Tech events have showcased a plethora of new startups and well-known brands displaying next-gen augmented reality (AR) smart glasses this year. This further highlights the industry’s gradual shift towards AI-assisted AR smart glasses amidst the limitations in new applications development and the continuous slowdown in shipment volumes for virtual reality (VR) and mixed reality (MR) devices.

P.K Tseng, Research Manager at TrendForce, stated that the current VR industry faces issues such as insufficient applications, slow content updates, heavy devices, discomfort during prolonged use, and high prices. Apart from hardcore gamers and specific project-based markets, the industry lacks killer applications that attract general consumers.

The same situation is reflected in MR headsets. Microsoft’s two generations of HoloLens and Apple’s Vision Pro, the three most representative MR head-mounted devices (HMD), once created significant hype in the market, but ultimately faced disappointing outcomes. They are generally heavier than VR devices in weight, and are exorbitant in prices. Additionally, limited application scenarios, poor long-term wear experience, and issues like dizziness, have led to weak market demand.

VR/MR to Carry On With Positive Growth after Two Consecutive Years of Deterioration
Most MR devices on the market structurally resemble VR devices with cameras. While they can view external objects, they do so through VST (Video See-Through) technology, showing the real-world images captured by the camera indirectly after rendering. Therefore, they are similar to VR devices in fundamental, and cannot directly view the real world like AR devices that support OST (Optical See-Through) technology. As a result, the industry often categorizes AR and MR together.

Eric Chiou, Senior Research Vice President at TrendForce, pointed out that from the global market’s perspective, the VR/MR market showed signs of decline last year compared to the previous year, with total shipments reaching 7.2 million units. This year, the market is expected to enter another period of ongoing shipment decline, influenced by news that Apple will halt production of the Vision Pro by the end of 2024. Additionally, new products, such as a more affordable version of Apple’s Vision Pro and updated Meta products, are not expected to launch until 2026 at the earliest.

However, thanks to improvements in hardware experience and cost investment for VR/MR, the future looks more promising. Notably, the adoption of OLEDoS (OLED on silicon, also known as Micro-OLED) offers a significantly higher PPI (Pixels per Inch) compared to glass-based OLEDs, which greatly enhances user immersion. As more production lines come online, the acquisition cost of these panels is also expected to gradually decrease. Consequently, VR/MR is anticipated to show a positive YoY growth. TrendForce forecasts that shipment volume will reach 40.1 million units by 2030 at an approximate CAGR of 33%.

Projected Shipment of VR/MR Devices between 2024 and 2030 (Source: TrendForce)

Battle of AR Glasses to Unlock Infinite Commercial Opportunities
A report from the Ericsson ConsumerLab in May 2024, focusing on early adopters of AR, indicated that the number of users willing to use AR glasses in conjunction with smartphones is expected to double within the next five years. Users have a strong demand for portable AR glasses, and are even willing to pay 20% more for the convenience of having them on the go.

Meta’s Ray-Ban smart glasses, despite not being categorized as AR glasses, have surpassed one million units in global sales, reflecting a strong demand for portable AR glasses. At the Meta Connect 2024 conference, Meta also unveiled the Orion AR glasses prototype for developers (consumer version expected to launch in 2027). As the leader in the VR industry, Meta’s demonstrated commitment to shifting its development focus and resources toward AR seems to signal a broader industry trend towards AR.

TrendForce projects the total shipment of AR devices in 2024 to be 700K units. With the integration of AI features, AR glasses are expected to receive a significant boost in momentum. Particularly, various Chinese brands and startups are aggressively launching a wide range of AI-assisted AR glasses, leading to an intense ” Battle of AR Glasses ” in the market. Driven by this enthusiasm, the market is expected to further expand to 25.5 million units by 2030 at an astounding CAGR of over 67%.

Projected Shipment of AR Devices between 2024 and 2030 (Source: TrendForce)

Who is the Leader of Next-Gen HMD?
Tseng commented that the biggest difference between AR and VR/MR is that AR primarily focuses on the real world, with virtual elements as a complement. Although MR is primarily centered on virtual environments, there is still interaction with the real world. As for VR devices, which are entirely dedicated to virtual environments, may become less common, as a simple addition of a camera can allow a device to transition into the MR realm. This also suggests that the boundary between VR and MR will become increasingly blurred in the future.

Chiou provided a straightforward way to distinguish between VR/MR and AR. If one needs to power on the device to see any content, it is VR/MR. In contrast, one can still see the real world through the lenses even when the power is off if it is AR. Therefore, the focus of AR is to allow users to focus on their actual surroundings while providing additional auxiliary information in that reality. On the other hand, VR/MR enables users to immerse themselves in, and focus on an extended virtual space.

Although MR devices using VST can display the external environment, images shown are actually rendered and delayed, which can restrict users to a fixed point to avoid potential dangers. Currently, there are three main sources of latency in VR/MR devices. The first is the camera’s exposure time, which is an inherent limitation of optical technology. The second is the processing time, as more powerful device functions require longer computation times. The third source is the response speed of Near-Eye Displays (NED). Regardless of silicon-based or glass-based, OLED displays have faster response times compared to LCDs.

Comparison between VR/MR and AR (Source: TechNews)

Seeking for Optimal NED Technology of Minimized Dimension and Maximized Brightness
As the ” Battle of AR Glasses ” intensifies across the AR industry, it has sparked infinite business opportunities and potential. In an effort to make AR devices more light-weighted and thinner, mainstream manufacturers have begun adopting a design philosophy for AR display modules that focuses on “minimizing size and maximizing brightness”. Firstly, lighter and thinner waveguide technology will replace Birdbath optics as the mainstream AR optical structure.

Following Meta Orion’s adoption of next-gen NED technology, LEDoS (LED on Silicon, or Micro-LED), it is set to drive a new wave of AR glasses embracing LEDoS technology. According to TrendForce, the market value of Micro-LED translucent AR smart glasses chips is projected to reach $383 million by 2026, with a staggering CAGR of 704% from 2023 to 2026.

Market Value of Micro-LED Transmission AR Smart Glasses Chips between 2021 and 2026 (in Million USD) (Source: TrendForce)

In the AR field, the most promising technology, LEDoS (LED on Silicon), along with OLEDoS (OLED on Silicon) suitable for VR/MR devices, both belong to active micro-display technologies with self-emissive properties. LEDoS stands out in terms of resolution, brightness, contrast, optical engine size, and power efficiency. However, it faces challenges in RGB integration, and must overcome the issue of full-color display to achieve commercialization and mass production in the future. On the other hand, OLEDoS offers respectable performance in resolution, power efficiency, contrast, and optical engine size, but remains weakest in brightness.

Additionally, there are passive micro-display technologies such as LCoS (Liquid Crystal on Silicon) and DLP (Digital Light Processing), as well as the highly promising LBS (Laser Beam Scanning) technology in the AR field. Each of these technologies has its own strengths and weaknesses (as detailed in the table below).

Comparison of Mainstream Micro-Display Technology (Source: TrendForce)

In addition, current AR glasses are focused on three major optimizations. Firstly, keeping the light engine (also known as the optical engine) under 1 inch in size. Secondly, ensuring that the brightness of the NED reaches at least 4,000 nits to improve the current issue of poor optical efficiency in mainstream AR waveguide lenses. Lastly, achieving a resolution that meets the demand for over 3,000 PPI.

Integrating from Military and Security Controls to Prepare for the AR Prosperity in 2030
Tseng explained that in the HMD industry, Taiwanese manufacturers are involved in various aspects, from IC design and chip manufacturing to application development and information services. Taiwanese companies are particularly prominent in the areas of NEDs and sensors, and are also engaged in battery modules and PCB modules. Among existing VR device developers, HTC stands out (sold part of its XR business to Google for $250 million on January 23rd). As for AR device development, companies like Jorjin Technologies and Pegatron are notable players.

Etron, who specializes in the design of micro fans and thermal modules, also offers display driver ICs. Elan Microelectronics supports touch and gesture recognition ICs. Young Optics supplies high-precision optical lenses that are assembled by Foxlink. In the field of game and virtual tour application development, companies such as HTC, IGS, and Smart Reality Tech stand out. The strategic positioning of these companies lays a strong technical foundation for a significant market entry, especially as the market scale for HMDs is expected to substantially increase by 2030.

In light of the current Lai administration’s active promotion of the “Five Trusted Industries” that comprises of semiconductors, AI, military, security, and next-gen communications, Chiou suggested that the government, when undertaking upgrades and demonstrations in the military and security sectors, should consider integrating existing domestic AR or VR/MR capabilities and resources. Doing so could further reduce the entry risks for more companies in a pragmatic manner, and better prepare these players for expanding into overseas markets.

TrendForce 2024 Near-Eye Display Market Trend and Technology Analysis
Release Date:2024 / 07 / 31
Languages:Traditional Chinese / English
Format:PDF
Page:164