ARM CEO Predicts Physical AI Will Automate 'Large Sections' of Factory Work Within Decade

The revolution isn't coming—it's already rolling off the production line. ARM CEO Rene Haas delivered a stark forecast at Fortune's Brainstorm AI conference: Physical AI-powered humanoid robots will automate "large sections" of factory work within the next 5-10 years, fundamentally transforming manufacturing and displacing millions of workers in the process.

While politicians debate theoretical AI impacts, Haas is watching the actual deployment unfold in real-time. General purpose humanoid robots, combined with increasingly sophisticated "Physical AI," will take on different jobs on the fly with quick modifications to their instructions—no lengthy reprogramming required.

The $7.3 Billion Industrial Robot Investment Surge

The numbers tell the story of an industry preparing for wholesale transformation. Total robotics deal value surged to $7.3 billion in H1 2025, driven by companies scrambling to automate before their competitors do. In manufacturing alone, $1.2 trillion in investments toward building out U.S. production capacity was announced in 2025—led by electronics providers, pharmaceutical companies, and semiconductor manufacturers.

"Physical AI could transform the manufacturing industry within the next five to 10 years, with AI-powered humanoid robots potentially taking over large sections of factory work and completely replacing many factory workers."

This isn't venture capital hype—it's production-ready automation backed by the world's largest manufacturers. BMW and Mercedes-Benz are already deploying humanoid robots in production lines, while Tesla and Agility Robotics advance humanoid mobility for industrial deployment.

Physical AI: Beyond Traditional Factory Automation

Traditional industrial robots were masters of repetitive tasks but slaves to programming. Physical AI represents a fundamental shift: robots that understand, adapt, and learn from their environment rather than simply executing pre-programmed sequences.

The technology combines advanced AI reasoning with real-world manipulation capabilities. NVIDIA's latest Isaac GR00T N1.5 foundation model enhances humanoid robot reasoning and skills, significantly improving performance in material handling and manufacturing tasks. These aren't the clunky automatons of previous decades—they're sophisticated systems that can switch between tasks, handle unexpected situations, and continuously improve their performance.

Major Players Drive Physical AI Adoption

• NVIDIA: Leading manufacturers and robotics companies are using NVIDIA Omniverse technologies to build state-of-the-art robotic factories
• SoftBank & Yaskawa Electric: Signed MOU to jointly develop "Physical AI" robots for office and industrial environments
• ABB and KUKA: Expanding modular collaborative robot portfolios for human-robot workspaces
• Startups like Figure AI and Apptronik: Scaling intelligent humanoids specifically for industrial deployment

The Workforce Displacement Reality

Haas isn't sugar-coating the employment implications. While automation historically created new categories of work, Physical AI's general-purpose capabilities pose a fundamentally different challenge. These systems can perform not just repetitive tasks, but complex manipulation, quality control, and even basic maintenance functions.

The manufacturing workforce faces a two-pronged disruption: immediate job displacement as companies deploy current-generation robots, and accelerating obsolescence as Physical AI capabilities rapidly expand. Unlike previous technological transitions that unfolded over decades, the Physical AI revolution is compressed into a 5-10 year timeframe.

The Economic Transformation Ahead

ARM's prediction signals more than technological progress—it represents the most significant restructuring of manufacturing since the assembly line. Companies that successfully integrate Physical AI will gain massive competitive advantages through reduced labor costs, 24/7 operation, and consistent quality control.

The geographic implications are equally profound. Manufacturing could return to high-cost countries as robot labor eliminates the wage arbitrage that drove decades of offshore production. American factories operated by Physical AI systems could competitively produce goods previously manufactured in lower-wage countries.

As Haas noted, we're witnessing the emergence of robotics as "a branch of artificial intelligence rather than simply advanced automation." The question isn't whether this transformation will occur—it's how quickly companies, workers, and governments will adapt to the new reality.

The factory floor of 2030 will bear little resemblance to today's manufacturing environment. Those preparing for this transition now will determine whether they're part of the automation revolution—or displaced by it.