Singapore-based Vertex Ventures has invested in Chinese robotics startups including Unitree Robotics, with support from Singapore government investor Temasek.
SINGAPORE — Chinese robot companies shut out of the United States by new regulations on advanced robots can still reach American buyers by building full-fledged operations in Singapore, according to a Temasek-backed venture firm that counts humanoid maker Unitree Robotics among its portfolio companies.
Choon Chong Tay, managing partner at Vertex Ventures China, said startups partnering with China could still capture the U.S. market by entrenching control of day-to-day operations, employment and critical components in the city-state.
China-linked startups that have “substantial content” in Singapore and control chips that power robots can enter the U.S. market, a Shanghai-based venture capitalist told CNBC on Tuesday.
The remarks illustrate a strategy that investors with exposure to Chinese tech startups are increasingly considering as technology competition between the U.S. and China intensifies. Investors and technology companies are pouring billions into humanoid robots and other hard technology areas seen as the next frontier of automation.
In July, the Trump administration banned new foreign-made humanoid and other mobile robots from entering the United States on national security grounds, shutting down the world’s largest consumer market as Chinese manufacturers take the lead in robotics.
According to the U.S. government, international trade regulations generally assign a product’s origin based on where the product was substantially transformed.
Vertex, which is backed by Singapore state investor Temasek, manages nearly $3 billion across US dollar and renminbi funds and has backed Chinese startups across robotics, artificial intelligence, semiconductors and advanced manufacturing.
The company’s portfolio includes Unitree, self-driving chip maker Horizon Robotics, logistics robot provider Geek+, surgical robot maker Edge Medical, and photonics chip maker Lightelligence.
Unitree generates more than 40% of its revenue overseas, with about 18% of that coming from the U.S., said Kangyushao Li, a Morningstar equity analyst. “As such, the US is an important market for Unitree, and losing access could have a noticeable impact on revenue growth,” Lee said.
Mr Tay is betting that economics will ultimately trump politics. He said U.S. consumers and businesses want what Chinese factories make cheaply, and there’s no domestic industry yet to fill the gap. If Singapore-certified robots are safe and reasonably priced, “why else would they not allow export?”
The company’s early investments included bike-sharing company Mobike, which Meituan acquired in 2018, and Tay said it has returned about 10 times its initial investment.
Currently, our portfolio is overwhelmingly hardware-based. For Tay, physical intelligence, which refers to AI combined with robotics, is the defining theme of the next decade, and he predicts the industry will be 10 times larger than the automotive sector.
Bernstein equity analyst Dian Wang said last month’s U.S. ban was a milestone in the U.S.-China decoupling of the emerging robotics sector, which could extend to a broader physics-AI complex, including intelligent vehicles and stationary robots.
But the Chinese government holds a counterweight through its control of rare earths used in humanoid actuators and motors, Wang said. “Controlling key choke points could ultimately determine who has the upper hand.”
