[Robot Component War]③ "We Can't Beat China on Price"... Korean Components Head Overseas

"Unable to Lower Unit Costs Domestically, So Heading Overseas"
Concerns Over High Labor Costs and Tariff Burdens
Expanding Abroad to Find New Sales Markets

Editor's NoteAs artificial intelligence (AI) expands into the real world, the focus of manufacturing sites is rapidly shifting from humans to robots. However, South Korea, which has remained centered on traditional manufacturing, has not yet fully established a supply chain for robot components to support the transition to automated systems. With Japan leading in precision and China in price competitiveness, the nation's status 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 seeks strategies for survival.

Robotis, a robot component and manufacturing company, established a local subsidiary in Uzbekistan on January 26. The company's decision to select a third region was driven by "cost" considerations. The reasons included low labor costs, relatively low tariff burdens, and high flexibility in responding to the global market.

Aerial view of Robotis Uzbekistan factory. Robotis

In this way, domestic robot manufacturing and component companies are diversifying their production bases to secure price competitiveness. The main reason for relocating overseas is the ability to save on relatively high labor and overhead costs. An official from a component company said, "If we only manufacture in Korea, we cannot compete with China," adding, "When production takes place domestically, where labor costs are high, we fall behind in price competitiveness from the outset."

Another factor is the growing risk of tariffs. In August of last year, the U.S. Department of Commerce announced that it would impose additional itemized tariffs on 407 steel and aluminum derivative products. As a result, products containing steel or aluminum exported to the U.S. are now subject to a 50% tariff. Industrial robots, cutting and welding machines, and specialized equipment for metalworking are included in the scope, making it inevitable for companies considering exports to the U.S. to reorganize their production bases.

In fact, Korean companies in the robotics sector strongly objected when the U.S. announced a separate investigation into robots and industrial machinery at that time. LG Electronics, LG Chem, and LG Energy Solution submitted opinions to the U.S. Department of Commerce’s Bureau of Industry and Security at the end of last year, stating, "If the U.S. government imposes tariffs on robots and industrial machinery for national security reasons, it will disrupt the stable supply of domestically produced products." Doosan Robotics and WIA Machine Tools also requested that the Department of Commerce not impose tariffs on robots and industrial machinery from Korea, an allied nation, citing concerns about reduced investment in U.S. manufacturing and weakened supply chains.

Due to the relatively small size of the domestic ecosystem, there is also a noticeable move to expand sales channels overseas. A domestic manufacturer, Company B, stated, "We are considering entering the U.S. market," and added, "It is a critical time to raise brand awareness among overseas clients."

Han Areum, Senior Research Fellow at the Korea International Trade Association, explained, "Industrial machinery and robots can serve as key industrial goods at a time when the U.S. is seeking to revitalize its manufacturing sector. Since bolts, nuts, and screws made of steel are also included as steel and aluminum derivative products, there is virtually no industry unaffected by these measures, but machinery is particularly impacted."