"100,000 Won in Korea, 3,000 Won in China"... K-Robot Components Miss the 'Golden Time' [Robot Component War] ①

Japan Leads in Precision, China in Price
Korean Robot Components Squeezed in the Middle
Demand and Supply Exist, but the Market Remains Small
"Economies of Scale... The Market Will Grow"

Editor's NoteAs artificial intelligence (AI) expands into the real world, the center of manufacturing sites is rapidly shifting from humans to robots. However, South Korea, which has remained focused on traditional manufacturing, has yet to fully establish a supply chain for robot components to support this transition to automation. In a structure where Japan leads in precision and China in price, the status of South Korea as a 'manufacturing powerhouse' is being put to the test. The Asia Business Daily examines the current state of the domestic robot component industry in the era of physical AI and seeks strategies for survival.

"If a key drive component made in Korea costs about 100,000 won, the Chinese equivalent is around 3,000 won."

A domestic component supplier, Company A, which provides parts for industrial and humanoid robots, stated, "We simply cannot match China when it comes to meeting price requirements for supply."

Manufacturers already using industrial robots have long turned to Chinese and Japanese components for key drive parts, citing their lower prices and better performance. Bae Chaeyoon, Head of Advanced Technology Research at LS Electric, said, "Most of the robots used in manufacturing sites are Japanese," adding, "While our company does not use Chinese products yet, Chinese robots are becoming so prominent that it is only a matter of time before we bring them in."

Why Has a Manufacturing Powerhouse Fallen Behind the Times?

Korea's manufacturing industry has maintained its competitiveness in traditional manufacturing line design and high-precision equipment by evolving from heavy industry facilities based on hydraulics and pneumatics to automated lines centered on servo motors and industrial controllers. The process design capabilities and equipment reliability accumulated through the automotive, semiconductor, and display industries have been strengths in global production sites.

However, this competitiveness was built in a structure focused on complete equipment and line construction, and has not been sufficiently linked to the accumulation of technology at the component level-specifically, the drive and control parts that determine the core performance of robots. While the ability to integrate and operate equipment has advanced, the ecosystem to independently develop and achieve price competitiveness in robot components such as actuators, reducers, and sensors remains weak.

The problem is that the standards for manufacturing automation have already changed. In the era of physical AI, manufacturing competitiveness is determined more by the learning speed and operational precision of robots, as well as the flexibility at the component level, rather than the stability of production lines. This change is already being reflected in the field, with more cases where processes that once required dozens of workers are now operated by only a few people thanks to the spread of AI and automation.

In the next-generation manufacturing environment, represented by industrial and humanoid robots, the focus is shifting to component-level competition. However, the domestic robot industry remains centered on equipment and production lines, exposing structural vulnerabilities in the robot component supply chain.

Robot Industry Soaring... But No Ecosystem

According to the "2024 Robot Industry Survey" released last month by the Ministry of Trade, Industry and Energy and the Korea Institute for Robot Industry Advancement, domestic robot industry sales reached 6.1695 trillion won last year, up about 3.2% from the previous year (5.9805 trillion won). Sales in the robot component and software sectors also rose 1.9% year-on-year to 1.981 trillion won. This reflects the accelerating shift to smart manufacturing and the growth of the robot industry.

However, unlike the rapid pace of change felt in the field, growth in robot manufacturing and component industries-the sources of this change-remains slow. The same survey found that most domestic robot industry businesses are small and medium-sized enterprises, with 65.1% of all robot companies generating less than 1 billion won in annual sales, accounting for more than half. Many robot companies continue to operate at a loss due to insufficient profitability in the robot industry, but are continuing to invest with an eye on future value.

Both manufacturers and component suppliers are small-scale, so for key components, there is heavy reliance on foreign products from China and Japan. Although demand is gradually increasing, there is a growing "mismatch" with supply. According to data requested by Assemblyman Lee Jaegwan of the Democratic Party of Korea from the Ministry of Trade, Industry and Energy, as of 2023, the overseas dependency rate for drive components-key parts used in domestic manufacturing robots-was 80.3%. Of these, about 98% were Japanese parts. In the precision reducer market, Japanese-made harmonic reducers have essentially become the standard. For sensor components, about 51.5% were foreign-made, with the share of Chinese components among these rising from 23% in 2021 to about 49% in 2023.

Why Does the Demand-Supply Mismatch Persist?

Robot manufacturers cite the lack of a component supply chain as the reason they cannot use domestically produced parts. To make robot products, research must first be conducted, but since the domestic robot industry is still in its infancy, there are few component suppliers capable of handling "small-quantity, multi-variety production" orders.

A domestic robot manufacturer, Company B, which develops both research and industrial robots, said it produces all the components for its own robots, lamenting, "Even if we want to make robots, there are no domestic companies from which we can purchase components." However, robot component suppliers argue that the real issue is a lack of production demand. Even if they want to manufacture components, it is difficult to take the risk without securing definite demand.

Another reason is that Japanese components dominate in terms of quality, while Chinese components lead in price, making it difficult for Korean parts to gain a competitive edge. A representative from SBB Tech, a domestic reducer manufacturer, explained, "Japanese parts are still widely used in equipment that requires high precision, while Chinese products are rapidly entering the market with low prices." A representative from Company A pointed out, "Internalizing core technologies is essential for improving quality and reducing costs, but we have already missed the 'golden time.'"

The industry diagnoses the current situation as a problem of "economies of scale." Kim Jin-oh, Chairman of the Korea Association of Robot Industry, said, "If the market were larger, capable companies would rush in, but the market is still not big enough. As the market gradually grows, this issue can be resolved." He also predicted that the domestic robot industry is developing rapidly, and the supply chain will be established soon. Kim added, "Many domestic auto parts companies are now trying to enter the robot component sector, and there is a growing perception that 'there is no other choice' but to do so."