America wants to wean itself off Chinese technology. Will the pain pay off?

By Stephanie Yang, CNN

(CNN) — Seven years after founding a robotics startup in San Francisco, Rajat Bhageria is confronting a daunting new task: building robots without any help from China.

Like most US-based robotics firms, Chef Robotics has come to rely heavily on Chinese components to make the robot arms it sells to food manufacturers to automate the assembly of ready-made meals. China’s ability to churn out cheap parts at incomparable volumes has made it an integral source of competitive tech products around the world.

But as China has begun to dominate advanced industries from electric vehicles to automated factories, an increasingly protectionist US under President Donald Trump has ratcheted up restrictions on domestic use of Chinese technology, including drones, mobile robots and other critical electronics.

“For a while of course, it was like, ‘Hey, let’s find the best components, and let’s find them at the cheapest price,’” Bhageria said.

Now investors and customers have begun asking him a different question: “Why are you still using foreign-made parts?”

The intensifying rivalry between the US and China has deepened concerns about the national security risks that come with over-dependence on Chinese systems and supply chains.

In banning foreign-made technologies, US officials cite the need to protect sensitive consumer and government data, while incentivizing domestic manufacturing. But experts warn the curbs may be having an unintended effect: hindering American companies’ ability to keep up with their Chinese rivals.

Decades of outsourcing have left American manufacturers ill-equipped to meet demand, leading to higher costs and longer wait times for companies, universities and consumers that require both cutting-edge and everyday electronics.

“A lot of our digital lives are built on the infrastructure of foreign-made components and goods assembled abroad, and that’s not going to change anytime soon,” said Ben Armstrong, executive director of MIT’s Industrial Performance Center, who researches manufacturing competitiveness and automation.

“We just don’t know how to make them in the US. So, there will be a learning curve, and during that learning curve process, the price will be high,” he said.

Bhageria hopes that by starting his search for alternative suppliers now, his company can mitigate potential economic pain down the line.

He has that luxury, because the components in his robotic arms are not yet affected by the bans. But he’s worried the list will grow. “You can imagine what’s the next shoe to drop, right? Like, the next thing might be fixed robot arms.”

Robots made in America

The company’s final assembly is done in the US, Bhageria said. However, the machine utensil components attached to the end of its robot arms are all currently made in China.

Bhageria initially wanted to shift that production last year, as Trump escalated tariffs on Chinese imports. He quickly discovered it would be prohibitively expensive to make the plastic grabbers in the US, and that many suppliers outside China didn’t have the capability to fill his order.

“It’s actually been a much harder process than we had initially hoped,” he said. “We will even talk to some really good machine shops in the US and they’re like, ‘We can’t do this.’”

Those challenges underscore how important Chinese industrial advancement has become to US companies. But the US administration remains insistent on discouraging use of Chinese technology, and the range of prohibited products continues to expand.

In July, the Federal Communications Commission added power inverters and new advanced robotics – like the humanoids that can run, jump, dance and fight – to its list of restricted foreign-made technology. The US has also forbidden cars using Chinese software and enacted a 100% tariff on Chinese electric vehicles. Similar tariffs on drones took effect last month, following a ban on new models in December.

The ever-growing list has left even American corporate giants like Ford struggling to keep up. The blue-chip automaker drew criticism from the Trump administration earlier this month for improper links to Chinese technology, namely its use of Chinese electric car batteries made by CATL.

Ford rejected claims that it was ceding US manufacturing to Chinese entities.

Michael Murray, chief executive of Kopin Corporation which makes optical components for drones used by the US military, said it has taken the company more than two years to relocate manufacturing for some of its micro display screens from China to the US.

He estimates that making those components in the US costs as much as 25% more, though the expenses of moving the supply chain have been offset by funding from the Department of Defense.

“We don’t have the volumes to get the costs down as much as the rest of the market, so there is a price squeeze there that we have to accommodate for,” he said.

As regulation has become more stringent on the sourcing of sensitive technologies, more companies are looking for US-made parts, Murray said. Still, China can produce more micro displays in one week than the US can produce in a year, he added.

Falling behind

Gavin Kenneally, whose company makes industrial and military robot dogs, is working to find a new source of rare earth metals, of which China has nearly a global monopoly.

Ghost Robotics has already moved its motor production from China to South Korea, and currently procures its neodymium magnets from a European company. But the raw material comes from China, which means it will be subject to a government ban starting in January.

“It’s an extremely difficult supply chain problem to solve in the short term,” said Kenneally, who added that such policies are often telegraphed in advance to give companies time to adjust. “In the long term, I think these bans have had the stimulative effect that the government had designed them to have.”

As US suppliers work to catch up, analysts and executives said limited access to China’s extensive supply chain could hinder American progress in both cutting-edge industries like AI and robotics, and traditional manufacturing.

“In the time that it takes an American company to build their first prototype, a Chinese company may already be on version three,” said Saman Farid, founder of industry coalition Robots for America, and Formic, which supplies industrial robots to US factories.

While Farid’s customers have not yet been impacted, he worries that the scope of restrictions will grow, and manufacturers will have to go without the most competitive equipment and technologies.

“If alternatives are not created fast enough, then it could be a real stumbling block for American businesses,” he said.

Without the cheap humanoid robots that China mass produces, US universities and research labs may also have to turn to older or more expensive models.

At the University of Illinois Urbana-Champaign, engineering professor Sayan Mitra said several courses use robotic arms, drones, humanoids and vehicles from China. Replacing Chinese humanoids with US ones could cost 10 times more, while other drone options may not even exist, he said.

“It’s like we are trying to do surgery on a patient that is already on their feet,” Mitra said. “If it is done in a very ad hoc, unpredictable way, it’s going to slow down everything. And in fact, the solution we are aspiring towards, like creating strong robotics researchers and having a domestic supply chain, can completely get derailed because we’re going to block the process of getting robots and experimenting with them.”

Even everyday home goods are in the government’s crosshairs. The FCC ban on mobile robots includes new versions of automated devices like robot vacuums, pool cleaners and lawn mowers, the vast majority of which are also made in China.

“It’s extremely difficult to move manufacturing to the US,” said Jitesh Ubrani, director of consumer devices research at IDC, a tech intelligence firm. “Long-term, sure, that could happen. But that’ll probably be very expensive, and so the US consumers end up just paying a whole lot more.”

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