PATEO (02889.HK) has signed a strategic cooperation Memorandum of Understanding with Arm to explore physical AI (AI that interacts with the physical world) applications for vehicles. The companies will focus on next-generation automotive workloads involving perception, interaction, multimodal sensing, cockpit-driving integration and in-vehicle AI agents. PATEO says the collaboration supports its integrated Software, Hardware, Chip and Cloud strategy, while Arm contributes automotive computing expertise and a broad industry ecosystem. PATEO's AI-related revenue reached approximately RMB 209 million in the first half of 2026, up 588.6% year on year, as the company expands from proof-of-concept projects toward scaled deployment and develops its AI-Defined Vehicles strategy.