Fanuc’s share of China’s industrial robot market has fallen from more than 20 per cent at its peak to 9 per cent. That figure covers the first quarter of 2026. Over the same period Estun, KUKA and Inveance each held 10 per cent, and Yaskawa was left with 4 per cent. Domestic Chinese brands crossed 55 per cent of the market for the first time, overtaking the foreign incumbents.
This is not a story about a company in trouble. Fanuc’s fiscal 2025 revenue reached 857.8 billion yen, up 7.6 per cent and a record high, with an operating margin of 21.4 per cent and cumulative global installations past one million units. The bleeding in China and the growth everywhere else are written on the same set of accounts.
Hitachi supplies what Fanuc cannot build
On 30 September Fanuc and Hitachi announced a strategic partnership. Hitachi brings its AI technology, Fanuc brings its industrial robots, and together they will run joint validation and commercial deployment of physical AI. During the validation phase, Hitachi’s plant in Ibaraki prefecture serves as the Customer Zero.
The arrangement is more pragmatic than a digital twin. Simulation always leaves a gap between the model and the real workshop. Lighting, dust, part tolerance and equipment ageing cannot be simulated at production fidelity. Hitachi’s approach skips the simulation and uses a real factory as the training ground, converting every small adjustment during a changeover and every difference in grip force into reusable capability.
From fiscal 2027 the two plan to roll the offering out to global customers across nine industries, including semiconductors, pharmaceuticals, automotive and shipbuilding.
Why field data beats a bigger fleet
Industrial robot competition has been measured on precision, speed and reliability for three decades. Physical AI changes the axis. The question becomes whether the machine can judge for itself, understand a task goal, adapt to a changed environment and complete a complex operation without an engineer reprogramming every line.
Fanuc has the strongest body in the industry. Its servos, reducers, controllers and CNC systems are all built in house, and no buyer replaces a Fanuc line that has run for ten years to save 10 per cent on price. Trust in industrial settings is accumulated over time, and Fanuc has four decades of it.
What the company does not have is the non-standard data from real manufacturing sites. Virtual simulation and imitation learning cannot cover the rules that only experienced operators know. How much the feel of a part differs between batches. Which parameter needs a nudge when production switches product. Where the cycle-time bottleneck hides at a particular station. None of that is in any dataset.
Hitachi has a century of manufacturing history, live production lines and real process know-how. The Ibaraki factory generates the data Fanuc cannot manufacture in a laboratory. The Customer Zero label is essentially an AI translation of the Toyota Production System, moving the genchi genbutsu improvement loop from an engineer’s head into a model.
The market read it as good news
The secondary market reaction was immediate. On 30 September Hitachi’s shares reversed from a 72 yen decline into positive territory, and Fanuc closed up 0.96 per cent.
The more interesting signal is what the deal does to valuation logic in the private market. For two years the anchor for embodied AI startups has been body plus data, with whoever owns more robots and more data collecting the higher mark. The Hitachi and Fanuc combination suggests a different rule. The scarce asset is not volume, it is authenticity. A century-old manufacturer with real production sites may hold data that is more valuable than a startup with a hundred thousand synthetic episodes.
For Chinese industrial robot makers the near-term competitive pressure is limited. The Fanuc and Hitachi pairing is aimed at semiconductors, pharmaceuticals and shipbuilding, segments where Chinese vendors still have thin penetration, and it does not yet collide with Estun and Inveance in the domestic mid-market.
The open question is timing. In fiscal 2027 the combination of brain, body and real site either proves itself in high-barrier industries or it does not, and that verdict decides whether Fanuc keeps the industrial robot throne or gets pushed off the table by the physical AI wave.
Editor’s note: This is an adapted translation of the original OFweek report. It has been trimmed and restructured for readability for an international business audience. The full original (in Chinese) is at https://robot.ofweek.com/2026-10/ART-8321202-8420-30708402.html.