With the advent of the physical artificial intelligence (AI) era, Korea has moved beyond technological self-reliance to enter a growth phase in the market for speed reducers, the core drive components of robots. In a market once dominated by Japanese and Chinese corporations, Korean speed reducer corporations, led by SPG, have begun expanding their share by seeking a windfall from the United States' recent move to decouple from China.
A speed reducer is a component that lowers a motor's rotational speed to amplify force (torque) and accounts for about 30%–40% of a robot's total cost. The precision speed reducer market has long been controlled by Japanese and Chinese corporations, but Japanese products have been criticized for long lead times and high prices, while Chinese products have been faulted for precision and durability issues. Korean corporations are carving out a niche with fast delivery and reasonable prices for the quality.
According to industry sources on the 2nd, SPG, which produces all three types of precision speed reducers for robots (planetary, harmonic, and cycloidal), is accelerating toward mass production of robot drive module actuators that integrate speed reducers. Planetary speed reducers are mainly used in mobility units that require high output, such as quadruped robots; harmonic speed reducers are used in collaborative robot joints where precision is critical; and cycloidal speed reducers, which withstand impact loads, are primarily applied to the joints of large industrial robots.
SPG plans to move into full-scale mass production of actuators in the first half of next year after refining its prototypes. This aligns with recent moves by U.S. robot and big tech corporations to stop using Chinese robot parts due to supply chain instability and other concerns.
Notably, Elon Musk, the CEO leading Tesla, has signaled an intention to diversify the supply chain to reduce reliance on Chinese parts for core components ahead of mass production of the Humanoid Robot Optimus. In step with this trend, SPG is combining its in-house motor technology with its flagship precision speed reducers to expand its business from supplying individual parts to higher value-added module-level supplies.
An SPG official said, "With U.S. corporations declaring they will exclude Chinese products, interest in Korean-made parts has increased," and added, "As a strategy to quickly capitalize on this spillover effect, we are establishing a mass production system for actuators, targeting U.S. exports and domestic supply in the first half of next year." The official also said, "Based on the prototype, we more than doubled the precision compared with Chinese actuators and reduced weight by about 10%."
Collaboration with major domestic and global robot corporations is also expanding. SPG, which currently is the sole supplier of speed reducers for all collaborative robot and dual-arm robot models of Rainbow Robotics, is widening its supply scope to quadruped robots and autonomous mobile robots (AMR). The company is also reportedly exploring the supply of precision speed reducers for quadruped robots made by major U.S. robot makers.
As the precision speed reducer business gains traction, SPG's earnings are improving. According to the Financial Supervisory Service's electronic disclosure system, SPG's cumulative operating profit for the third quarter this year was 12.9 billion won, up 31% from a year earlier. This year's robot speed reducer sales were in the high 10 billion won range, reaching breakeven. Next year, sales from the robot speed reducer business are expected to reach the 30 billion won range, and the institutional sector is projected to post a profit in this area for the first time since the company's founding.
SBB TECH, which manufactures harmonic speed reducers, is also accelerating its market push. Kim Seong-hwan, an analyst at BOOKOOK Securities, said, "SBB TECH's strength lies in custom production for clients based on its proprietary tooth profile design technology," and added, "With supply prices at about 70% of Japanese competitors and rapid gains in penetration in the collaborative robot market, demand for localization substitution is likely to increase."
In addition, Woorim Power Train Solution, which focuses on industrial planetary speed reducers, is expanding its lines for robot precision planetary speed reducers and cycloidal speed reducers. DIC, which has grown on the basis of automotive transmission parts, is seeking to enter the robot speed reducer field by applying its gear machining technology.
As Korean-made speed reducers emerge as substitutes for global corporations, the share prices of leading corporations are also swinging sharply. As of late Nov., SPG's share price has surged about 121% this year, while SBB TECH and Woorim Power Train Solution have risen about 48% and 53%, respectively.
Even so, the securities industry stresses that the robot parts sector must closely watch trends in downstream industries. Lee Jae-mo, an analyst at Growth Research, said, "The precision speed reducer business is closely linked with the full-fledged growth of the robot market," and added, "If corporations' capital expenditures contract due to a global economic slowdown, large-scale sales expansion could be delayed more than expected."