US restrictions on Chinese drones and advanced robots are likely to accelerate the creation of a fragmented global robotics market, rather than dislodge China’s dominance of low-cost manufacturing, analysts and industry executives have warned.
Washington tightened controls on foreign-made robotic systems in July and August, citing national-security concerns, while imposing steep tariffs on imported drones and their components. The drone tariffs are due to take effect in September, with further duties on components scheduled for 2027.
The measures form part of a broader effort to limit foreign technology in strategically important industries. The Federal Communications Commission’s Covered List, established in 2021, initially targeted telecommunications and surveillance equipment from companies including Huawei, ZTE and Hikvision before being expanded to foreign-made drones and, most recently, advanced robotic devices.
Chinese manufacturers have built leading positions in both sectors, often offering products at prices that US and European competitors struggle to match. The restrictions could protect sections of the American market, but they do not remove China’s advantages in production capacity, supply chains or costs.
China’s scale in humanoid robots
China’s lead is particularly pronounced in humanoid robots. Counterpoint Research estimates that 22,000 humanoid machines were shipped globally in the first half of 2026, with the vast majority made by Chinese companies.
The five largest manufacturers by shipments – AgiBot, Unitree, Galbot, UBTECH and Leju Robotics – were all Chinese and together accounted for 86% of global deliveries during the period, according to the research firm.
US companies are operating at a far smaller scale, said Soumen Mandal, a principal analyst at Counterpoint Research. Lower prices allow Chinese manufacturers to place more robots in real-world settings, producing data that can be used to improve the machines and drive down costs further.
Chinese firms are also bringing more of the technology in-house and drawing on the country’s established industrial base. Unitree is developing more of its own components, while carmakers such as XPeng can apply experience in chips and vehicle production to robotics.
Ankur Saxena, an investment director at TDK Ventures, said the contest differed from the semiconductor industry, where a single technology can be controlled more easily. “The United States leads in frontier AI, software and semiconductor innovation,” he told TechCrunch. “China leads in manufacturing scale, supply-chain depth and cost.”
“You cannot sanction your way around a cost curve. You can only out-build it, and America has yet to begin making the decade-long investment that will require,” he added.
Chinese robotics firms look overseas
With access to the US market becoming more difficult, Chinese robotics companies are expected to focus increasingly on their domestic market and on regions where affordable automation is in demand.
Mandal said manufacturers were already targeting labour-short markets across Europe, south-east Asia, Latin America and the Middle East. Countries facing demographic decline could become important customers, particularly in factories where humanoid robots can undertake repetitive tasks.
He expects the industry to follow a path similar to that taken by Chinese electric vehicle makers: establish scale at home, expand overseas and eventually set up local production.
The drone industry offers an early indication of how the split could develop. Bentzion Levinson, founder and chief executive of Virginia-based Heven AeroTech, said the sector was increasingly separating into a US-led ecosystem based on American-made, National Defense Authorization Act-compliant systems and a China-led market focused on high-volume, low-cost production.
Western companies are unlikely to beat Chinese manufacturers in the lower-priced consumer drone market, Mr Levinson said. Instead, US and allied firms may compete more strongly in long-range autonomous systems for defence and critical infrastructure, where security requirements are more important than the lowest possible price.
He said competition could shift towards the technology powering drones and the equipment they carry. Battery limitations, in particular, may become more significant as the machines are required to fly further and perform more complex tasks.
Agility Robotics welcomed the FCC’s July decision, saying it could address security concerns about foreign-made advanced robots before they became embedded in the US market. The company highlighted its Digit humanoid, which is designed and assembled in the United States, while calling for continued access to tools and technologies needed for robotics research.
A regional robotics market
The emerging alternative to Chinese manufacturing is unlikely to be a completely domestic US supply chain. “The alternative to China isn’t a purely domestic U.S. supply chain; it’s a diversified allied one,” Mr Saxena said.
Japan has long-standing expertise in industrial robotics and precision manufacturing, while South Korea has strengths in electronics, batteries and vehicles. Taiwan is a major semiconductor producer. However, China’s role in global robotics supply chains is so extensive that none of those countries can replace it immediately, Mr Saxena said.
South Korea’s Hyundai, which owns Boston Dynamics, and Japan’s Toyota are among the carmakers investing in robotics. Their experience in manufacturing, autonomous systems and vehicle development could help them occupy a position between cheaper Chinese machines and more expensive US products, Mr Mandal said.
Yang Fang, of California-based agricultural technology company Beagle Technology, said robotics was likely to become more regional as manufacturers designed systems around local labour needs, working conditions and customers.
That could leave Chinese companies competing on price and scale across much of the world, while US and allied manufacturers concentrate on markets where security is paramount. Japan, South Korea and Taiwan may seek to establish their own positions between the two, producing a more divided global robotics industry rather than a clean separation between American and Chinese systems.
