Physical AI Is Pulling Silicon Valley Founders Toward Asian Banks

Ask a Silicon Valley founder in 2026 what is on their mind at night and you are as apt to hear about a shipment of harmonic drives held up in customs as about a model training run. Physical AI, the effort to put a body on software by way of robots, autonomous trucks, warehouse humanoids and the like, has made a whole generation of startups into hardware companies. The change reaches past the founders to the law firms, landlords, insurers, recruiters and bankers who underwrite the ecosystem. One plain indication is where the new hard tech founders are making their deposits: with Asian banks in the Bay Area.

Physical AI made Silicon Valley a hardware town again

The figures speak for themselves. Robotics startups raised about $9.9 billion worldwide in the third quarter of 2026, more than twice the same period a year prior, and the first nine months of the year are up some 185 percent. China and the United States are at the head of the pack. Chinese firms have pulled in roughly $13.2 billion this year and American ones close to $12.1 billion; Skild AI alone raised $1.4 billion for its robotics foundation model.

The chip industry set the tone in January. When NVIDIA introduced a new line of open physical AI models at CES, founder and CEO Jensen Huang put it in a line quoted at every robotics meetup in the Valley since.

A software founder can make a product with a laptop and a cloud account. Physical AI needs motors, reducers, batteries, cameras, custom boards and machined aluminum, most of it designed, made or assembled in Asia. An engineering issue turns into a logistics issue, and then a matter for the bank.

The supply chain is the business

In a hard tech startup the supply chain is anything but a back office concern. It sets unit cost and delivery schedule, and decides whether a pilot customer comes back. Founders who once lived in fundraising decks now deal with purchase orders, deposits, quality checks and payment terms with factories some eleven thousand kilometers away.

One can see that in the Taiwan startups that pitched at Sparknify's Taiwan Venture Day on Sand Hill Road in July. Mountain Gracious Tech, with hydrostatic bearings for robot joints, and MetaRosetta, with semiconductor compatible metalenses, were selling the components physical AI firms require rather than the robots. The customers are in Fremont and Mountain View while the machine shops and fabs are in Hsinchu and Taoyuan, and money has to move between them in two currencies, often against documents rather than handshakes.

Investors see the same geography. At a physical AI summit during SF Tech Week this month, panelists from Citi, DCVC and Japanese venture funds argued that Asia's semiconductor and electronics supply chains give the region an outsized part in physical AI, and that American appetite for automation is a natural fit with Asian manufacturing. The hardware is becoming a product of two continents.

Why the smart money is opening accounts at Asian banks

The collapse of Silicon Valley Bank in March 2023 taught founders that choosing a bank is a strategic matter, not a formality, and many opened second and third accounts. The physical AI wave has given that habit a purpose. These days the first question put to a bank is whether it understands the countries the parts come from.

Asian American banks were fielding that query for importers and manufacturers well before robots were on the scene. Cathay Bank, founded in Los Angeles Chinatown in 1962, today has over 60 branches in nine states, a full branch in Hong Kong and representative offices in Beijing, Shanghai, Taipei and, since this past August, Ho Chi Minh City. At the end of September 2026 its parent, Cathay General Bancorp, had total assets of some $25.6 billion. In the Bay Area its footprint is right where the hardware startups are: Cupertino, Mountain View, Milpitas, Fremont, San Jose, Oakland and San Francisco, according to its branch map.

Its international business financing page reads like a hardware founder's checklist: commercial, standby and transferable letters of credit, import and export documentary collections with financing against them, receivables and inventory financing, plus a correspondent network in Asia, Europe and the Americas. A startup with a $400,000 order at a Taiwanese contract manufacturer wants a letter of credit from a bank the factory already knows.

Cathay Bank has also built a High Tech Lending team, which the bank says is based in Silicon Valley and focuses on growing and emerging technology companies. It is led by Jane Ho, senior vice president and manager of the bank's High Tech Lending Division, who has seen the customer base evolve as software outfits became hardware ones.

What an Asian bank offers that a Sand Hill bank does not

Letters of credit are the plain advantage. For a founder learning the hardware business as they go, the less apparent ones matter just as much.

Take time zones and language. No app feature beats a relationship manager in Cupertino who can make a Mandarin call to a colleague in Taipei in the afternoon and get a documentary collection released before the factory shuts. For the many Taiwanese and Chinese American founders in robotics, it also matters that Cathay Bank does business in English, Traditional and Simplified Chinese and Spanish.

Then there is foreign exchange built into the account rather than tacked on. Hardware startups quote in dollars but pay suppliers in New Taiwan dollars, yen or yuan, and multi-currency accounts with currency risk management let a startup hedge a tooling deposit instead of absorbing a swing on a thin gross margin.

Or pattern recognition on Asian counterparties. A bank with sixty years of financing importers knows what a proper invoice from a Dongguan factory looks like and how long customs at the Port of Oakland actually takes. That shortens the learning curve for a robotics PhD with no supply chain background.

Lending against the physical is another. Software firms borrow against recurring revenue. A hardware startup has inventory, receivables and equipment, and a bank with asset based lending and trade finance muscle can underwrite those, sparing the founder from giving up more equity than necessary.

The network matters at both ends. In Asia the representative offices put founders in touch with suppliers, distributors and strategic investors; back in Silicon Valley the lending team sits alongside the venture firms and customers. For a founder planning a Taiwan subsidiary in two years, a bank already established in both places is one less headache.

The ripple reaches the rest of the ecosystem

Bankers are only the most conspicuous case. Law firms that spent ten years on SaaS terms now hire customs and export control experts. In Fremont and Hayward, industrial landlords are letting high bay space with loading docks to firms that would once have wanted open plan offices in SoMa. Recruiters are in Taipei and Tokyo after mechanical engineers. Every service layer around Silicon Valley is reconfiguring for atoms over bits, and those with a base in Asia are ahead.

Will Asian banks become the default bank for hard tech?

The coming years will tell if this is a lasting realignment or an expedient phase. Should physical AI funding keep compounding at the 2026 rate, the Bay Area will be home to hundreds of startups whose bills of material are largely Asian in origin, and each will need trade finance, foreign exchange and a banker who can make sense of a Taiwanese pro forma invoice. Banks with a branch in Hong Kong and offices in Taipei, Shanghai and Ho Chi Minh City can establish those ties while a startup is still small and grow from there. Cathay Bank's move into Vietnam this year, in step with manufacturers putting down roots in Southeast Asia outside China, indicates where that footprint is going. Founders stand to gain quicker cash cycles, cheaper hedging and fewer equity dollars tied up in inventory.

Then there are the risks. Geopolitics sits on top of any cross-border or cross-strait deal. A tariff change, export restrictions on the latest chips and sensors or a name on a sanctions list can turn a standard letter of credit into a compliance matter overnight, and a bank with substantial Asian exposure has more of that risk to contend with. Concentration is a concern as well. Founders who shifted funds after the 2023 bank failures did so to spread risk, and putting all of a startup's treasury with one regional bank, Asian or not, runs counter to that. A startup's banker must be stable as well as well connected.

One controversy is worth putting on the record. Some venture investors hold that startups belong with the big national institutions and fintech platforms, with their sweep accounts, instant venture debt and software integrations, and that regional banks cannot match that product depth. Those who make the case for an Asian bank counter that no sweep account puts through a documentary collection in Kaohsiung on a Friday afternoon, and that the trade finance acumen founders need lives in institutions built for importers. For many founders the sensible course is a national or fintech account for payroll and a specialist Asian bank for the supply chain.

What to watch: whether Asian American banks begin to report technology lending figures or set up more specialty lending teams in Silicon Valley; whether trade finance at Bay Area branches rises in step with robotics funding; how new tariff and export control rules alter the cost of cross-border payments; and whether the first physical AI unicorns hold on to their Asian bank ties once they can do business with any bank on the planet. If they do, the quiet change underway in the branch offices of Cupertino and Milpitas this year will look like the point where Silicon Valley's financial plumbing caught up with its supply chain.

Physical AI gave Silicon Valley's startups bodies made in Asia, and the founders who bank where the factories are will spend less time fighting their own cash flow.

Subscribe to Sparknify for Silicon Valley tech news and the people behind it.