[Robots Are Coming]③ Core Components Still Mostly Foreign... Robot Independence Far Away

Robot Industry Thrives Amid COVID-19... SoBuJang Ecosystem Remains 'Wasteland'
Core Parts Still Dependent on Imports... Reducers Account for 40% of Robot Cost
Even with Localization, 'Sandwiched' Between Japan and China... Commercialization Takes 5-10 Years

A reducer domestically produced by SBV Tech, a machinery and robot parts company located in Gimpo, Gyeonggi Province. SBV Tech has been mass-producing reducers since 2017, but the sales proportion still accounts for less than 20%.
[Photo by SBV Tech]

[Asia Economy Reporter Junhyung Lee] “The robot industry has entered a new golden age.”

This is the recent evaluation from both inside and outside the industry regarding the robot sector. The International Federation of Robotics (IFR) titled its ‘World Robotics Report 2021,’ released at the end of last month, as ‘Robot Sales Rise Again.’ Since the onset of COVID-19, the robot industry has embarked on a full-fledged growth trajectory, but there are criticisms that the domestic 소재·부품·장비 (SoBuJang, materials, parts, and equipment) ecosystem is close to a wasteland. Domestic SoBuJang companies are struggling not only with securing research and development (R&D) personnel but also with commercialization. They are also caught in a ‘sandwich situation’ between manufacturing powerhouses and China.

The Korea-Japan economic conflict that began in 2019 highlighted the importance of domesticizing SoBuJang. At that time, the domestic industry was thrown into chaos. When the Japanese government designated essential semiconductor and display process materials such as hydrogen fluoride (etching gas) and photoresist as export-controlled items, the supply chain of key domestic industries was shaken to its roots. In fact, Japan’s dependency on photoresist for extreme ultraviolet (EUV) lithography, an essential semiconductor material, reached 90%. As the vulnerability of the domestic SoBuJang ecosystem was exposed, not only the Korean government but also large corporations like Samsung Electronics actively pushed for SoBuJang localization.

Robot SoBuJang Takes a Backseat

The problem is that these efforts were focused only on existing core industries. Emerging industries such as robotics were pushed to the sidelines. Meanwhile, manufacturing powerhouses strengthened their market dominance, and Chinese companies rapidly increased their market share backed by strong support from the Chinese government. An industry insider said, “Since 2019, government-led support projects for SoBuJang localization have increased significantly, but many targeted the semiconductor and display sectors. While there was some interest and policy support for robot finished products, there was none at all in the SoBuJang field.”

This explains why domestic robots still rely on foreign-made core components. For example, native robot company B, located in Daejeon, depends entirely on imported reducers for collaborative robots. A reducer is a component that controls the motor’s rotational speed at the robot’s joint. It is a key part that assists robot movement and accounts for about 40% of the robot’s cost, making it a high-priced component.

On the other hand, SBV Tech, a parts company that has localized reducers, is struggling to find customers. Located in Gimpo, Gyeonggi Province, SBV Tech entered reducer development in 2005 and began mass-producing precision control reducers in 2017. Its prices are about 30% lower than those of Japan’s Harmonic Drive Systems (HDS), which holds 70% of the reducer market. However, the sales proportion of reducers still accounts for less than 20% of its total revenue.

Mid-sized robot company Yujin Robot launched the autonomous driving test robot 'AMS-DemoKit-100' earlier this year. It is equipped with a 3D LiDAR sensor developed in-house by Yujin Robot. The company began developing the 3D LiDAR sensor in 2014 and took its first step toward commercialization last year.
[Photo by Yujin Robot]

Domestic Companies Are ‘Sandwiched’

The situation is similar for sensors, which have emerged as new core components in the robot industry. Sensors are essential parts for autonomous service robots. Robots need data collected from various sensors such as cameras, 3D sensors, and LiDAR to recognize obstacles or reconstruct the surrounding environment. However, the domestic sensor ecosystem is poor. It is reported that most sensors installed in LG Electronics’ service robot ‘CLOi’ are also foreign-made.

There are companies that have localized sensors, but they have become ‘sandwiched.’ Currently, the premium sensor market is dominated by the United States, Japan, and Switzerland. China has captured the low-cost market through its ‘sensor rise.’ The CEO of company B explained, “Chinese sensors are more than 90% cheaper than Japanese sensors, making price comparison impossible. Sensors, being technology-intensive components, require a long time from development to commercialization, so it is quite risky for small and medium-sized enterprises to start development recklessly.”

LG Electronics' service robot 'LG CLOi GuideBot' deployed at COEX in Samseong-dong, Seoul. It is reported that most of the sensors installed in this robot are foreign-made.
[Photo by LG Electronics]

The reason companies are not actively developing core components is slow commercialization. Even if technology is developed over several years, component reliability can only be recognized if there is a track record of supplying to large corporations. However, the industry explains that large corporations do not even provide opportunities for proof of concept (PoC) without initial references. Even if PoC is conducted, it takes six months to a year, and the final supply decision is uncertain.

It is common for commercialization to take 5 to 10 years. Mid-sized robot company Yujin Robot started developing 3D LiDAR sensors in 2014 and took its first step toward commercialization last year. Another industry insider said, “Core components with high technological barriers require more rigorous reliability tests than other parts, and PoC alone takes at least one year. If there is a track record of supplying to large corporations, it is easier to open sales channels, but securing a sizable company as a customer from the start is not easy.”