By Craig Mellow

Jensen Huang says robots are the next big thing, or one of them anyway. That's good news for Japan, potentially.

"The ChatGPT moment for robotics is coming," Nvidia's chief executive declared while keynoting the monster CES tech fair on Jan. 6 in Las Vegas. His company will ramp up an array of software tools enabling the jump from today's mechanical assembly-line arms to tomorrow's intelligent "humanoids," he promised.

Japan is the Silicon Valley of industrial robotics. Companies like Fanuc, Yaskawa Electric, and Nachi-Fujikoshi churn out nearly half of the global supply of robots, according to the International Federation of Robotics. U.S. producers barely figure, as yet.

Japanese robotics stocks have been laggards, too, because they've been linked to so-so demand from Chinese manufacturers, not global hype about artificial intelligence. Fanuc's shares gained 3% over the past year.

The road to rerating is hardly smooth. Industrial robotics is a mature business, slated for 5% growth this year, predicts Susanne Bieller, general secretary at the IFR. Japan's stalwarts aren't investing much in a humanoid explosion they view as speculative.

"There's a lot of money going into humanoid robots in the U.S. and China, not so much in Japan," she says.

One particular American, Elon Musk, promises that Tesla's anthropomorphic Optimus robot will "fundamentally transform civilization, " whenever it is ready.

Significant penetration for what Huang calls "physical AI" will wait till the 2030s, thinks Tejas Dessai, director of thematic research at Global X ETFs. Companies like Nvidia and the software giants need to build the necessary data centers first.

"We could see a $30,000 to $40,000 humanoid in every household," he says. "But we have to temper expectations on the timeline."

Intriguing pilot projects are popping up, particularly in Japan, where labor shortages driven by a shrinking population meet enthusiasm for advanced gadgets. Patrons at Tokyo's DAWN Avatar Cafe are served by robots remotely controlled by disabled humans spread across the country.

"We aim to achieve a new form of social participation through technology, " operator OryLab says. Visitors to the capital can stay at the Henn na Hotel, where all customer-facing staff are robots.

Less quixotically, Bieller sees a potential approaching boom in "mobile manipulators," traditional robotic arms mounted on wheels so they can, for instance, stock and unload goods in warehouses. Omron, a firm probably better known for medical devices, is leading the Japanese charge here. Two prominent competitors, Robotnik Automation and PAL Robotics, are based in Spain.

Huang's ChatGPT analogy is imprecise, Bieller says. OpenAI was able to "train" its text-spewing wizard on an infinite supply of free words from the internet. Robot performance data is jealously guarded by auto makers and other end users.

Nvidia is looking to compensate with virtual replicas of robots' environments, or "digital twins of factories and other environments that accurately duplicate the physical characteristics," as the company's press release puts it. That could also take a while, even for the world's supreme microchip designer.

But the ChatGPT precedent, and subsequent feeding frenzy on AI-related stocks, teaches us that new technologies can seem remote until they are suddenly everywhere all at once -- at least for investors.

If and when robotics' moment comes, it's hard to imagine that the traditional Japanese leaders in the field won't get a lift.

"Now is the time to become aware of the products being developed and research the firms," says Neil Newman, head of strategy at Astris Advisory in Tokyo.

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January 10, 2025 21:30 ET (02:30 GMT)

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