As the artificial intelligence race moves beyond language models into the physical world, Asia's manufacturing and supply chain strengths could give it an edge over the US, says Granite Asia's Jixun Foo.
The veteran venture capitalist said the current wave of AI development, sparked by breakthroughs in foundation models over the past two years, had entered a new phase where physical applications - from robotics to industrial automation - were becoming increasingly important, playing to Asia's long-standing manufacturing strengths.
"AI is not just about models or applications in software," said Foo, senior managing partner at Granite Asia, in a recent interview with the South China Morning Post. "If you look at Asia, our advantage is in the supply chain, hardware and engineering capabilities."
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That advantage, he added, stemmed from a deeply integrated industrial base spanning mainland China, Japan, South Korea and Southeast Asia, allowing faster iteration and large-scale deployment of AI-enabled hardware, which could give Asia an edge as the focus of AI shifted from "language models" to "real-world applications".
The shift was also being reflected in venture capital flows, with investors increasingly focusing on application-layer companies that could generate tangible use cases and revenue, rather than purely model-driven businesses, according to Foo.
"When we look at [opportunities in] AI, we don't just look at models or applications in isolation - we look at the entire ecosystem," Foo said. "The key question is what industries it can transform and what kind of value it can unlock."
Granite Asia, formerly the Asia operations of GGV Capital, manages about US$10 billion in assets and has backed a number of major technology companies including Baidu and Xpeng. Foo, a Singapore-born investor who has spent two decades in the region, is best known for his early bets on Chinese internet and mobility firms.
He cited Manycore Tech, a spatial computing software developer that debuted on Friday in Hong Kong, as an example. Backed by Granite Asia since 2014, Manycore is positioning itself in the emerging field of "spatial intelligence", where digital models of physical environments can be used to train embodied AI systems.
That shift, he said, would also fundamentally reshape business models, including those built on advertising, as interactions moved from human attention to machine-driven execution.
For Foo, the long-term opportunity lay less in software interfaces and more in how AI interacted with the physical world. "In the past, software provided tools that people used," he said. "In the AI era, what it delivers is outcomes - it gets the work done."
Foo also said hardware and infrastructure would play a more central role in the next phase of AI development, particularly in Asia, where supply chains for components such as chips, optical modules and industrial equipment were already concentrated.
"I tend to believe hardware will become more valuable," he said, pointing to the rapid development of robotics, autonomous driving and AI-powered industrial systems.
At the same time, he expected a wave of new listings for AI-related companies as they sought to capitalise on investor enthusiasm, though he cautioned that not all would prove sustainable.
"Many companies will add 'AI' to their story," he said. "But over time, the market will differentiate between real and fake AI."
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This article originally appeared on the South China Morning Post (www.scmp.com), the leading news media reporting on China and Asia.
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