Introduction
The idea of humanoid robots filling gaps in the labor force seemed like science fiction as recently as a few years ago, it has quickly become a reality. Humanoid robots are now actively working on factory floors and being piloted in personal homes. Amazon already has over 750k robots in their employment. Meanwhile, Morgan Stanley now projects that humanoid robots will become a $5 trillion annual market by 2050 — making it twice the size of the global auto industry today.
Labor Economics Meets Robotics
The U.S. Unemployment Rate is low at a rate of around 4% currently, and we’ve witnessed that labor shortages are particularly acute in sectors like manufacturing, warehousing, and logistics—areas that involve repetitive, physically demanding work. These are also the very industries where humanoid robots are beginning to prove their value today.
In many developed economies, wages for low to mid-skill labor have risen steadily. According to the U.S. Bureau of Labor Statistics, median annual pay for production and non-supervisory workers now hovers around $45,000, with benefits and turnover adding to the total employment cost. Labor supply, meanwhile, is constrained by demographic trends, such as aging populations, declining workforce participation rates, and tighter immigration policies. As displayed in the chart below, the U.S. Labor Force Participation Rate, which measures the total labor force as a percentage of the working age (16+) population, has been steadily declining over the last 25 years.
The combination of a low labor force participation rate and a low unemployment rate is where the economics of humanoid robots become highly compelling.
The Cost Convergence: Humans vs. Humanoids
The majority of humanoid robots are currently rather cost-prohibitive, with units priced around $200,000 within high income countries, but that is changing fast. Advances in mechatronics, lithium-ion batteries, AI processors, and mass manufacturing in China are driving down hardware costs at double-digit annual rates. Unitree, one of the frontrunners in humanoid robots in China, recently released a model for under $6,000, dramatically lower than the high and low income country average selling price.
Morgan Stanley projects that by 2050, the average selling price of a humanoid robot will fall to $50,000, which is nearly equivalent to the cost of one year of human labor in high income countries. China-based supply chains produce robots at approximately ⅓ the cost of non-China suppliers, so countries that tap into China’s robotics supply chain may be able to get costs as low as ~$16,000 per unit by the same year.
But the cost benefit analysis doesn’t only factor in hardware pricing versus salary. Robots don’t require health benefits, lunch breaks, paid time off, or 401(k) matches. They don’t switch jobs or take leave. And most importantly, they don’t sleep. When operating two 8-hour shifts a day, a robot with a $16,000 price tag effectively costs less than $2.75 per hour in depreciation-adjusted terms over a 3-year period.1
In other words, even before we reach full cost parity on a sticker basis, humanoid robots may already be the cheaper labor option in many use cases.
Scaling to Trillions Across Industries
If this sounds like a niche trend, the projections say otherwise. Estimates of humanoid robot annual unit sales are projected to reach 134 million by 2040, translating into $1.2 trillion in revenue. By 2050, the market could reach 1 billion cumulative units, generating $4.7 trillion to $5 trillion annually.
Initial deployment is focused on industrial and commercial roles, including:
- Assembly-line and warehouse support
- Construction site logistics
- Healthcare support roles (mobility assistance, sanitation)
- Hospitality tasks (greeting, luggage, foodservice)
- Security and night shift monitoring
While at-home humanoid companions and butlers are also in production, it is expected that household adoption will come much later. This is mainly due to the higher safety and AI generalization demands for robots inside homes.
Global Supply Chains, Local Constraints
As the demand for humanoids rises, supply chain realities will shape regional adoption curves. Today, China manufactures the vast majority of global industrial robots and dominates in key inputs such as actuators, servos, and robotic joints. At roughly one-third of the cost, sourcing from China is a necessity for many companies in North America and Europe
That said, geopolitical pressure and U.S. policy (e.g., CHIPS Act, tariffs) are pushing toward domestic manufacturing. Tesla, Boston Dynamics, and Apptronik are just a few examples of U.S. based companies building humanoid platforms at scale.
In the coming decades, humanoid robots will be essential to maintaining a globally competitive labor force. The alternative is relying on human labor, which continues to grow more expensive, less available, and prone to mistakes.
Investing in the Humanoid Revolution
It’s simple math: a robot that costs $16k upfront and works 16 hours/day is a bargain when compared to a $40k/year employee working 8 hours/day. In a world that’s aging, slowing, and getting more expensive to operate, having a scalable workforce is going to be a major differentiator of growth. That is why investors need to be paying attention.
The Roundhill Humanoid Robotics ETF (HUMN) offers exposure to this rapidly growing sector, targeting the largest public manufacturers of humanoid robots worldwide. Key holdings include Tesla, which is developing Optimus, and other major humanoid robotics builders globally, such as UBTech Robotics, as well as players leading in sensors, semiconductors, and AI hardware.
If you’d like to learn more about HUMN, check out our two other blogs which give an introduction to the ETF and explore the humanoid robots behind HUMN.
Footnotes
1 Hourly rate calculation assumes a conservative price using 365 days/work of labor, 2 8-hour shifts, approximated annual maintenance costs (estimated at ~$1,000/year), power consumption costs ($300-500/year). Other models, specifically Tesla’s, imply “nonstop work” which amounts to even more aggressive cost/hour assumptions.
Sources
Morgan Stanley, Humanoids: A $5 Trillion Global Market
U.S. Bureau of Labor Statistics
ARK Invest, Autonomous Tech & Robots Research Series
McKinsey & Co, Will Embodied AI Create Robotic Coworkers?
Bloomberg, China’s Unitree Offers a Humanoid Robot for Under $6,000
Disclosures
Investors should consider the investment objectives, risk, charges and expenses carefully before investing. For a prospectus or summary prospectus with this and other information about Roundhill ETFs please call 1-855-561-5728 or visit the website at www.roundhillinvestments.com/etf/HUMN. Read the prospectus or summary prospectus carefully before investing.
Some of the companies mentioned in this blog may be held in the fund. For a list of the top 10 holdings, please click here. Fund holdings are subject to change.
All investing involves risk, including the risk of loss of principal. There is no guarantee the investment strategy will be successful. The fund faces numerous risks, including options risk, liquidity risk, market risk, cost of futures investment risk, clearing broker risk, commodity regulatory risk, futures contract risk, active management risk, active market risk, clearing broker risk, credit risk, derivatives risk, legislation and litigation risk, operational risk, trading issues risk, valuation risk and non-diversification risk. For a detailed list of fund risks see the prospectus.
Humanoid Robotics Companies Risk. The Fund invests in Humanoid Robotics Companies, which may have limited product lines, markets, financial resources, or personnel and are subject to the risks of changes in business cycles, world economic growth, technological progress, and government regulation. These companies are also heavily dependent on intellectual property rights, and challenges to or misappropriation of such rights could have a material adverse effect on such companies. Securities of Humanoid Robotics Companies tend to be more volatile than securities of companies that rely less heavily on technology. Humanoid Robotics Companies typically engage in significant amounts of spending on research and development, and rapid changes to the field could have a material adverse effect on a company's operating results. Additionally, the development and commercialization of fully-functional humanoid robots involve complex and evolving technologies, which may face unforeseen technical challenges, regulatory hurdles, and market acceptance issues. As a result, investments in Humanoid Robotics Companies may be subject to higher levels of risk and volatility.
Consumer Discretionary Sector Risk. Consumer discretionary companies, such as retailers, media companies and consumer services companies, provide non-essential goods and services. These companies manufacture products and provide discretionary services directly to the consumer, and the success of these companies is tied closely to the performance of the overall domestic and international economy, interest rates, competition and consumer confidence. Success depends heavily on disposable household income and consumer spending. Changes in demographics and consumer tastes can also affect the demand for, and success of, consumer discretionary products in the marketplace.
Emerging Markets Risk. The Fund’s investments in China may be subject to a greater risk of loss than investments in more developed markets. Emerging markets may be more likely to experience inflation, political turmoil and rapid changes in economic conditions than more developed markets. Emerging markets often have less uniformity in accounting and reporting requirements, unreliable securities valuation and greater risk associated with custody of securities.
Information Technology Companies Risk. Information technology companies face intense competition, both domestically and internationally, which may have an adverse effect on profit margins. Like other technology companies, information technology companies may have limited product lines, markets, financial resources or personnel. The products of information technology companies may face obsolescence due to rapid technological developments, frequent new product introduction, unpredictable changes in growth rates and competition for the services of qualified personnel. Companies in the information technology sector are heavily dependent on patent and intellectual property rights. The loss or impairment of these rights may adversely affect the profitability of these companies. Information technology companies are facing increased government and regulatory scrutiny and may be subject to adverse government or regulatory action.
Concentration Risk. The Fund is concentrated in the industry or group of industries comprising the health care sector. The Fund may be susceptible to an increased risk of loss, including losses due to adverse events that affect the Fund’s investments more than the market as a whole, to the extent that the Fund’s investments are concentrated in the securities and/or other assets of a particular issuer or issuers, country, group of countries, region, market, industry, group of industries, sector, market segment or asset class.
New Fund Risk. The Fund is a recently organized investment company with a limited operating history. As a result, prospective investors have a limited track record or history on which to base their investment decision.
Roundhill Financial Inc. serves as the investment advisor. The Funds are distributed by Foreside Fund Services, LLC which is not affiliated with Roundhill Financial Inc., U.S. Bank, or any of their affiliates.
