AI Robots and PPP
Last week during Nvidia’s quarterly earnings call CEO Jensen Huang described robotics and physical AI as “the next trillion-dollar opportunity”
Automation is nothing new, especially in the automotive industry, but the alure of AI powered robots is obvious. 2023 data from the International Federation of Robotics (IFR) shows that the country with the highest penetration of robots is South Korea with 1,012 robots installed per 10,000 employees while Singapore (730), Germany (415), Japan (397) and China (392) round out the top five. The US has a robot density of 295.
IFR data of annual installation of robots over the last three decades by country is illuminating. China 38%, Japan 11%, South Korea 10%, the US 9% and Germany 7%. Today China accounts for nearly 50% of annual global demand.
Quite aside from the benefits of higher efficiency and higher quality provided by robots, the rapidly declining workforce across many countries (China and South Korea come to mind in particular) is making robots a ‘must have’ in the manufacturing sector.
In nominal terms the United States, at 26.4%, remains the largest economy globally. Visual Capitalist recently released 2024 purchasing power parity (PPP) data. PPP is a rather more sophisticated version of the Economist’s Big Mac index.
On a PPP basis the Chinese economy is already 27% larger than that of the US. Collectively China, India, South Korea and Indonesia are more than twice the size of the US. Throw in Japan and these five Asian economies are 90% larger than NAFTA. These same five Asian economics are more than three times the size of the five largest European economies (Germany, France, UK, Italy, and Turkey).
When Jensen Huang describes “the next trillion-dollar opportunity” we wonder how he might break that down geographically. It is a shame that Nvidia is unlikely to have access to roughly half the potential market, China.
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