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.”

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.”