Morgan Stanley warns that China's humanoid robot industry has transitioned from the PowerPoint presentation stage into a phase of genuine, head-to-head mass production competition.
According to information from a trading desk tracking industry trends, Morgan Stanley's research team conducted intensive visits from January 26th to 28th to multiple full-machine manufacturers (Fourier, Kepler, MagicBot) and core component suppliers (Leaderdrive, Hengli Hydraulic, Shuanglin Co., Ltd., Zhenyu Xieneng, Flat Glass Group, Wolong Electric Drive, Agile Robots). Analysts observed a critical shift: the gap between the leaders and the laggards is widening rapidly, and the first wave of industry consolidation is imminent.
Morgan Stanley analysts believe that core component suppliers possessing both technical strength and mass-production capabilities will dominate this wave of industrialization. As industry shipments are expected to multiply by 2026, suppliers with a first-mover advantage are poised to capture significant market share and pricing power.
Shipments in 2026 are projected to achieve a multi-fold leap. Morgan Stanley's research indicates that all full-machine manufacturers hold optimistic shipment forecasts for 2026. One leading domestic full-machine manufacturer, having already surpassed 5,000 units in shipments for 2025, anticipates a several-fold increase in 2026. Specific targets from other manufacturers include: Fourier targeting 2,000 units (up from 400-500 units in 2025); MagicBot targeting over 1,000 units; and Kepler targeting 300 units (up from 70-80 units in 2025).
On the component supplier side, Hengli Hydraulic and Agile Robots are preparing capacity based on production plans from a North American full-machine manufacturer—this client aims to achieve a production capacity of 1,000 units per week by July 2026, further increasing to 2,500 units per week by year-end. Leaderdrive even expects its embodied robotics business to achieve exponential growth, potentially reaching parity with its industrial robot shipments. The critical support behind these numbers comes from government-backed projects. Early shipments still rely primarily on procurement for research and development and government-supported initiatives. Most of the full-machine manufacturers visited during the research have shipment records to data collection centers or have received government support.
Divergence in Task Capability: Who is Actually Delivering Products
Morgan Stanley observed a decisive difference during its field visits: a clear divergence in task capabilities and execution efficiency/speed has emerged among full-machine manufacturers. As the industry moves beyond the video demonstration phase in 2025, increased customer feedback and actual shipments in 2026 will further reveal this gap. This divergence is evident not just in shipment volumes but, more crucially, in which companies can complete the closed loop from actual deployment to iterative improvement—encompassing model optimization, enhancement of task capabilities, and cost control. Despite rapid growth in unit shipments, the pace of improvement in robotic operational abilities remains slow, constrained by models, data, and computing power. Morgan Stanley judges that lagging startups will find it increasingly difficult to catch up during this period of industry acceleration, and the first round of consolidation could occur swiftly. Furthermore, component suppliers revealed that companies from other sectors, such as XPeng and Xiaomi, are also accelerating their robot development.
Core Component Suppliers Widen Their Leading Advantage
The component supplier market also shows a clear advantage for the leaders. Suppliers with stronger technical capabilities and mass-production prowess (better quality, consistency, yield, cost, and readiness for overseas supply) are expanding their market leadership and achieving higher penetration rates among leading full-machine manufacturers. Suppliers are evolving from competing on individual components to offering module-level products, including actuators, modules, motors, bearings, and even self-manufactured equipment. This strategy aims to help clients reduce integration complexity, improve consistency and quality control, thereby capturing higher value and profit margins and avoiding price competition on individual components. Although the industry is still in its early stages, overseas expansion has become a key focus. Leading domestic full-machine manufacturers reported that overseas sales contributed a "single-digit" percentage last year, only establishing overseas sales teams in the second half of 2025, with expectations for stronger international business growth this year. Demand from North America tends to be for R&D and data collection purposes.
Application Scenario Validation: Gradual Progress, No Universal Breakthrough Yet
Full-machine manufacturers are piloting in multiple scenarios to identify repeatable, scalable application cases, including industrial, retail, healthcare, logistics, and guidance/demonstration roles. Morgan Stanley continues to anticipate a gradual development trajectory: slow, scenario-by-scenario progress driven by the human-robot collaborative data flywheel, rather than a rapid, unified breakthrough in general-purpose operation. Leading domestic full-machine manufacturers expect roughly one-third of their 2026 shipments to come from entertainment/commercial services, one-third from industrial/data collection, and the remainder from R&D. Fourier anticipates that 60% of its 2026 revenue will still come from R&D/education/data collection, 10% from entertainment, and the remainder from industrial and elderly care applications. Kepler currently has application cases in logistics and industrial loading/unloading (at the proof-of-concept stage), targeting entry into commercial services (cinemas/coffee shops) by 2026. MagicBot is focusing on industrial loading/inspection, guidance/demonstration, unmanned retail, and pharmacy applications. This application validation indicates that the commercialization of humanoid robots still requires time, but the industrialization process is now irreversible. Companies with genuine technical strength and mass-production capabilities are positioned to emerge victorious from this race.
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