Asia Industrial Technology Continues Upward Trend, China's FAI Near Peak Growth

Overview

Bernstein's Asia Industrial Technology Barometer report shows that during April-May 2026, China's industrial automation continued to grow at near-peak speed, with further acceleration in recovery in other parts of the world. The report highlights positive development trends in Asia's industrial technology sector through multiple key indicators, particularly showing the resilience of China's manufacturing.

Core views

In China, both official manufacturing PMI and production PMI remained in expansion territory in May at 50.0 (previous 50.3) and 51.2 (previous 51.5), respectively, despite new orders PMI slightly declining to 49.9. More importantly, high-tech manufacturing PMI and equipment manufacturing PMI further expanded to 52.9 (previous 52.2) and 52.1 (previous 51.8), respectively, showing strong performance in industrial automation-related sectors. In April, Japan's machine tool orders to China increased by 33.2% YoY (previous 27.2%), with growth momentum widely distributed, forming a "dual peak" pattern similar to previous cycles. Additionally, industrial profit growth further accelerated to 24.7% YoY in April, driven by accelerated revenue growth and improved operating profit margins. Manufacturing, especially high-end manufacturing, grew by 20.4% YoY and 44.8% YoY in April 2026, significantly outperforming the overall industrial performance. Globally, Japan's machine tool orders increased by 45.1% YoY in April, with a slight MoM decrease of 2.3%. After excluding exchange rate effects, growth in the North American region temporarily slowed to 16.2% YoY (previous 48.3% YoY), mainly due to high base effects. However, growth accelerated further in Europe (+35.6% YoY vs +21.9% YoY) and Japan (+43.4% YoY vs +2.5% YoY). In May, manufacturing PMI of major economies remained in expansion territory: US 55.3, Eurozone 51.4, Japan 54.5. In April, Japan's robot export volume maintained strong momentum, increasing by 40.7% YoY (previous 31.7% YoY). Although the US temporarily declined by -5.8% YoY due to high base effects, growth continued to accelerate in China (+32.8% YoY vs +25.6% YoY) and Europe (+68.3% YoY vs +35.3% YoY). In March, Japan's overall robot orders maintained strong momentum, increasing by 23% YoY and 10% MoM. The report believes this growth stems from both cyclical recovery and the acceleration in adoption of physical AI.

Analysis framework

The report adopts a multi-dimensional data cross-validation analysis method, judging the industrial technology sector's prosperity through the organic combination of macroeconomic indicators, industry indicators, and micro-enterprise data. At the macro level, it focuses on key indicators such as manufacturing PMI, industrial profits, and fixed asset investment; at the industry level, it closely tracks professional data such as machine tool orders, robot exports, and automation equipment production; at the micro level, it verifies overall trends through specific companies' orders and production situations. This progressive analysis framework from macro to micro can more accurately grasp the driving forces and sustainability of industry development.

Methodology notes

• Industry/Industry Analysis FrameworkSupply-demand framework

  Tracking supply-side indicators like machine tool orders and robot exports, and demand-side indicators like manufacturing PMI to judge industrial automation industry prosperity

  The prosperity of the industrial automation industry requires observing both supply-side capacity utilization, order situation and demand-side manufacturing activity, with mutual verification to accurately judge industry trends

• Cycle and Prosperity FrameworkProsperity Inflection Point Analysis

  Using leading indicators like PMI to identify turning points and expansion trends in the manufacturing prosperity cycle

  PMI above 50 indicates expansion, below 50 indicates contraction. By observing PMI changes, we can anticipate changes in the manufacturing prosperity trend

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Keyence (6861.JP)

  Industrial automation equipment manufacturer, benefiting from manufacturing PMI expansion and increased equipment investment

  Strengths

  Global leader in industrial sensors and measurement equipment

  Comparison

  Maintain overweight rating

• FANUC (6954.JP)

  Industrial robot and automation control system provider, benefiting from robot export growth

  Strengths

  Global leading industrial robot manufacturer

  Comparison

  Maintain overweight rating

• Cognex (CGNX)

  Machine vision system supplier, benefiting from smart manufacturing upgrade demand

  Strengths

  Leading enterprise in machine vision technology

  Comparison

  Maintain overweight rating

Key data

• China Manufacturing PMI50.0Maintained expansion in May, previous 50.3
• High-Tech Manufacturing PMI52.9Further expanded into expansion territory, previous 52.2
• Japan Machine Tool Orders to China YoY+33.2%Strong YoY growth in April, previous +27.2%
• Industrial Profit Growth YoY24.7%Further accelerated in April
• Japan Robot Exports YoY40.7%Maintained strong growth in April

Impact & implications

For industrial automation-related companies, the current positive data indicates that the industry is in an upward prosperity cycle, especially the strong performance in high-tech manufacturing and equipment manufacturing, which provides a favorable market environment for related equipment suppliers. The report reiterates overweight ratings for Keyence, FANUC, Inovance, SMC, AirTAC, Cognex, Hikvision, Han's Laser, IPG Photonics, and Harmonic Drive, and maintains the market performance rating for Estun, showing continued optimism for leading enterprises in industrial automation sub-sectors.

Risks

• Macroeconomic fluctuations may affect manufacturing investment willingness
• Exchange rate changes affecting multinational enterprise profitability
• Supply chain disruption risks

What to watch

• Persistence and trend changes in manufacturing PMI
• Seasonal fluctuations in industrial automation equipment orders
• Impact of global trade policy changes on equipment exports