According to CNN, xenobots are made by scraping living stem cells from embryos and left them to incubate.  There’s no manipulation of genes involved.  As of 2021, xenobots are created from frog stem cells.

The shape of a xenobot's body, and its distribution of skin and heart cells, are automatically designed in simulation to perform a specific task, using a process of trial and error (i.e., an evolutionary algorithm).  Despite the algorithmic nature of their creation, they are not made using machine parts.
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