorb that at very very low cost. So you had
Speaker 4: two things occurring. One is that the cost of purchasing
Speaker 4: AI dropped significantly. It's almost a free, open source architecture.
Speaker 4: And secondly, the sheer processing and pattern recognition, which is
Speaker 4: really what allows the humanoid to do various tasks different places,
Speaker 4: has been able to be quickly adapted into the physical
Speaker 4: structure of the humanoid. So It wasn't because of the
Speaker 4: cost of labor. It was simply because cost dropped for
Speaker 4: building a humanoid. And as I said, it was still
Speaker 4: probably is the best example of AI being absorbed into
Speaker 4: a manufacturing process and being successfully deployed as well. So
Speaker 4: I think those two things came from different directions. The
Speaker 4: cost of AI was very low and the sheer processing
Speaker 4: power that manufacturers never thought they could attain and saw.
Speaker 2: Why was there such an excitement Vishy.
Speaker 1: Though, Yeah, because it's quite recently, like you've just said,
Speaker 1: six months.
Speaker 4: Well, I think there had been in the background quite
Speaker 4: a number of robot companies, some of them which came in,
Speaker 4: as I say, from different directions, and all of them
Speaker 4: were able to leap on to this open source architecture
Speaker 4: and recognize just how quickly they could deploy a humanoid.
Speaker 4: As I said, most of the other available technology has
Speaker 4: been around for some time, but it was really that
Speaker 4: ability to combine AI with the dexterity of the humanoid skeleton.
Speaker 4: So most of those that you had seen in the
Speaker 4: last year or so were essentially prototypes that couldn't really
Speaker 4: be mass produced. But now that you have just all
Speaker 4: the various elements coming together, and at a pricing point
Speaker 4: which allows for mass adoption. I think the way I
Speaker 4: would say to you is that you look at what's
Speaker 4: happened in the ev industry where car prices have dropped.
Speaker 4: You get to those tipping points where suddenly there's a
Speaker 4: huge wave of demand that can actually mean that you
Speaker 4: can make these goods at a very very profitable level.
Speaker 4: And I think put it this way, there was no
Speaker 4: monopoly on creating humanoids, and because auto companies and various
Speaker 4: groups within the industry had already had some sort of
Speaker 4: manufacturing robots, suddenly you've seen the sort of plethora of
Speaker 4: various companies coming out with humanoids.
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Speaker 2: and share how good is the technology? Now see some
Speaker 2: videos of a humanoid robot that picks up an apple
Speaker 2: and gives it a customer. But when you're going to
Speaker 2: see humanoid robot actually do real meaningful things like maybe
Speaker 2: cook for you, clean the house.
Speaker 4: So I think the way I would look at it
Speaker 4: at the moment is that to get a humanoid to
Speaker 4: do one specific task like, for example, picking apples from
Speaker 4: a table and putting it into a bowl, that has
Speaker 4: already reached the level of which those humanoids could be deployed.
Speaker 4: Where we are in transition is that you want a
Speaker 4: humanoid to do a variety of tasks and recognize when
Speaker 4: those tasks are appearing. It's sort of what's called end
Speaker 4: to end AI. So you do one task like picking
Speaker 4: up the apple and putting it in the bowl, then
Speaker 4: you pick up the orange and peel it, and you
Speaker 4: go through a series of various different tasks. Now that
Speaker 4: at the moment is where I would say the limiting
Speaker 4: fact is in deploying very commercial humanoids, because quite clearly
Speaker 4: you don't want the humanoid just to move around this
Speaker 4: room and move the microphone and then just go back
Speaker 4: into it one position. So the issue at the moment
Speaker 4: is really to adapt the AI so that it can
Speaker 4: do multitasks, multifunction and kind.
Speaker 3: Of think for themselves in a way.
Speaker 4: Yes, recognize that you've put some apples on the table
Speaker 4: and they go into one area that you need the
Speaker 4: oranges to be put in the fridge.
Speaker 3: Done with the dog in a fridge, that's correct.
Speaker 4: So the multitasking is where the commercial benefits from the
Speaker 4: humanoid come through. And if you look further down in
Speaker 4: terms of deployment, there are enormous productivity benefits from humanoid
Speaker 4: being deployed. Go back to your example of picking a fruit.
Speaker 4: In the agricultural industry, you have a lot of opportunities
Speaker 4: for picking grapes, pricking vegetables that are tasks that are
Speaker 4: actually quite repetitive and very onerous. Similarly, in the construction
Speaker 4: industry you have a lot of repetitive tasks and then
Speaker 4: people have a lot of downtime as well. So if
Speaker 4: you look at sectors where traditionally it's been very hard
Speaker 4: to make productivity gains would include in the medical industry
Speaker 4: as well, moving patients. The humanoids would be very very
Speaker 4: adaptable and very easily to be brought into those industries
Speaker 4: and function very very critically in terms of being able
Speaker 4: to produce the apples or move the patient or mix
Speaker 4: the cement. So we're at a point now where they
Speaker 4: demand for those type of humanoids is immense in the system,
Speaker 4: and that this maneuverability with the human skeleton or you
Speaker 4: have dexterity pattern recognition and maneuverability in terms of the
Speaker 4: location where the humanoid can be put.
Speaker 1: Is that because we talked about a couple use cases there, right,
Speaker 1: you know, so we talked about warehousing and sort of
Speaker 1: the back end manufacturing as well. There's sort of the
Speaker 1: consumer facing robot humanoid that could be in place. There's
Speaker 1: also the military capabilities, and then there's also I think
Speaker 1: the healthcare industry, right, so you mentioned transporting people. It
Speaker 1: could also be for you know, the elderly, like taking
Speaker 1: care of people in their home, especially with the cost
Speaker 1: of care. Right now, which of those do you think
Speaker 1: will be the biggest areas for application?
Speaker 4: So I would sort of put the military uses and
Speaker 4: industrial uses quite close together, because there are a lot
Speaker 4: of areas of industry and the military which are recognized
Speaker 4: as being very dangerous for humans. For example, in the
Speaker 4: mining industry, going into areas which have perhaps been blasted
Speaker 4: or where there's a need for a visual inspection. The
Speaker 4: human always would have that ability to maneuver and to enter.
Speaker 4: You could also look at areas, for example, where you
Speaker 4: have had radioactive leaks or gas leaks, where again you
Speaker 4: need to implement emergency services very quickly. I would almost
Speaker 4: say the military uses come to some extent or evolved
Speaker 4: actually from these other areas, because it's actually a more
Speaker 4: natural progression again rescuing people from buildings that are maybe
Speaker 4: in a dangerous position. I guess what I would say
Speaker 4: is that the limiting factors are really going to come
Speaker 4: down to very usual problems which are being presented with
Speaker 4: themselves as battery life, and again the capability or maintenance
Speaker 4: of the robots themselves. How long can they do these
Speaker 4: tasks without necessarily needing downtime. It'd be nice to have
Speaker 4: someone in the field doing for twenty four hours, seven
Speaker 4: days a week picking fruit, but the reality is those
Speaker 4: robots themselves will need a certain amount of maintenance. So
Speaker 4: to answer your question is that I think you go
Speaker 4: through various evolutions, and that again the cost progression drops
Speaker 4: consistently as you go further and further down the various evolutions.
Speaker 2: You talked about the cost reduction, how much is it
Speaker 2: right now to buy a humanoid robot?
Speaker 4: Well, let's let's make two comparisons or three comparisons. Really,
Speaker 4: if you looked at an industrial robot that was being
Speaker 4: advertised maybe ten years ago, so your traditional one that
Speaker 4: helps to assemble cars, that price of a industrial robot
Speaker 4: has dropped by more than sort of sixty five seventy
Speaker 4: percent for some of them. So again, there's been such
Speaker 4: a large production of these items that the pricing points
Speaker 4: have come down. Looking at the amount of competition for humanoids,
Speaker 4: I would imagine for very traditional roles such as just
Speaker 4: moving stuff around a room and so forth, looking at
Speaker 4: some of the quotes out there, you could see again
Speaker 4: price deflation coming through by twenty thirty percent. And the
Speaker 4: reason I say that is because the numbers of units
Speaker 4: being produced this year are around about one thousand for
Speaker 4: the I would say for the top ten Chinese makers.
Speaker 4: But you know, looking out to twenty twenty six, as
Speaker 4: you start to involve the production processes, I mean we
Speaker 4: could be seeing price drops that are much much deeper
Speaker 4: than that. Again, I come back to the point that
Speaker 4: in terms of the costing twelve to eighty months ago,
Speaker 4: they never thought they could get that AI is as
Speaker 4: cheap and as abundant when they thought about what the
Speaker 4: price point was. One other thing on pricing is that
Speaker 4: the advantage you gain for some of the assemblers is
Speaker 4: it's coming from an existing production line for the auto companies.
Speaker 4: So we've spent some time looking at where the price
Speaker 4: pressures are going to be less in terms of building
Speaker 4: a humanoid, and that's in the road tree and the actuators.
Speaker 4: So when I extend my hand, it doesn't go right
Speaker 4: through that window. There's an ability for me to control
Speaker 4: that movement. Now, that segment of a robot was a
Speaker 4: very particular niche of engineering, and again just four or
Speaker 4: five players in that area, so they can keep the
Speaker 4: pricing quite well controlled. So I think to answer your
Speaker 4: question is that the prices look relatively static at the moment.
Speaker 4: Units like Optimus are being sort of highlighted at around
Speaker 4: twenty thousand dollars. But I would say to you, look
Speaker 4: at what's happened to the evs B BYD. They're almost
Speaker 4: halving now, and I would say that that's probably where
Speaker 4: we go in two to three years time with some
Speaker 4: of the humanoids, that they will appear to have been
Speaker 4: halved from the price levels being offered at the moment, so.
Speaker 1: Sort of somewhere between the cost of like a fridge
Speaker 1: and a car right now.
Speaker 4: Yeah, I would say almost getting to the price of
Speaker 4: an electric vehicle. I think your opening remarks were very precient,
Speaker 4: which is nobody could imagine that, first of all, you
Speaker 4: could produce humanoid but at the cost levels that could
Speaker 4: be adopted so quickly. And again I point out that ironically,
Speaker 4: the auto industry was in the lead of this, but
Speaker 4: other players have come in because they've had various aspects
Speaker 4: that they themselves are sort of masters of. Yeah, I
Speaker 4: think the auto industry did the humanoids a great favor
Speaker 4: by being able to produce a lot of the items
Speaker 4: and have a lot of the products like the batteries,
Speaker 4: the sensors all in place, so it didn't take as
Speaker 4: long to bring them humanoids into the mainstream.
Speaker 2: So Sean, which countries dominate this industry, is this going
Speaker 2: to be another example of the US and China battling
Speaker 2: it out?
Speaker 4: So it's a good question. I think at the moment
Speaker 4: to make like for like comparisons is a little bit
Speaker 4: difficult because many of the US players in this industry
Speaker 4: are either privately owned or they themselves are part of
Speaker 4: a technology company. And I would say, Navidia's there. You
Speaker 4: mentioned Amazon, which you could, having looked at those companies
Speaker 4: past track records, deploy a lot of capital very quickly
Speaker 4: into those areas to bring those humanoids in. Where I
Speaker 4: sense that the momentum is with is probably with China
Speaker 4: at the moment. There are two reasons for that. One
Speaker 4: is that the output of industrial robots, which is your
Speaker 4: cash cow, is growing absolutely astonishing. I think the latest
Speaker 4: numbers for output of industrial robots in China, I think
Speaker 4: for May or for April, was something like fifty percent
Speaker 4: year on year. These are extraordinary numbers, so you can
Speaker 4: imagine those companies are extremely cash rich now and again
Speaker 4: have squeezed out other players. So the first thing is
Speaker 4: that they've got cash cows. And the second is that
Speaker 4: China itself perhaps felt that it would never be able
Speaker 4: to access the AI as cheaply as deep Seek and
Speaker 4: so forth. So again there's been a bit of a
Speaker 4: huge shift in terms of their ability now to absorb
Speaker 4: that and to adapt it as well. So I think
Speaker 4: the way to answer the question is that the US
Speaker 4: has a big play in this from a lot of
Speaker 4: the well known technology franchises. China's probably got the momentum
Speaker 4: behind it, and also the sheer number of different companies
Speaker 4: that have already entered that space. What I would say
Speaker 4: to you is that it's going to look like the
Speaker 4: EV industry in about eighteen to twenty four months.
Speaker 2: Because China has over one hundred EV companies, so you
Speaker 2: think there's going to be over competition in the humanoid space.
Speaker 4: So when we did our we went through some of
Speaker 4: the listed and private companies in China which have some
Speaker 4: form of a humanoid business. We've got to about a
Speaker 4: list of about twenty to twenty five already, and those
Speaker 4: companies now are coming to the market to raise money
Speaker 4: for the sort of you know, evolution of the production process.
Speaker 4: So on that basis, I guess one thing to say
Speaker 4: about China is that this has been also part of
Speaker 4: the made in China theme Made in China twenty twenty five.
Speaker 4: What we're seeing is the results of that investment being
Speaker 4: put in place nearly ten years ago, and those companies
Speaker 4: that themselves having worked through and grown into businesses which
Speaker 4: again was not thought about some eight ten years ago.
Speaker 1: I'm really curious about the economic implications you know, we
Speaker 1: talked about commercial applicability, but you know, this is part
Speaker 1: of the automation trend and automation of the labor force,
Speaker 1: and especially for the lower skilled kind of lower paid
Speaker 1: work or what we call what economists call lower scaled work,
Speaker 1: which has to be lower paid. You know, if robotics
Speaker 1: are able to take away those jobs or sort of
Speaker 1: that skills gap.
Speaker 3: Then that enters the labor force.
Speaker 1: So there are range of predictions, but essentially we should
Speaker 1: expect the unemployment rate to tick up somewhat unless there's
Speaker 1: like retraining program or something. But how do you think
Speaker 1: of that the economic implications, the libermarket implications.
Speaker 4: So that's a very good question. I look at it
Speaker 4: in two ways. As a service user, so you could
Speaker 4: argue with the robotaxis that you lose the driver, but
Speaker 4: the cost experience is much much lower from moving.
Speaker 2: A to B.
Speaker 4: I would say for the industries that I've mentioned earlier,
Speaker 4: the productivity benefits are huge. So for the corporates, they
Speaker 4: go through a dropping the cost curve that is almost
Speaker 4: a demand side shock that they can find themselves making
Speaker 4: a much larger share of profits than they would have
Speaker 4: done from the employee side. I think there's two or
Speaker 4: three things that I would say. One is that many
Speaker 4: of those jobs are either dangerous or have physical demands
Speaker 4: which are not necessarily ones that a human being could
Speaker 4: repeat through their lifetime. So picking grapes going through into
Speaker 4: areas like minds, so it removes some job specifications which
Speaker 4: shouldn't really be used by humans at all. In that spirit.
Speaker 4: On the other side, one area that I think there
Speaker 4: has been resistance to has been in the medical industry
Speaker 4: because the ability for the humanoids not to be able
Speaker 4: to precisely do movements almost as to the tolerance levels
Speaker 4: you would see in building a car, means that surgeons
Speaker 4: and doctors would find themselves not able to even anywhere
Speaker 4: close to being able to replicate that themselves. Now as
Speaker 4: a service user. That means that medical costs drop very sharply,
Speaker 4: which is a huge overhang for the global economy in
Speaker 4: the developed world, but certainly for wages of doctors and surgeons,
Speaker 4: it means a very very different transition. So again, I
Speaker 4: think the way I would say to you is that
Speaker 4: most industries have gone through similar evolutions. If you look
Speaker 4: at a Boeing seven four seven, it used to have
Speaker 4: about six or so people in the cockpit. We're down
Speaker 4: to about two or three. Now planes can almost take
Speaker 4: off for themselves, apart from landing and taking off. So
Speaker 4: I think what's going to happen with the humanoids is
Speaker 4: that it's going to mean that a lot of those
Speaker 4: low wage, low skilled jobs are taken out from the economy.
Speaker 4: I mean, when I was young, I packed shelves in
Speaker 4: a store and it was a way of me garnering
Speaker 4: some wages. When my master I was at university, those
Speaker 4: jobs will essentially go. So maybe I'll have to work
Speaker 4: in a student union bar or something like that, or
Speaker 4: you know, do a variety of other tasks. I think
Speaker 4: that's just going to be the nature of the evolution, really,
Speaker 4: but I would see it as being very very deflationary.
Speaker 4: All other things being equal, those areas where there's been
Speaker 4: very poor productivity would really really see, you know, extraordinary drops. Again,
Speaker 4: you could have figured on a lot of people who
Speaker 4: would never go and have surgery. Costs would be prohibitive
Speaker 4: being able.
Speaker 3: To access that as long as the company.
Speaker 4: Is Yeah, I mean, I think the way I would
Speaker 4: look at it is that this is the reason we
Speaker 4: have very cheap cars is because of the industrial robots.
Speaker 4: The reason we will have very cheap service prices is
Speaker 4: because of the humanoids.
Speaker 2: Sure, you know, just getting back to your point of view,
Speaker 2: potentially working at a bar, I think you're safe, robot.
Speaker 4: I was a pretty bad bartender, so't I'm not going
Speaker 4: back into that industry. But I feel that the good
Speaker 4: thing about these areas is that it shows that there
Speaker 4: are applications for AI and that the open source architecture
Speaker 4: that's brought this into the mainstream is going to have
Speaker 4: a lot of benefits for society. I know there'll be
Speaker 4: some military uses, but it is really going to be
Speaker 4: a huge driver in lowering costs, and the EV industry
Speaker 4: has been a good example of that, where a large
Speaker 4: number of players force costs so low that we go
Speaker 4: through an electrification process, which in turn does a lot
Speaker 4: of good for the planet. So there's a bigger, wider
Speaker 4: holistic theme about this as well.
Speaker 1: Perhaps that's a good note to end it on on
Speaker 1: a very optimistic note.
Speaker 3: Thank you so much for joining us today. Thank you
Speaker 3: very much.
Speaker 1: You've been listening to Asia Centric from Bloomberg Intelligence. I'm
Speaker 1: Katudmitreva on Hong Kong, and.
Speaker 2: I'm joenerally also in Hong Kong. You can listen to
Speaker 2: all our episodes on Apple Podcasts, Spotify, or wherever you
Speaker 2: listen and this podcast was produced and edited by Clara Chan.
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