"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 not yet sufficiently established 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 now 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 explores survival strategies.

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

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

Manufacturers already using industrial robots have long turned to Chinese and Japanese components for key drive parts. The reason is that they are cheaper and offer better performance. Bae Chaeyoon, Head of Advanced Technology Research at LS Electric, said, "Most of the robots used in manufacturing sites are Japanese," adding, "Our company does not use Chinese products yet, but with Chinese products rising so rapidly, it's only a matter of time before we start bringing in Chinese robots."

Why Has the Manufacturing Powerhouse Fallen Behind the Curve?

Korean manufacturing has maintained its competitiveness in traditional manufacturing line design and high-precision equipment by transitioning from hydraulic and pneumatic-based heavy industry equipment to automation lines centered on servomotors and industrial controllers. The process design capabilities and equipment reliability accumulated through the automotive, semiconductor, and display industries have served as strengths in global production sites.

However, this competitiveness has been formed 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 that determines the core performance of robots, such as drive and control parts. While the capability to integrate and operate equipment has advanced, the ecosystem for independently advancing robot components like actuators, reducers, and sensors, and securing price competitiveness, remains weak.

The problem is that the standards for manufacturing automation have already changed. In the era of physical AI, manufacturing sites are now defined by the speed at which robots learn, their operational precision, and the flexibility of components, rather than the stability of the production line. This shift is already being reflected on the ground, with more cases where processes that once required dozens of workers can now be run by only a few, thanks to the spread of AI and automation.

In next-generation manufacturing environments, represented by industrial and humanoid robots, the focus is shifting to component competitiveness. However, the domestic robot industry remains equipment- and line-centered, exposing structural weaknesses in the robot component supply chain.

Rapid Rise of the Robot Industry... 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, an increase of about 3.2% from the previous year's 5.9805 trillion won. Sales in the robot component and software sectors also rose by 1.9% year-on-year to 1.981 trillion won. This is a result of the accelerated shift to smart manufacturing and growth in the robot industry.

However, unlike the rapid pace of change felt in the field, growth in the robot manufacturing and component industries, which are 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 businesses posting annual sales of less than 1 billion won, accounting for more than half. Many robot companies continue to operate at a loss due to poor profitability in the robot industry, but they continue to invest with an eye on future value.

Because both manufacturers and component suppliers are small-scale, there is heavy reliance on foreign components, particularly from China and Japan, for key parts. Although demand is gradually increasing, a 'mismatch' with supply is occurring. 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, which are key parts in manufacturing robots in Korea, was 80.3%. Of these, about 98% were Japanese-made components. In the precision reducer market, Japanese harmonic reducers have essentially become the standard. For sensor components, about 51.5% were foreign-made, with the proportion of Chinese components among these rising from 23% in 2021 to about 49% in 2023.

Why Does the Supply-Demand Mismatch Persist?

Robot manufacturers cite the lack of a component supply chain as the reason they cannot use domestically produced parts. To make a robot product, research must begin first, but since the robot industry in Korea is still in its infancy, there are not many component suppliers capable of handling 'small-quantity, small-variety production' orders.

A domestic robot manufacturer that develops research and industrial robots said that it produces all the components for its own robot products, lamenting, "Even if we want to make robots, there are no domestic suppliers from which to buy the parts." However, robot component suppliers say the real problem is a lack of production demand. Even if they want to manufacture components, it is difficult to take on the risk without securing reliable demand.

Another reason is that Japanese components dominate in terms of quality, while Chinese components lead on price, making it difficult for Korean components to gain an advantage. A representative from SBB Tech, a domestic reducer manufacturer, explained, "Japanese components are still widely used in equipment requiring high precision, while Chinese products are rapidly entering the market in low-cost forms." A representative from the aforementioned component supplier pointed out, "In order to improve quality and reduce unit costs, it is essential to internalize core technologies, but we have already missed the 'golden time.'"

The industry diagnoses the current situation as a problem of 'economies of scale.' Kim Jino, Chairman of the Korea Robot Industry Association, said, "If the market size grows to a certain extent, capable companies will jump in, but for now, the market is still too small," adding, "This issue can be resolved as the market gradually expands." He also predicted that the domestic robot industry is developing rapidly and that the supply chain will be established soon. Kim added, "Many domestic auto parts companies are now attempting to enter the robot component sector as well," and "Now, there is a general sense that 'there is no other choice' but to get involved."