Despite South Korea's much-hyped push to become an artificial intelligence powerhouse, its physical AI ecosystem remains fledgling, short of both scale and a homegrown supply chain.
Aei Robot, one of the country's leading bipedal robot makers, is largely forced to fend for itself, machining the frame, actuators and a gearless linear drive for its Alice humanoid line at its own factory in Ansan, south of Seoul.
"We build the parts ourselves, because otherwise we can't control the price," said Kim Ho-jung, the company's marketing manager.
"But take a motor — there are rare earths in it, and that's the materials layer. We can't make that here at all, so it's imported."
The Hanyang University spin-off comes closer to building a humanoid entirely in-house than almost any Korean rival. Tally the machine up part by part, however, and a stubborn share still has to be sourced from abroad.
South Korea localizes only about 40 percent of the core parts used in its robots. It sourced 88.8 percent of the permanent magnets used in robot motors from China last year and buys much of its precision reducers and controllers from Japan, according to a January report from the Korea International Trade Association.
Japan's Harmonic Drive Systems and Yaskawa Electric together command 60 percent to 70 percent of global markets for key robot components.
"Korea has outstanding robot utilization capability, but faces structural limits from its heavy overseas dependence on core materials and components," said Jin Sil, a senior research fellow at the association's Institute for International Trade.
Localization was largely a matter of industrial ambition until late July. Then it became a condition for selling new robot models into the United States.
The Federal Communications Commission put foreign-produced advanced robotic devices on its Covered List on July 28, blocking new U.S. equipment authorizations for humanoids, quadrupeds, autonomous mobile robots and other covered platforms regardless of the manufacturer's nationality.
Absent conditional approval from U.S. authorities, a robot escapes classification as foreign-produced only if it is manufactured in the United States and domestic parts account for more than 65 percent of total component costs. The threshold rises to 75 percent in 2029.
Parts Korea cannot make, rare-earth materials among them, complicate that arithmetic. The chip inside the robot complicates it further.
"On a cost basis, that eats up a big share of the non-localized portion. I can't tell you that the whole thing is localized. I don't think that's even possible."
Nvidia's Jetson computing platform runs many of the humanoids now coming out of China.
AgiBot, Unitree, Galbot, Engine AI and UBTech all use Jetson platforms, as does Alice. Nvidia's Jetson T5000 module launched at $2,999 apiece for orders of at least 1,000 units.
The same module now costs about $4,999 at that volume, a 67 percent jump that robot makers link to the AI-driven memory boom pushing up chip costs.
South Korea is one of the world's dominant memory-chip producers. But the memory it excels at making cannot replace the processor sitting inside a humanoid's head.
Neural processing units, or NPUs, offer a lower-power alternative to power-hungry GPUs. Rebellions and FuriosaAI, two of Korea's leading AI chip designers, have neither the production volume nor the robotics optimization to step in yet.
The problem reaches beyond parts.
Rainbow Robotics, the Samsung Electronics affiliate, has stopped shipping its RB-Y1 semi-humanoid to the United States. An order for dozens of units from a major North American customer has stalled, and the company cannot say when shipments will resume.
Most Korean humanoid startups have not reached mass production at all, leaving them struggling to meet the new U.S. requirements before they have sold a single robot there.
China is already operating on another scale.
Chinese vendors shipped more than 30,000 humanoids in the first half of 2026, above the roughly 20,000 shipped in all of 2025, according to China's Humanoid Robot Scene Application Alliance, an industry body.
South Korea had only hundreds of humanoids deployed last year, compared with an estimated 10,000 to 15,000 in China, according to Goldman Sachs.
Aei Robot, which receives support from the industry ministry, has built more than 10 Alice units and booked commercial revenue on two, both sold to small manufacturers. The rest were supplied under state research projects that cover parts and labor but do not translate into commercial robot sales.
Funding constraints extend into state research institutes.
The Korea Institute of Machinery and Materials unveiled version 0.7 of its KAIROS humanoid on Sept. 7 and made a funding appeal at the same time.
"We need at least 3 billion won ($2.21 million) budgeted, and we will answer it with results," said Park Chan-hoon, director of its AI Robotics Institute.
China's overwhelming shipment numbers come with a caveat: much of the demand is created at home, often with the state itself helping generate the market.
"The key performance indicator for the Chinese government is just the number of units," Kim said. "Through last year there were performance targets. From this year it's purely volume, print enough of them and the state will take care of the rest."
"Once they've taken the market completely, they'll switch to backing only whoever survives the fight among themselves," he said.
"They've already run that play with electric vehicles and solar, and I think they're running it again."
South Korea is now preparing its own state-backed push to nurture an industry still learning to walk.
Physical AI spending is set to climb to 3.1 trillion won next year from 900 billion won this year under the 2027 budget proposal approved by the Cabinet on Sept. 1.
Of that, 500 billion won is earmarked for field trials across eight sectors, including manufacturing, construction, defense and care.
The government also plans to deploy about 2,000 Korean-made AI robots, including 650 at research and education sites and 369 with police and fire services.
The Ministry of Trade, Industry and Energy has budgeted 30 billion won to place 200 research humanoids at engineering schools and state institutes. Another 30 billion won would support deployment of 200 humanoids on factory floors.
A new 37 billion won research program targets actuators, reducers and sensors, among the core parts Korea still relies on foreign suppliers to provide.
"We will actively support the private sector through the 2027 budget for future industry core components," said Huh Chang, second vice minister at the Ministry of Economy and Finance, during a Sept. 10 visit to robot maker Robotis in Seoul.
None of it is money yet.
The budget was submitted to the National Assembly on Sept. 3 and must still clear committee review and a floor vote. Separate tax incentives will also depend on an enforcement decree expected in February to determine the applicable rates.
The longer-term potential is much bigger than today's production figures suggest.
Goldman Sachs expects Korean companies to account directly and indirectly for 30 percent of global humanoid production by 2035, drawing on expertise in actuators, motors, sensors and dexterous hands already developed for the country's vast automotive and manufacturing industries.
The bank estimates Korean supply chains could support about 74,000 humanoids by 2030.
The industry ministry is now surveying government agencies and companies to find out how many of those robots they would actually buy.
For an industry in which China can already count its machines in the tens of thousands, that may be the number that matters most.
AJP Takeaways
- The U.S. Federal Communications Commission added foreign-made humanoids and mobile robots to its Covered List on July 28, 2026, exempting only robots assembled in the United States with domestic content above 65 percent of component costs, which halted Rainbow Robotics' RB-Y1 shipments.
- South Korea localizes about 40 percent of its robot core components and sourced 88.8 percent of its robot-motor permanent magnets from China in 2025, according to the Korea International Trade Association, with Japan supplying most precision reducers and controllers.
- Goldman Sachs expects Korean companies to take 30 percent of global humanoid production by 2035, while SBB Tech, Korea's only full-cycle harmonic reducer maker, does not expect an operating profit before 2028.
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