Asia has a long history of leadership in automation. Japan continues to maintain a major share of global industrial robot manufacturing, boasting 38% of overall production in 2024. The region also dominates adoption of the technologies: almost three-quarters of factory robot installations in 2024 were in Asia, mostly in China.
Asian companies are found at the forefront of many aspects of industrial automation, including both hardware on the factory floor and the software systems that enhance operational efficiency.
AI is already demonstrating its potential to accelerate technological advances in both areas as its adoption catalyses demand for precision manufacturing made possible by factory automation solutions.
We identify several innovative Asian companies at the centre of this structural shift in the global economy.
Fewer workers, more precision
Behind the adoption of factory automation is a combination of demographic pressure and policy support.
Populations in China, Japan and South Korea are not only ageing, but are now in decline. This is squeezing labour pools and so pushing up wages.
To combat these demographic pressures and their impact on domestic competitiveness, policymakers in South Korea and elsewhere have encouraged the adoption of robotic technologies through financial incentives and technical support.
In China, where the government wants to double robot density between 2025 and 2030, national and regional policies have provided strategic support for ‘local champions’. Chinese domestic manufacturers outsold overseas suppliers in their home market – by far the largest in the world – for the first time in 2025.
The pursuit of manufacturing precision is another important driver of automation-related capital expenditure. Advances in machine learning and sensor technologies have helped enhance the consistency, quality and speed of manufacturing processes.
Extreme levels of precision are crucial for industries where tolerances are tight, as in semiconductor manufacturing where tolerances can be just a few nanometres.
Leadership in high-value niches
It can be helpful to conceptualise factory automation into two sets of systems: those at the workstation, where parts are inspected, moved and assembled, and those that run the factory as a whole.
At the workstation, sensors and machine vision systems can be understood as the ‘eyes’ of the modern, connected factory, detecting assembly defects or missing parts instantly on fast-moving production lines. Japanese-listed Keyence is one of the leading providers of these systems.
Robotic joints and the motion components that drive them form the ‘body’. Servo motors and inverters are the ‘muscles’, converting control signals into exact movements. Shenzhen Inovance, China’s largest automation company, holds around 37% of the domestic AC servo market.
In a humanoid robot, motors are combined with reducers, screws and sensors into complete joint actuators. Chinese-listed Sanhua Intelligent Controls is extending its world-leading expertise in precision thermal-control components into linear and rotary actuators.
Across the factory, three further systems enhance the productivity of operations. The ‘brain’ is the computing and analytics layer that turns sensor readings into real-time decisions on the factory floor. Taiwanese company Advantech is among the leading providers of industrial computing and internet-of-things (IoT) that connects equipment to the cloud, enabling predictive maintenance.
The ‘circulatory system’ moves materials between manufacturing stations. Among the leaders in this niche is another Japanese company, Daifuku, whose automated conveyors, guided vehicles and storage systems serve semiconductor plants and distribution centres that demand particularly high reliability.
Finally, the ‘nervous system’ is made up of the real-time control loops that keep processes within tolerance. Single-loop and multi-loop controllers, produced by the likes of Japanese-listed Azbil, work with automatic control valves to regulate temperature and equipment with high precision.
Opportunities unlocked by AI
We believe that advances in AI are expanding the long-term opportunity set for the region's leaders in industrial sensing, motion control and factory software in three ways.
First, AI is enabling rapid technological advances. Adaptive systems can perceive their surroundings, interpret unexpected events and learn new tasks with minimal engineering input, enabling automated hardware to complete multiple, varied tasks. One application is within collaborative robots, or ‘cobots’, that are programmed to work alongside human workers.
Second, AI is increasingly embedded within factory software systems to optimise operations. Shenzhen Inovance reports that using AI to help write the code that controls its equipment has cut the time engineers spend programming by as much as 40%.
Third, the AI infrastructure build-out is itself a driver of demand for factory automation systems and tools. Server assembly, high-speed connectors, advanced semiconductor packaging and fab construction all require high-precision manufacturing.
For investors focused on Asia, we believe the AI story goes beyond owning technology companies. The challenge is instead to identify the businesses overcoming the productivity, quality and labour constraints that AI is uniquely positioned to address.
Given Asia’s leadership in the production and adoption of factory robots, reinforced by demographic trends and government policies, we anticipate that some of the region’s most innovative companies will remain at the technological vanguard.
Barbara Heap is head of listed equities portfolio specialists at Impax Asset Management. The views expressed above should not be taken as investment advice.