A Chinese venture capital firm has visited Korea to explore potential collaboration with Korean physical artificial intelligence (AI) companies, sources confirmed. Industry observers see the move as a strategic effort to grow a physical AI ecosystem by partnering with Korean firms that hold strengths in manufacturing data and software (SW) technology. In the physical AI market, where no dominant player has yet emerged, alliances between nations and companies are beginning to take shape in earnest.
According to industry sources on Tuesday, Spark Physical AI Ventures, based in Hong Kong and Shenzhen, visited Korea in the middle of last month and held a series of meetings with officials from Korea's AI and physical AI industries. The company is a VC that has set out to build a physical AI ecosystem by linking supply chains across Asia, including China, Korea, and Japan. It was founded by Tony Chen, who was active at Hong Kong's prominent venture fund "Hong Kong X Technology Fund," with Tony Chan, former president of the Hong Kong University of Science and Technology, among its founding members.
About 40 people, including officials from Korean corporate venture capital (CVC) firms and AI and physical AI companies, gathered at a meetup event Spark Physical AI Ventures held in Seoul. Lee Hyung-min, CEO of Tennecell, who organized the event, said, "Spark believes that if Korea's fast market response speed and manufacturing and branding competitiveness are combined with the manufacturing execution and supply chains of the Shenzhen and Guangdong regions, we can jointly create physical AI companies targeting the global market." He added, "It was a gathering where a consensus was formed that Korea and China can sufficiently collaborate in the physical AI field."
Chinese VCs are eyeing Korea's physical AI market because physical AI is regarded as a growth engine that will drive innovation in real-world industries such as manufacturing and logistics after generative AI, while no country or company has yet secured overwhelming technological capabilities. China boasts outstanding assembly and mass-production capabilities, accounting for 90% of the world's humanoid robot output as of last year, but is assessed as having limitations in algorithm, data, and computing capabilities. This is the backdrop to the strong demand for collaboration with Korean firms that possess manufacturing data such as semiconductors and system integration (SI) capabilities. Cases of Korea-China collaboration are also increasing domestically, with LG CNS developing related software based on China's Unitree robots.
However, for Korea-China collaboration to gain momentum, it must overcome the challenge of geopolitical risk. One startup official said, "A Chinese company inquired about investing in us, but we declined out of concern that it might cause problems for our future U.S. business," while adding, "That doesn't mean we rule out partnerships with Chinese companies altogether, so we are continuing to collaborate."
Kim Tae-yong, CEO of EO, said, "As the physical AI era opens, many Silicon Valley startups also do their hardware manufacturing in China." He added, "For Korean founders, a strategy of leveraging their geopolitical position to utilize both China's manufacturing infrastructure and the U.S. market will become more important."
