JPMorgan has released a research note indicating that China's factory automation (FA) upcycle remains intact, though the recovery is becoming increasingly selective, with growth and quality increasingly concentrated in high-value, innovation-driven automation and robotics segments.

According to the latest data from MIR, FA sales rose 8% year-on-year in the second quarter of 2026, while the industrial automation (IA) market was broadly flat, up just 0.2% year-on-year, and process automation (PA) declined 4% year-on-year.

At the product level, AC servo motors surged 25% year-on-year, small PLCs (programmable logic controllers) rose 15%, medium and large PLCs climbed 14%, and industrial robots increased 17%.

The bank recommends that investors refocus on lagging names and supply chain beneficiaries for the remainder of the year, particularly Sanhua Intelligent Controls (02050) and Hengli Hydraulic (601100.SH) tied to the Tesla robotics ecosystem, as well as UBTECH Robotics (09880) and Inovance Technology (300124.SZ) in the FA space.

JPMorgan continues to favor high-quality leaders with clear innovation and execution advantages.