"If a key drive component made in Korea costs about 100,000 won, the Chinese version is around 3,000 won."

A domestic component supplier, Company A, which provides parts for industrial and humanoid robots, stated, "When it comes to meeting price requirements, it is impossible to catch up with China."

Manufacturers already using industrial robots have long turned to Chinese and Japanese components for key drive parts, citing lower prices and better performance. Bae Chaeyoon, Head of Advanced Technology Research at LS Electric, said, "Most of the robots used in manufacturing sites are Japanese-made. Our company does not use Chinese products yet, but with Chinese products rapidly gaining traction, it is only a matter of time before we start importing Chinese robots."

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Korean manufacturing has maintained its competitiveness in traditional production line design and high-precision equipment, transitioning from hydraulic and pneumatic-based heavy industry facilities to automation lines centered on servomotors and industrial controllers. The process design capabilities and equipment reliability accumulated through the automotive, semiconductor, and display industries have served as strengths in global production sites.

However, this competitiveness was built around complete equipment and line construction, and has not been sufficiently connected to the accumulation of technology at the component level, which determines the core performance of robots. While the capability to integrate and operate equipment has advanced, the ecosystem for independently advancing robot components such as actuators, reducers, and sensors and securing price competitiveness remains weak.

The problem is that the standards for manufacturing automation have already changed. In the era of physical AI, competitiveness in manufacturing is determined by the learning speed and operational precision of robots, as well as the flexibility of components, rather than the stability of the production line. This shift is already evident on the ground, with more and more processes that once required dozens of workers now being operated by only a few, thanks to the spread of AI and automation.

China focuses on price, Japan on quality

Domestic parts losing their place

Dependence on overseas core parts rises above 80%

Strong in design but lacking in parts technology

Even as the next-generation manufacturing environment, represented by industrial and humanoid robots, shifts its focus to component competitiveness, the domestic robot industry remains centered on equipment and lines, exposing structural vulnerabilities in the robot component supply chain.

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According to the "2024 Robot Industry Survey" released last month by the Ministry of Trade, Industry and Energy and the Korea Institute for Robot Industry Advancement, domestic robot industry sales reached 6.1695 trillion won last year, up about 3.2% from 5.9805 trillion won the previous year. Sales in the robot components and software sector also increased by 1.9% year-on-year to 1.981 trillion won. This reflects the acceleration of smart process transformation and the growth of the robot industry.

However, unlike the pace of change felt in the field, growth in the robot manufacturing and component industries—the sources of this change—remains slow. The same survey found that most businesses in the domestic robot industry are small and medium-sized enterprises, with 65.1% of all robot businesses posting annual sales of less than 1 billion won, accounting for more than half. Many robot companies continue to operate at a loss due to poor profitability in the industry, but are still investing in anticipation of future value.

Both manufacturers and component suppliers are small in scale, so for key components, there is heavy reliance on foreign products from China, Japan, and others. While demand is gradually increasing, a 'mismatch' with supply is occurring. According to data requested by Assemblyman Lee Jaegwan of the Democratic Party of Korea from the Ministry of Trade, Industry and Energy, as of 2023, the dependence on overseas drive components—key parts used in industrial robots in Korea—stood at 80.3%. Of this, about 98% were Japanese-made components. In the precision reducer market, Japanese harmonic reducers have effectively become the standard. For sensor components, about 51.5% were foreign-made, with the share of Chinese components among these rising from 23% in 2021 to about 49% in 2023.

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Robot manufacturers cite the lack of a component supply chain as the reason they cannot use domestic parts. To make robot products, research must come first, but since the domestic robot industry is still in its infancy, there are few component suppliers able to handle 'small-lot, small-variety' orders.

B Robot Manufacturing, a domestic company that develops research and industrial robots, said it manufactures all the parts used in its robot products itself, lamenting, "Even if we want to make robots, there are no domestic suppliers from whom we can buy components." On the other hand, robot component suppliers say there is a lack of production demand. Even if they want to produce components, it is difficult to take the risk without guaranteed demand.

Another reason is that Japanese products have an advantage in quality, while Chinese products lead in price, making it difficult for Korean parts to gain a competitive edge. A representative from SBB Tech, a domestic reducer manufacturer, explained, "Japanese components are still widely used in equipment requiring high precision, while Chinese products are making inroads in the low-cost segment." A representative from Company A added, "In order to improve quality and lower costs, it is essential to internalize core technologies, but we have already missed the 'golden time.'"

Spread of Japanese and Chinese Industrial Robots in the Field

Profitability Limits Persist in Small and Micro Enterprises

Mismatch Between Supply and Demand... Structure Blocking Localization

Precision Reducer Market, Japan is Virtually the Standard

"Endurance Phase Until Economies of Scale Are Achieved"

The industry diagnoses the current situation as a problem of 'economies of scale.' Kim Jin-oh, President of the Korea Robot Industry Association, said, "If the market grows to a certain size, capable companies will jump in, but the market is not big enough yet. Once the market starts to grow, these problems can be solved." He also predicted that the domestic robot industry is developing rapidly, so the supply chain will be established soon. Kim added, "Many domestic auto parts companies are now trying to enter the robot parts sector. There is a growing sense that 'there is no other choice' now."