JPM China Thematic

Global Markets Strategy 15 August 2026

China Thematic Research Spotlight on Physical AI

Unitree’s A-share IPO and AgiBot eyeing a HK IPO this year have brought the Equity Macro Research physical/embodied AI theme back in scope, particularly the humanoid robot Tim Huang AC supply chain. Please see page 5 for the Top 5 questions asked about China’s ( physical AI by global investors. The investment case for China’s humanoid robot industry rests on three facts. First, the mass-production inflection point appears J.P. Morgan Securities (Asia Pacific) Limited/ close, as we forecast global shipments to rise from 18,000 units in 2025 to 60,000 J.P. Morgan Broking (Hong Kong) Limited in 2026 and 1.75 million by 2030 (a c150% shipment CAGR, Figure 5), with Erin Zhang, CFA China shipments expected to hold over half of the market share. Second, ( localization offers clear upside, with high-entry-barrier components such as planetary roller screws and six-axis force sensors remain below 50% localized, SAC Registration Number: S creating localization upside for Chinese leading component makers. Third, J.P. Morgan Securities (China) Company Limited domestic policy supports can accelerate commercial validation. The "Six Networks" buildout provides communication, compute, and logistics foundations, Rajiv Batra AC while the 2026 Special Action for Real-Scenario Training by MIIT and SASAC, ( encouraging SOE procurement, accelerates commercial validation. Our screen on J.P. Morgan Securities Singapore Private China stocks in various segments of humanoid production based on market Limited cap and 3m ADT is in Figure 21, with the top holdings by onshore mutual Asia Industrials Research funds listed in Figure 2. We see upstream components subject to localization Karen Li, CFA opportunities to benefit disproportionately from volume ramp, notably ( planetary roller screws (40–50% localized) and six-axis force sensors (<30% localized). Advanced cutting tools and upstream materials should also J.P. Morgan Securities (Asia Pacific) Limited/ benefit. Following the positioning reset, we believe the AI names’ fundamental J.P. Morgan Broking (Hong Kong) Limited resilience shown in 2Q earnings season could fuel a recovery of the AI trade in Sunny Su August. ( Humanoids: global shipments to show a 150% CAGR over 2025-30E, China J.P. Morgan Securities (Asia Pacific) Limited/ taking 50%-plus market share. Currently, humanoids (Rmb3-8.5bn/US$0.4- J.P. Morgan Broking (Hong Kong) Limited 1.3bn market size) account for only a small part of China’s embodied AI market (Rmb1trn/US$148bn) in China, but are expected to grow rapidly. JPM Industrial team expects global shipments of humanoids to rise from 18,000 units in 2025 to 60,000 in 2026 and a projected 1.75mn by 2030. In terms of key milestones to monitor on commercial adoption, we think users can prioritize measurable productivity gains, and unit cost is the core determinant of adoption speed. TMT Post estimates that when the annual cost of usage lowers to Rmb80k – equivalent to the average cost of a manufacturing worker – humanoids will see commercial viability. ASPs of some of the most popular models (Figure 9) feasible for commercial/industrial usage are still 5x-8x the average labor cost. Growth will likely accelerate as component costs decline, AI training datasets expand, and battery density improves. Industrial and service deployments will lead adoption, while home use remains constrained by price sensitivity and safety concerns.

• Upstream components & equipment account for the bulk of value capture. The humanoid robot ecosystem can be divided into perception, planning, and execution layers (Figure 4), and include sensor suppliers, AI software developers, semiconductor suppliers, battery systems, actuator manufacturers, system integrators, and end-user enterprises. Hardware currently captures most of the value, driven by actuator complexity, battery density requirements, and precision control systems. According to local news, the execution layer accounts for 50%-65% of the bill of material (BOM), the perception layer and the planning layer account for 10-20% of BOM each, and the rest goes to the battery

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