The U.S. can't find enough of this critical machine component to win the humanoid-robots race

By William Gavin

Humanoid robots have the potential to revolutionize life as we know it - but the U.S. does not have a supply chain that can produce key parts

Apptronik CEO Jeff Cardenas has described humanoid robots, including his company's Apollo, at left, as a "network" of actuators. A diagram shows the actuators used by Apollo.

At a 90,000-square-foot facility in Austin, Texas, Apptronik, one of America's biggest robotics companies, is training hundreds of humanoids. They include dozens of 5-foot-8-inch, 160-pound robots on two legs or wheels, called Apollo, that trade the intense precision of a traditional robot for flexibility and mobility.

Apollo humanoids come equipped with sensors and cameras, giving them the ability to adjust to their environment much like a human being. Yet developing this technology comes with a unique, emerging set of challenges.

Apollo and humanoids like it require critical machine components known as actuators that are hard to come by in the U.S. In fact, the American robotics industry can't get enough of them. They're so vital that Apptronik CEO Jeff Cardenas sees his robots as "just a network" of actuators.

Humanoid robots have the potential to revolutionize life as we know it, and robotics startups across the globe are trying to bring them to market as soon as possible. But a lack of actuators and other components could stifle those designs, experts like Cardenas say.

'Actuators are effectively the engine for the humanoid.'Ani Kelkar, McKinsey

While most people have likely never heard of an actuator, they're found across daily life - used in everything from smartphones and computers to refrigerators and cars, to convert power into motion. Humanoid robots use a variety of actuators, including some that enable metal arms to push and pull.

"Actuators are effectively the engine for the humanoid," said Ani Kelkar, a partner at McKinsey who leads the consulting firm's robotics and physical artificial-intelligence efforts. Actuators determine everything from how strong a robot can be to how quickly and precisely it can respond to new signals, he noted.

The average humanoid has dozens of actuators, which together can account for as much as 60% of the cost of manufacturing one. They come in all shapes and sizes; some resemble a hockey-puck-like disc, while others look more like a rod.

Robotic shoulders and hips use what's called a rotary actuator, which are primarily made up of a gearbox that converts the energy from a fast-spinning motor into force, combined with a sensor that ensures the joint moves as intended. A humanoid's knees rely on linear actuators, which are made up of similar components but translate rotation into a linear movement: pulling, lifting and so on.

Producing cheap, easily accessible actuators are key to unlocking the humanoid market, which Morgan Stanley expects to be worth $5 trillion by 2050. But due to a lack of U.S. manufacturing capacity and capability, actuation systems are also a bottleneck, Kelkar said.

The kinds of actuators currently made at scale in the U.S. are designed for airplanes or cars, experts say. Humanoids also aren't very compatible with actuators made for traditional robots, according to Apptronik's Cardenas, whose company has designed about 80 different actuators for its robots.

Apptronik raised $520 million in funding at a $5 billion valuation in February, making it one of the most valuable private humanoid companies. The actuator bottleneck Cardenas has warned against is being confronted industry-wide in the U.S.

"With Optimus, there is no supply chain," Tesla (TSLA) CEO Elon Musk told investors in July, referring to the company's humanoid robot. "We've had to build up a supply chain in its entirety or in-house the production."

Chokepoints and China

Relatively small bits of machinery called actuators are a core component of humanoid robots, a potentially multitrillion-dollar industry.

While actuators have been used in humanoid robots and research labs for decades, outsize demand for them only emerged recently. Even today, most humanoids are either used for flashy demonstrations - like the 100-meter dash at the World Humanoid Robot Games - or in pilot programs.

Tesla has some Optimus robots in use at its factories, while Boston Dynamics' Atlas humanoid has been deployed by Google DeepMind (GOOGL) (GOOG) and at majority shareholder Hyundai's (KR:005380) facilities. Agility Robotics, which plans to issue its stock through a special-purpose acquisition company (SPAC) by the end of the year, is at the forefront of the American robotics industry, with plans to deploy its new humanoid for customers in the coming months.

By the end of 2025, just 15,000 humanoids were deployed around the world, according to Barclays. Yet growth is expected to come fast: Barclays expects 60,000 humanoids will be put to work by the end of 2026, while some 500,000 robots could ship annually by 2031, according to the bank's projections.

Meeting those expectations will require a lot more actuators. However, with so many humanoid manufacturers still iterating new designs for their robots and the parts that make them up, potential suppliers don't appear ready to commit to manufacturing them.

McKinsey's Kelkar said the companies making actuators and related components like gears are hesitant to make big investments since the industry is still developing and major use cases are still years, if not decades, away. The economics of certain business models, such as robots-as-a-service, also remain mostly untested and have not been a proven success for at least one humanoid company, Agility, according to a regulatory filing.

Apptronik's Cardenas told MarketWatch that humanoids will "start to really shine" once they move out of the factory and into the retail or healthcare industries, but the industry needs to make the technology good enough to support that goal. Jonathan Hurst, chief scientist at Agility, told MarketWatch that it could take one or two decades to make humanoids safe enough for use in households, which experts call the industry's holy grail.

Some suppliers are starting to test things out. North Canton, Ohio-based Timken (TKR), a supplier of bearings and other components, is in the "very early days" of working with humanoid makers, its executives said at a conference this month. Timken can make the parts needed for about 25% of a humanoid, according to CEO Lucian Boldea.

"But can that be done at scale? Can that be done at a cost-effective way to where these things are affordable?" Boldea said at a Morgan Stanley conference. "That's still ground to be developed, and that's not just us - that's in general."

While some companies can try to establish an in-house supply chain, that's only feasible for a few of them, Morgan Stanley analyst Adam Jonas said in a recent client note. And even companies known for vertical integration, like Tesla, are sourcing their components from outside the U.S.

Tesla reportedly purchased $685 million Chinese-made actuators last year. This month, it sent staff to audit Chinese manufacturers of actuator components and sensors, 21st Century Business Herald reported. Tesla did not respond to a MarketWatch request for comment.

In July, however, the Federal Communications Commission added new foreign-made advanced robotic devices to a list of products deemed an "unacceptable risk" to national security. That prevents the import or sale of humanoids that are made up of less than 65% of domestic content for sale, although companies can apply for an exemption.

McKinsey's Kelkar called it "impossible" to abide by the FCC's restrictions without onshoring actuator manufacturing. Effectively closing the U.S. market to Chinese humanoids "improves the probability that a Western humanoid ecosystem develops successfully," according to Citi analyst Ross MacDonald.

Morgan Stanley's Jonas noted that there is a "significant gap" in volumes at price points comparable to Chinese suppliers, even as legacy U.S. companies expand "adjacent" capacity for actuator components. He also highlighted several "chokepoints" for scaling U.S. actuator production for robotics at scale, each of which bring their own challenges.

'The only way that we can really compete is by building these regional supply chains here in the U.S.'Jeff Cardenas, Apptronik

Chief among Jonas's callouts is China's control of magnetic rare earths, which are used to make motors that are key to actuation systems. American actuators are also largely dependent on Japanese suppliers of certain gears, with China fielding those companies' primary competition.

Part of China's edge comes from having faced its own actuator bottleneck less than a decade ago, Jonas noted. But China's robotics industry has mostly overcome its issues thanks to efforts to localize the production of major components, as well as its willingness to direct capital with government-backed national road maps. Past national support for encouraging local production of electric vehicles, which share many components with humanoid robots, also helped.

As a result, China's robotics industry is thriving. The nation deployed 10 times more industrial robots than the U.S. did last year, according to the International Federation of Robotics, and makes an estimated 30 million more drone motors and robot actuators than the U.S., per estimates from venture-capital firm Andreessen Horowitz. China also accounted for 85% of the humanoids deployed last year, with the domestic firms AgiBot and Unitree making most of those units, according to Barclays.

China's Unitree (CN:688836) had an explosive stock-market debut in August as it became the first humanoid-robotics company to list its shares in mainland China - with its stock popping as much as 629%, before gains were pared back in the following weeks. According to the Financial Times, more than 50 Chinese robotics firms have either listed or plan to go public.

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