Morgan Stanley raises forecast for humanoid robot exports to China as adoption begins

Morgan Stanley has raised its outlook on China’s robotics market, saying the industry’s shift from demonstration to commercial use has been seen sooner than expected.

The Wall Street bank upgraded its forecast for humanoid robot shipments to China for the second time this year on Tuesday, expecting 50,000 units to be shipped this year, nearly double the previous estimate of 28,000. The bank had doubled its original January forecast of 14,000 units.

Morgan Stanley estimated that China’s humanoid robot market will reach $2 billion this year and grow to $15 billion by 2030. Annual shipments are expected to reach 446,000 units during that period. The forecast includes only external sales, excluding those produced for prototypes, pre-order testing, or internal use.

“Commercial validation, policy support, and supply-chain feedback point to the rapid adoption of humanoids in China,” said Sheng Zhong, an equity analyst at Morgan Stanley, in a note on Tuesday.

China has accelerated its push to dominate the industry, with a growing list of domestic manufacturers racing to expand the production and deployment of robots in real-world environments such as factories, shops and restaurants.

Beijing has also made the development of “integrated AI” – artificial intelligence incorporated into physical systems such as robots – a priority over the next five years, directing local governments to fund startups for land and office space while ordering banks to extend favorable lending terms.

Last year, about 13,000 humanoids were shipped worldwide, according to research firm Omdia. Chinese companies dominated the top five positions for shipments, while American rival Figure AI ranked seventh, and Tesla was ninth. Tesla CEO Elon Musk said earlier this year that the company’s Optimus humanoid robot will not start selling to the public until the end of 2027.

Humanoid robots could be the “next big frontier” for investors looking at China’s rapid technological development, said Joe Ngai, senior partner and chairman of McKinsey Greater China.

“If you go outside [in China]you see all these startups and advanced companies, all these robots dancing — but the use of robots on the industrial side is often an under-the-radar issue,” Ngai told CNBC’s Elaine Yu on Wednesday on the sidelines of the World Economic Forum’s Annual Meeting in the city of Dalian.

“If you go to any factory in China right now, there is more automation and robots used than anywhere else in the world,” Ngai added.

Morgan Stanley’s supply chain field research also pointed to faster trade, citing factory and logistics settings, as well as more outsourcing of vacant stores and interactive commerce services.

The bank named Shanghai-listed Leaderdrive as the biggest beneficiary of the humanoid’s rise, raising its 12-month price target to 464 yuan ($68) from 269 yuan. The Suzhou-headquartered company provides precision robotic components to humanoid home builders such as Ubtech and Galbot.

Leaderdrive could capture a global market share of 40% this year and 25% in the long term, Zhong said, supported by strong shipments and its strong customer exposure.

Chinese robotics companies are also increasingly looking to expand overseas.

Seer Intelligent, a Shanghai-based robotics company that started trading in Hong Kong on Wednesday, has expanded beyond China since 2021, with overseas revenue from more than 65 countries contributing 18% of its total sales last year, according to Jonathan Fan, the company’s chief operating officer.

But political uncertainty and looming trade tensions remain the most important headwinds, Fan told CNBC’s Emily Chan on Monday. He said the company is focused on decentralization to reduce reliance on a single market and to comply with local regulations in each operating market.

Policymakers in Washington have been alarmed by China’s progress in artificial intelligence and the dangers of growing reliance on Chinese technology in recent years.

“If Washington treats this competition as a race to score new points, it could lead to innovation but lag behind in influencing where and how AI is used around the world,” Suzanne Nossel, Lester Crown director of US foreign policy and international affairs at the Chicago Council on World Affairs, said in an opinion piece published on Foreign Policy this week.

“The US AI mass marketing campaign will not soon begin to catch up with China,” he said.

— CNBC’s Evelyn Cheng contributed to this report.