AI Moves from Digital to Physical: Industry Leaders Chart Next Phase
Artificial intelligence is entering a new era — one that extends far beyond chatbots, image generators, and digital assistants. At the Bosch Connected World (BCW) conference held June 10–11 in Berlin, industry leaders from manufacturing, automotive, and technology sectors delivered a clear and consistent message: AI is moving from the digital realm into the physical world, and the transformation is accelerating rapidly.
According to Xinhua News, the consensus among executives was that manufacturing will become one of the most important deployment scenarios for next-generation AI systems, with China playing an increasingly significant role in driving this integration.
The Factory as the First Frontier
Bosch Group Chairman Stefan Hartung set the tone early, emphasizing that while humanoid robots are entering a phase of rapid development, their large-scale application depends on scenario maturity — and factory floors are the natural starting point.
“Humanoid robots are entering a phase of rapid development, but large-scale application still depends on scenario maturity,” Hartung said at the conference. “Factory environments will become the key deployment scenario first.” He noted that industrial settings offer higher standardization and controllability compared to complex environments like homes, making them ideal for robot training and iteration.
Hartung also highlighted a profound technological shift: robots are evolving from simply executing tasks to “understanding the environment.” Future embodied intelligent robots, he explained, will need to integrate perception capabilities like vision and touch, with MEMS (Micro-Electro-Mechanical Systems) sensors serving as the core technology for achieving holistic perception of the physical world. According to Gasgoo, Hartung illustrated the scale of the challenge with a striking comparison: the human body has 4 million tactile sensors, and to manufacture a robot with the same number, the entire global production over four years would only be enough for 12,500 units.
A Trillion-Dollar Bet on AI Infrastructure
Alibaba Group Chairman Joe Tsai provided a macro-level perspective on the investment wave driving AI’s physical-world expansion. He revealed that major cloud service providers are expected to spend approximately $800 billion on capital expenditure this year alone, with continued growth ahead.
“Global tech giants are investing huge sums to build ‘AI factories,’” Tsai said. He noted that Germany and China, as major manufacturing countries, possess vast amounts of factory data, production process data, and industrial scenario data — resources that will become an important foundation for future industrial AI development.
Tsai’s figures align with broader market analysis. A May 2026 report from Sohu noted that Bank of America Securities’ prediction of over $800 billion in AI-related capital expenditure for 2026 significantly exceeded earlier Goldman Sachs projections of $500 billion, confirming that AI infrastructure investment intensity and speed are surpassing expectations.
“The next phase of AI will move from the digital world to the physical world,” Tsai declared. “Future opportunities lie not only in robots, but in all application scenarios related to the real economy.”
Automotive Industry’s AI Transformation
Volkswagen Group Chairman Oliver Blume offered a window into how AI is reshaping one of the world’s largest industries. “The automotive industry is undergoing a deep transformation from mechanical-driven to software-driven, and then to AI-empowered,” Blume said.
He described AI as becoming “the core technology foundation connecting perception, decision-making, and execution” — a transformation that is simultaneously reshaping both R&D processes and end products, from intelligent cockpits and voice interaction systems to autonomous driving technology.
Blume highlighted China’s unique position in this transformation, noting that the Chinese market has become an important part of Volkswagen’s global innovation system. Volkswagen’s China R&D center is the largest outside Germany, with over 3,000 engineers and software developers. “We can benefit from China’s innovation speed and digital experience, and bring these experiences to other parts of the world,” he said.
China’s National Strategy and the Broader Context
The discussions at BCW did not occur in a vacuum. They align closely with China’s national “AI+” strategy, which the State Council formalized in August 2025. The policy sets ambitious targets: deep AI integration in six key areas by 2027, with smart terminal and agent adoption exceeding 70%; full AI empowerment of high-quality development by 2030, with adoption exceeding 90%; and a complete transition to an intelligent economy and society by 2035.
In December 2025, eight Chinese ministries jointly issued the “AI + Manufacturing” Special Action Implementation Opinions, further operationalizing the strategy for the industrial sector. This policy framework provides both direction and resources for the very trends discussed in Berlin.
Implications and the Road Ahead
The convergence of trends discussed at BCW points to a fundamental economic transformation. AI’s move into physical industries could trigger a productivity revolution comparable to earlier industrial revolutions, with manufacturing, logistics, and automotive sectors at the forefront.
Bosch’s strategic positioning illustrates the direction of travel. The company explicitly positions itself not as a humanoid robot manufacturer, but as a technology supplier providing “intelligent brains” and “neural systems” for robots. With over 230 factories worldwide, Bosch possesses a unique data asset for AI training — a competitive advantage that Tanja Rueckert, Bosch’s Chief Digital Officer, described as the key to developing future intelligent automation solutions.
Several open questions remain. Can the massive AI infrastructure investments — projected to exceed $1 trillion by 2027 — generate commensurate returns in physical industries? How quickly will humanoid robots move from factory floors to broader applications like homes and healthcare? And how will competitive dynamics among China, the United States, and Europe shape the global AI-industrial landscape?
What is clear is that the next phase of the AI revolution will be measured not in tokens generated or images created, but in factories transformed, supply chains optimized, and physical processes reimagined. As the speakers in Berlin made plain, the era of AI in the physical world has begun.