Alibaba Cloud enters embodied intelligence for the first time, leading a 1 billion yuan new funding round for the robotics company Variable.

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Alibaba Cloud leads a new 1 billion RMB financing round for X Square Robot, which has raised eight rounds of funding in less than two years.

On Monday, X Square Robot issued a statement saying that the Shenzhen-based startup raised 1 billion RMB (about $140 million) in its latest A+ financing round, jointly led by Alibaba's cloud business division and Guoke Investment.

Since its founding in 2023, this has been X Square’s eighth round of financing in less than two years. According to COO Yang Qian, after this round, the company’s total raised funds have reached about 2 billion RMB ($280 million).

This round attracted a strong lineup of investors. In addition to lead investors Alibaba Cloud and Guoke Investment, Sequoia China (HSG), INCE Capital, and Lenovo Ventures also participated. Existing investors Meituan and Lenovo Star continued to follow on.

Adhering to a Software-First Strategy, Releases Wall-OSS Open Source Model

This investment comes as VC capital is flooding into the humanoid robot sector, with the market widely expecting that the integration of generative AI and robotics will revolutionize human-computer interaction and give birth to a new generation of smarter robots.

Unlike competitors who focus on hardware development, X Square takes a software- and algorithm-first differentiated approach. Company founder and CEO Wang Qian recently said in an interview that the company focuses more on the algorithms driving robots, rather than the hardware itself.

Alongside the fundraising announcement, X Square also released its open-source embodied intelligence base model “Wall-OSS” on Monday, aiming to build an open ecosystem around embodied intelligence and accelerate technological iteration. This move is also seen as a direct challenge to Physical Intelligence, which is backed by OpenAI.

COO Yang Qian said in an interview that AI technology for robots still lags behind generative AI applications such as chat or code generation. She expects robot technology to need at least 12 more months to reach the level of ChatGPT 3.5.

Citigroup expects the global robotics market to reach $7 trillion by 2050, and the massive market potential is attracting substantial capital, including funds with government backgrounds.

IPO Expected Next Year

Despite its focus on software, X Square has also launched physical products. According to its official website, the company’s products include two wheeled robots and one robotic arm.

On Monday, the company also unveiled a new robot called Quanta X2, which is said to be able to install a mop for 360-degree cleaning and is equipped with dexterous hands sensitive to minute pressure changes.

Currently, the company does not yet have products delivered to the mass market, but has generated revenue by selling products to customers such as schools, hotels, and nursing homes. Speaking of future plans, Yang Qian said the company is in talks with clients in Japan and Singapore, and plans to begin preparations for an IPO next year, though the listing location has not yet been determined.

Price is key for robots entering the consumer market. According to industry research firm Humanoid Guide, X Square’s humanoid robot is priced at $80,000, while a humanoid robot from rival Unitree Robotics costs $16,000.

Yang Qian believes that for robots to truly enter the consumer market, the price needs to drop to around $10,000, which could be achieved in the next three to five years through reductions in hardware costs. For core components, she revealed the company uses Nvidia chips for computing, but other functions require only lower-performing, auto-grade chips that can be sourced domestically.

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