Elon Musk’s Neuralink likes to say that it is a “pioneer” in brain-computer interfaces (BCI), but China’s BCI industry is already quietly transitioning from research to scale-up.
With stronger policy support, expanded clinical trials, and increased investor interest, a new wave of startups is racing to commercialize both implantable and non-invasive BCIs. So says Phoenix Penn, who has founded not one but two BCI startups. He is the co-founder of NeuroXess, a manufacturer of BCI implants, and the founder and CEO of Gestala, a non-invasive ultrasound BCI startup.
His belief in the potential of this market is based on concrete actions. Provinces such as Sichuan, Hubei, and Zhejiang have already set prices for BCI medical services and are accelerating its integration into the national health insurance system.
Over time, he said, the technology will expand beyond medicine to “treating diseases” to “augmenting humans.”
“I have always maintained that neuroscience and AI are two sides of the same coin,” Peng said. “They are destined for deep integration that will enable a direct high-bandwidth connection between the human brain and AI. BCI will serve as the ultimate bridge between carbon-based intelligence and silicon-based intelligence. This may sound far-fetched, but it represents an unimaginably huge market in the future.”
Four factors driving BCI in China
However, over the next three to five years, BCI use will likely continue to be concentrated in the medical field, with the market reaching billions of dollars as insurance coverage expands, Peng told TechCrunch.
In August 2025, China’s Ministry of Industry and six other institutions announced a national roadmap to further accelerate the development of BCI. The plan targets major technological milestones by 2027, common industry standards, and a complete supply chain by 2030, with the goal of building globally competitive BCI companies and supporting small, specialized businesses.
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When asked what’s driving China’s rapid progress in BCI, Peng told TechCrunch it’s down to four factors. The first is strong policy support through cross-sector collaboration to coordinate technical standards and healthcare reimbursement. In December, at the 2025 Shenzhen BCI & Human-Computer Interaction Expo, China announced a 11.6 billion yuan ($165 million) neuroscience fund to support BCI companies from research to commercialization.
The second factor is vast clinical resources, including large patient pools and low research costs that accelerate trials. China’s national health insurance means faster commercialization once the state approves a device. This compares to the United States, where even after the FDA approves a device, each major payer, private insurance company, must approve it separately.
According to CGTN, researchers have completed the country’s first fully implantable wireless BCI trial, and the second in the world, allowing paralyzed patients to control the device without external hardware. Neuralink is the startup that has completed its first such trial.
“In traditional electrical BCIs, Chinese companies have made clinical advances in motor and language decoding, spinal cord reconstruction, and stroke rehabilitation, completing more than 50 flexible implantable BCI clinical trials by mid-2025,” Peng said, adding that next-generation efforts are now moving toward whole-brain neural decoding and encoding, including ultrasound-based approaches like Gestara.
The third factor is China’s mature industrial production spanning semiconductors, AI, and medical hardware, which supports rapid research and development and prototyping, Peng points out. Finally, there is strategic investment in the market, with both state-funded and private capital proliferating under state leadership.
Recent significant deals include Shanghai-based BCI startup StairMed Technology raising $48 million (350 million yuan) in Series B funding in February 2025. BrainCo, a neurotechnology company developing non-invasive BCI and bionic limbs, also reportedly quietly filed for an IPO in Hong Kong after raising $287 million (2 billion yuan) earlier this year. Penn’s company, Gestara, was founded in January and is in talks with investors to close an angel round in the near future, he said.
Overall, Chinese BCI startups are gaining momentum to challenge US leaders such as Neuralink, Synchron, and Paradromics. Some of the most active companies in China include NeuroXess, Neuracle, NeuralMatrix, BrainCo, Bo Rui Kang Tech, Aoyi Tech, Brainland Tech, and Zhiran Medical. They range from approaches from implantable flexible interfaces to non-invasive brain computer techniques.
This means that China’s BCI market is expected to grow from 3.2 billion yuan in 2024 to more than $530 million (3.8 billion yuan) in 2025, according to media reports, and some forecasts say the market will reach more than 120 billion yuan by 2040.
BCI type
BCI follows two paths. The first is invasive electrophysiological BCIs like NeuroXess and Neuralink, which implant electrodes in people’s brains to obtain precise neuron-level signals. However, this type carries surgical risks. The second type are non-invasive systems like NeuroSky and BrainCo that sacrifice some accuracy for safety and ease of use. (These devices, typically headsets or headbands that use electroencephalography (EEG), read electrical activity through the skull.)
The field is currently expanding further, with new approaches such as ultrasound, magnetoencephalography imaging, transcranial magnetic stimulation, optical techniques, and hybrid BCIs giving researchers new tools to read and influence brain activity.
The startup’s founders also hope that non-invasive technology will help overcome barriers to adoption. Not everyone is happy to undergo brain surgery and have a device implanted in their head.
OpenAI-backed ultrasound BCIs from companies like Merge Labs and Gestala target high-prevalence diseases such as chronic pain, stroke, and depression. These technologies are more easily accepted by patients as non-invasive solutions and have much greater commercial scalability.
For example, Gestala plans to roll out its first generation of products by the third quarter, Peng said. He added that early clinical trials have shown promising results, with one session reducing pain scores by 50%, with effects lasting one to two weeks.
Meanwhile, HongShan Capital (formerly Sequoia China) invested in Zhiran Medical, a startup founded in 2022 focused on improving long-term implant performance. The company uses flexible, high-throughput electrodes to reduce inflammation and signal loss associated with rigid implants.
“While some technologies may seem cutting-edge, they are far from practical application,” said Yang Yunxia, a partner at Hongshan Capital, in a blog post. Other products appear commercially viable but face “high costs” or significant technical barriers, Yunxia argued. Ultimately, the investment decision will depend on whether investors believe the product can be developed into a sustainable business, the partners said.
The future era
Over the next five years, industry players expect China’s BCI regulations to more closely align with international standards, with a particular focus on regulatory approval and data sovereignty. Global frameworks developed by organizations such as the IEC and ISO, along with guidance from the U.S. Food and Drug Administration (FDA), are expected to serve as important reference points.
Chinese regulators are also expected to tighten oversight of the data generated by all BCI devices, as well as invasive devices, while relaxing approvals for non-invasive technologies.
Regarding the ethics facing brain-implanted and manipulated devices, China plans to strengthen requirements for informed consent, expand ethical review beyond medicine, and move toward uniform technical standards for clinical evaluation.
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