Soumitra Dutta Says Physical Intelligence to Shape the AI Competition Among Nations

The AI conversation has been all about text over the past few years: enormous models trained on huge‚ text-filled datasets that can produce prose‚ write code‚ answer questions‚ and generate fluently worded document summaries․

The upcoming phase of AI will be different․ "The next era of AI is about turning perception into reasoning and imagination into action‚" says Soumitra Dutta‚ former dean of Oxford's Saïd Business School and co-creator of the Global Innovation Index, in a recent article that appeared on media sites such as The Globe & Mail․ The shift he is describing is toward physical intelligence -- systems that interact with the real world. And this domain will largely determine which countries and companies win the next decade of tech competition․

Physical AI includes machines that perceive‚ reason‚ and act‚ as well as manipulate objects to navigate three-dimensional environments․ For example‚ a humanoid robot in a hospital ward, or a surgical assistant that understands tissue‚ instruments‚ and anatomy in real time․ They are categorically different technologies from chatbots‚ and they require categorically different capabilities to build․

Among nations, the United States is widely seen as leading in the cognitive dimension of robotics‚ including Vision-Language-Action (VLA) models and simulation environments․ But industrial robotics is where China has a decisive edge. China’s operational stock of industrial robots today exceeds 2 million units -- roughly 4.5 times larger than Japan’s, the world’s second-largest robotics base. And China now deploys 54 percent of all new industrial robots worldwide․

Soumitra Dutta’s key argument is that the US has structural advantages that will matter more as AI moves from the digital domain to the physical․ "The next phase of AI is not just about better models -- it is about integrating computation with the physical world․ That requires ecosystems that combine science‚ engineering‚ capital and institutions at scale․ The United States is uniquely positioned to do this," says Dutta, who holds a PhD in computer science (with a major in AI) from the University of California, Berkeley.

US private investment in AI in 2025 was $285․9 billion compared to China's $12․4 billion‚ more than 23x․ Physical AI - robotics‚ autonomous systems and AI-driven scientific laboratories - requires patient capital to accommodate long development times and uncertain outcomes․ Here, the US venture ecosystem is unmatched․

But the race is still on. "The United States leads in foundational innovation and ecosystem depth‚ while China excels in scale and rapid deployment‚" Soumitra Dutta says․ "The outcome of the next phase of AI will depend on how these different strengths evolve, and how effectively each country connects them into a coherent strategy․"