Humanoid: Japan’s edge in the rise of the machine

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For decades, robotics has delivered brawn without brains - machines capable of extraordinary precision, yet without comprehending what they were doing or why. Mechanical marvels, yes, but still prisoners of their programming. Now, we stand at an inflexion point. 

The breakthrough is not in muscle or metal, but in the mind, in robots’ ability to think for themselves. The deep-learning revolution that transformed self-driving cars has given robots the capacity to perceive, reason and decide. Large Language Models (LLMs), such as those behind ChatGPT, have endowed machines with contextual understanding – the cognitive layer that complements their mechanical prowess. 

Their successors, “vision-language-action models” (VLAMs), go further, fusing vision, speech and sensor data into a unified intelligence loop. For the first time, robots can interpret their surroundings, take natural-language instructions, and adjust their movements with purpose. 

This marks a profound turning point, the moment when artificial intelligence steps into the physical world, transforming force without thought into intelligence in motion.

The humanoid ecosystem

As with many global technology themes, Japan provides the critical components – the vital organs and nervous system – of the humanoid era: 

• Harmonic Drive Systems acts as the joints, enabling the finesse and precision of every movement;
• SMC supplies the muscles, delivering strong yet controlled motion;
• Nidec drives the limbs and maintains balance;
• Fanuc serves as the spinal cord, coordinating every reflex with industrial-grade accuracy;
• Keyence forms the eyes through its advanced vision and laser sensors; and
• Sony, with its world-leading image-sensing chips, allows robots to truly see and interpret their surroundings. 

Together, these firms make Japan the beating heart of global robotics – providing the body through which artificial intelligence will move. This position is no accident, but the culmination of decades of expertise in precision engineering and mechatronic mastery. 

The structural shift from factories to everyday life

While still in its infancy, the trajectory of this opportunity is unmistakable. The coming decade is likely to mirror the early evolution of electric vehicles – a period of steady iteration before an exponential rise. It is a path that Baillie Gifford knows well. We first backed Tesla in 2013, when it was a $4bn company, driven by the same conviction that long-term structural change often appears improbable before it becomes inevitable. 

As artificial intelligence fuses perception with precision hardware, robots will move beyond controlled factory settings into everyday life, addressing structural challenges from labour shortages and elder care to logistics and manufacturing bottlenecks. 

This is not a speculative vision but a structural inevitability propelled by demographic necessity, geopolitical fragmentation and rapid technological convergence. 

A growing body of evidence

At Baillie Gifford, we have always believed that the most transformative opportunities emerge at the intersection of technological progress and long-term vision. Today, as artificial intelligence fuses with Japan’s world-leading robotics ecosystem, we see a similar inflexion point. Japan’s ecosystem of component specialists, automation leaders and long-term capital investors places it squarely at the centre of this unfolding industry. 

Automation has long been a secular and central theme within our portfolios, with companies such as Fanuc held as early as the 1980s, when perception was shaped more by dystopian fiction (popularised by films such as The Terminator, 1984) than industrial foresight. 

For us, innovation has always been less about fearing disruption and more about embracing the promise of progress. Today, automation is entering a new chapter. The recent SoftBank acquisition of ABB’s robotic division underscores that momentum – a strategic commitment not to a single company, but to the dawn of a new industrial epoch of physical AI, one in which intelligence finally meets motion.

The rise of humanoid robots is not just a technological leap but a structural response to demographic and economic realities, with the potential to reshape industries and societies. The age of intelligent machines is here, and at Baillie Gifford, we have long been backing the innovators that will define it.

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