We are big fans of the use of AR in applications outside of retail, and while much of the AR/VR world has been negatively painted by Meta’s (FB) haphazard spending on developing the Metaverse and the issues surrounding cryptocurrency, we note that AR is alive and well, and not waiting for the metaverse or for gamers to sing its praises.  As with all other consumer technology, the XR space is application based, with successful products filling a need, either consumer related or business related, and while VR tends to be consumer (gaming) related, AR is more oriented toward business.  There are of course, business applications for VR, where you can sit at a virtual board room table and speak with other VR enabled avatars that could be in other parts of the world, but as a practical business application, VR still has a way to go.
AR however is a less complex and more accessible technology that is able to provide information to the user without requiring isolation from the real world, and will become imbedded in a number of business segments, particularly the service industry.  By service here we mean ‘servicing’, or the repair or maintenance of equipment.  Anyone business owner or consumer who has had to call in a repair person for even the most minor issue, is aware that there is no end to the complications and costs involved. 
Home appliances are a perfect example, as when a repair is needed, almost regardless of the item, a flat fee is charged just to make the visit, with an additional hourly charge as soon as the repair person walks through the front door.  Then, there is the location of the model information, which is hopefully easily accessible, and the inevitable question of, “Do you realize how old this unit is?”, which sets the tone for expensive parts that could be in short supply.  Next comes the phone call to the office, asking about the particular potential problems that might be at cause, even before a screw is turned, with the result being, “…It could be the motor (or whatever) which is going to be a problem as they don’t make it anymore…”.  If the repair person is younger than 25, there is another call to the office to talk to the boss who explains the possible issues of said pre-digital appliance, and then more parts removed. 
When the issue is discovered there is another call to the office, this time to speak with Loretta, the keeper of the parts catalogs, to find a replacement part number, and another call to Bill’s Appliance Parts Emporium to order the replacement part, followed by the inevitable, “looks like they have to order it, so we should have it within 5 to 7 business days…”, at which point you are left with a bill for the time spent, a promise as to when the part will come in, the hope that they will call when it does, and that the same repair person will be available to install the replacement part.  When the part come in, if you are lucky the same repair person is available, although if not there will be another series of phone calls to get the situation explained and some tips on how to install the part.  Eventually your appliance gets fixed (7 to 10 days?) and you geta bill for the ‘arrival fee’, time spent, and the marked-up parts, which, in the case of a refrigerator, can cost as little as $40 and as much as $1,000 ($350 average) according to Home Advisor.

What if that appliance is not an appliance but an escalator that is the only alternative to stairs for those that are disabled in a commercial building?  Just think of that home refrigerator times 100 in terms of complexity, repair difficulty, and cost, while keeping in mind that the number of repair persons who have the specialized knowledge to fix an elevator, escalator or moving walkway is diminishing as younger workers gravitate toward more digitally oriented service jobs.  Here’s where AR comes in.  Fujitec (6406.JP), Japan’s and the world’s largest manufacturer and servicer of elevators and escalators, just signed a deal with Vuzix (VUZI) under which Fujitec will adopt the Vuzix M400 smart glasses series to support its elevator engineers (installation and repair persons), along with functioning as a training tool.
Given that the company’s products are extremely complex and therefore require years of experience to install and repair, Fujitec has been testing the AR glasses for the last few years and has now decided to deploy the glasses across the company’s service engineers.  The glasses can be used while wearing helmets, regular glasses, or gloves, and have an extended battery life.  By using the glasses, experienced engineers can guide those providing installation or repair support without travel, reducing repair cost and the need for more extensive training.  The glasses themselves are technically adaptive frames that can be used with or without eyeglasses, weigh under 3 oz. and can be mounted in a hardhat if necessary.  Based on an 8 core Qualcomm (QCOM) XR1 processor and 64GB of internal flash (6GB RAM), the glasses have 3 DOF head tracking, 3 axis gyro, accelerometer, and compass, along with and an OLED display[1] with a brightness of over 2,000 nits and 24 bit color. 
The hot swappable battery pack (2 to 12 hours) can be worn as part of the headset or a 3rd party pack can be used, while the noise cancelling microphone and integrated speakers serve as adjuncts to the 12.8 MP (4k 30 FPS) camera  with image stabilization and barcode scanner.  The glasses are wireless using Bluetooth, Wi-Fi a/b/g/n/ac and 5G connectivity, all of which means that pretty much anything you see will be seen by others at a remote location as you see it, and detailed guides and information can be superimposed over the item under repair to make diagnosis and repair a simpler task. 
The M-400 series units retail for $1,800 with a variety of accessories, although we expect Fujitec will be working under a more discounted pricing system given the company’s employee base of ~10,000.  There is no information as to the timing of the roll-out and there will likely be a relatively long learning curve for those who have not participated in the trials, but such a deal is a feather in the cap for the AR world and is a good example of applications where AR has very practical applications.  We use this as an example only and are not indicating that it ushers in the ‘era of AR’ but serves as a point along the evolutionary path of AR and its potential applications in the business world, beyond any consumer applications.  While it might seem an expensive tool currently, we expect it would pay for itself quickly in the kind of applications Fujitec would be using the device.


[1] Equivalent to a 5” mobile device at 17”

​Note:  We have no connection with or receive any compensation from companies mentioned herein.  All product specifications and applications are from reference sources and/or product literature.

As we mentioned in our12-05-22 note, Samsung Electronics (005930.KS) has been conspicuously absent from the AR/VR world and seems to be looking toward the necessity for an application that would drive consumers into the space before making a major step into the AR/VR hardware business.  That said, Samsung has been developing and to a lesser degree marketing, Micro-LED technology, which is the use of very small LEDs as display emitting sources.  While Micro-LED technology is thought to be the ultimate replacement for LCD and even OLED display technology years down the road, it is currently a work in progress, and still faces some major issues that limit its use and maintain a high cost.  While that development will continue, Samsung Display (pvt) is taking its expertise in OLED display technology and moving toward another display venue.
SDC is beginning to take steps toward the mass production of Micro-OLED displays.  Micro-OLED displays use existing OLED technology, that of phosphorescent and fluorescent emitter materials, but with unusually small pixels that are densely packed in a small space..  There are theoretically two ways in which Micro-OLEDs can be used, the first being with an OLED emitter (or combination of emitters) that produces a single color and is then passed through a color filter that breaks the light into red, green, and blue components, similar to the way and OLED TV works.  The second is a using three OLED emitters (RGB) that are individually controllable and therefore do not need a color filter, similar to the way a smartphone OLED display works.  What makes these displays different from typical OLED displays is that they are built on silicon substrates, where larger OLED displays tend to be built on glass or flexible polymer plastics.
The OLED/Color filter path for Micro-OLED is being championed by Sony (SNE), who produces such displays for camera electronic viewer, HUDs, and AR/VR devices.  The display shown below measures 0.64” (Diagonal) and has 3,145,728 pixels squeezed into a display that is 0.512” x 0.384”, representing ~4,000 pixels/inch, with each pixel being spaced 0.0064mm apart (on center).  While this might sound like overkill, in a VR application the display is almost touching your eye, so if the pixels were not so closely spaced, the user would see gaps between the pixels, creating what is called the ‘screen-door’ effect

The problem is however, that using a color filter to create colors means that much of the light energy is eliminated, either reflected away from the user or absorbed, reducing the overall brightness of each color and the overall display, so Samsung Display, the global leader in RGB OLED displays for smartphones, is looking toward creating RGB Micro-OL:ED displays that contain a red, green, and blue sub-pixel within each pixel, and therefore does not need a color filter.  As can be expected however, these sub-pixels must all fit within the space of a pixel, which makes their deposition even more difficult and precise than that of the OLED/Color filter process.  It seems that while Samsung Electronics is still trying to find a key that will unlock consumer interest in AR/VR, Samsung Display, an affiliate, is thought to be taking the Micro-OLED concept a bit further.  

​Samsung Display is said to be developing a Micro-LED pilot line at its A2 display fab in Asan, Korea.  According to local sources, the company has ordered panel logistics systems from SFA (036540.KS) and glass encapsulation tools from AP Systems (054620.KS) for the pilot line that is expected to go into limited production toward the middle of 2023.  If successful, SDC will allocate funding for the construction of a small mass production line in 2024 that would be built to handle 6,400 sheets/month at the onset.  While we do not yet know the details of the intended product line, we expect the ultimate objective is to produce an RGB Micro-OLED display that will be used in commercial AR/VR applications, likely by Samsung itself, or sold to other customers, and with Apple (AAPL) expected to release an AR/VR device in 2023 or 2024, SDC is looking to develop a high volume mass production line that will feed the Apple AR/VR supply chain, especially given that Sony is expected to be the supplier for the initial Apple AR/VR product.
We note that creating OLED Micro-displays using the OLED/CF process is difficult, but the process of placing three separate OLED emitters in each pixel makes the RGB Micro-OLED process even more difficult, and SDC will face a number of challenges for which it must find solutions that can be scaled to mass production if these displays are ever to be within the cost demands of high volume consumer devices.  There are only a few manufacturers that can produce OLED Micro-displays, a number of which are large enough to be recognized by investors, such as China’s BOE (200725.CH), E-Magin (EMAN) and Sony, however others are far less recognizable, especially those based in China, such as SeeYa (pvt) in Hefei, Sidtek (pvt) in Wuhu City, Olightek (pvt) in Kunming, and Microoled (pvt) in Grenoble, all of whom have at least some product in the market. 
That said, this is still an evolving product segment and is driven on the technology side by higher resolution, higher brightness near-eye display improvements, leading to headsets and devices that are less bulky and cause less fatigue and stress.  But while the near-eye display industry continues to develop, and the two biggest CE players have not yet participated, the need for application driven demand is the industry’s major growth stumbling block.  Gaming is certainly a driver for the VR space and continues to evolve, but the metaphor of the ‘metaverse’, Meta’s (FB) hope for the future, is not enough to drive the high volumes needed for major CE companies to enter the market.  Meta has been on a costly quest to convince the world that the metaverse is other than a way to sell you something and collect user information but lacks a real application driver to attract consumers.  We expect the technology side of AR/VR displays to develop more rapidly in 2023 and 2024 but the application space will be the true driver for pushing AR/VR more quickly into the CE space.  Without application drivers, we expect the overall development of AR/VR to progress relatively slowly, likely falling behind expectations.

​As the 2nd largest CE company globally, Samsung Electronics has considerable influence over the direction of consumer products and CE technology, yet when in AR/VR circles, little is said about Samsung’s efforts, with much attention given to Meta (FB), who dominates the VR hardware space, and Apple, whose intentions for an Xr device in 2023 or 2024 seem to be well-known to all.  Yet Samsung has been working in the shadows toward developing an AR/VR business plan, although from a slightly different angle than one would expect.
Rather than rush to market with a consumer oriented AR or VR device, Samsung is taking the path of building an AR/VR ecosystem, and working to entice software developers to work with the company, rather than flooding the market with devices and hoping that they become dominant enough to become profitable.  This strategy is a bit different from Samsung’s foldable strategy, which was a race to become the first to commercialize such a technology, given a relatively open field and a well-understood smartphone market.  AR/VR, especially VR, is a new market and one that has considerable issues as to its growth path.  With Meta the dominant player, Samsung would be a catch-up company, having to spend vast sums to advertise that it has the ‘best’ device in the market, and no assurance that the market would accept that notion.
Instead, Samsung seems to be developing an ecosystem around the potential AR/VR markets, starting with a developer system assumedly next year, and aligning the direction of its affiliates and suppliers toward being able to provide as much of the potential ecosystem it would need for a high volume AR/VR production plan.  But Samsung’s focus is more toward creating the content that is necessary to develop the XR market into the high volume markets that Samsung handles well, and that means it needs to coordinate content development rather than flood the market and hope that existing content attracts consumers.  It is not to say that the company does not have hardware under development, with prototypes and models working through R&D, but having released a product in 2018 that saw little volume seems to have shifted Samsung’s attention away from hardware and toward software in this instance.
This is a challenge for Samsung, known for its hardware expertise, and the company faces the relatively meager adoption of its Exynos OS as a blow to its potential for building its software business, but the company does have a massive developer following given its top rankings in many DE categories, which gives them a platform from which to work.  We doubt Samsung is expecting its own developers to generate such content but will incentivize  the communities built around its products to build content for whatever AR/VR platform it releases.  This will be similar to Apple’s AR/VR approach, where Apple knows that despite the ‘coolness’ that an Apple AR/VR device might have, if there is little to do with it, it will see strong initial sales and weak long-term growth.
Both Samsung and Apple seem to be focused more on AR than VR, with the understanding that Meta has been seeding the market for VR to gain share, while losing a considerable amount of money.  W expect that neither company wants to enter into that scenario and are willing to let Meta rule the consumer market, while picking niches in both AR and VR that can carry higher ASP’s.  That is where we expect both to concentrate in the first two year’s of entry into the XR market, and both have the capabilities to ‘encourage’ developers to create applications and content for their platforms, rather than pin hopes on the blossoming of the Metaverse.  It is going to be a long battle for XR supremacy, but if we had to bet we would expect both companies to pursue similar paths toward such product development.

As the software is relatively new, having gone through development in partnership with DeafKidz International and the Royal National Institute for the Deaf, an organization that represents and does research for the 12m deaf or hearing impaired in the UK (17.4% of the current population – US is ~14.3%), new features are still being added with the company having noted that upcoming additions are an ability to detect different voice tones, accents, and pitch variations, all of which will enhance both the recognition and translations systems being used.
One concern we have, and hopefully others share, is the collection of data during the use of the application (or any application).  As the information is encrypted and travels over a secure link, there is little need for concern over it being intercepted by nefarious parties, but the translations themselves and the meta-data that is part of that data becomes recognizable at certain points in the process and given the issues over privacy that are currently a major part of social media, we checked to see what the company collects, particularly as the UK’s secession from the EU could put GDPR[1] rules in jeopardy.  It seems that the UK, despite its EU withdrawal, is still art of GDPR, so such rules remain in place and the company specifies its data collection policy below.

• No data is shared with 3rd parties
• Collects personal information, such as name. E-mail address, and user ID.
• Collects contact information and data on interaction with other applications, along with crash logs and diagnostic information.
• Data is encrypted over a secure connection and can be deleted upon request.

All in, XRAI is an example of an application for AR that provides a highly useful service for a segment of consumers, and to us, represents much of the difference between VR and AR currently.  While VR is a rich medium for certain content, it limits the user to a specific location, along with an inability to see the environment in which the user operates.  There is other translation software and some specifically for AR, as we have previously noted, but this application was designed to be specific to those that are deaf or hearing impaired.  With 1.5b such folks across the globe (18.75%) and expected to increase to 2.5b by 2050, there is certainly a market for such an application, and while AR is not the only way it can be implemented, it is an effective one that requires relatively little technology that does not already exist.  Smaller, less obtrusive AR glasses would be nice and an untethered device with an internal battery would also be a bonus, but we see this type of AR application as one that is both practical and beneficial to users, and that is what makes successful CE products.
Note: We get no compensation from any company, mentioned or implied, and offer our notes only as informational to investors who have an interest in the consumer electronics sector.  While there are links to our website and other websites, including those where items might be purchased, we receive no compensation for those links or products sold through those links.


[1] General Data Protection Regulations – passed in 2016 and enforceable in 2018, that sets parameters for data privacy and transfer

​Qualcomm (QCOM) has released what we believe is the 1st chip set platform specifically designed for AR headsets/glasses.  Previously most AR glasses used Qualcomm Snapdragon 670 or 662 chipsets, which were designed as smartphone chipsets using typical X12 modems, Adreno 615 GPUs, and Kryo 360 CPUs.  Qualcomm saw VR as the more important device, having designed the XR1 (5/18) and the XR2 (12/19) specifically for VR headsets, although the XR1 had some features that made it at least a stepping off point for the Ar2 – Gen 1 noted here.
The AR2 – Gen 2 has been specifically designed for AR in that it uses a distributed architecture that processes latency sensitive information on the glasses themselves, while high-computational processing is transferred to the Snapdragon chipset on a smartphone, PC, or similar device with less than 2ms of latency.  The chipset uses ~50% less power than the XR2 chipset and, according to the company, has 2.5x better AI performance than the XR2, with the main processor being 40% smaller (PCB area).  The chipset supports 9 cameras, which goes toward the trend in AR for a shift from 3 degrees of freedom systems (3DoF)  to 6DoF systems that are common in VR, along with hand, eye, face, and body movement tracking.
Most significant is that Qualcomm has designed this chipset specifically for AR, which legitimizes the category further, especially as the platform is the basis for the Meta Quest Pro XR headset released last month by Meta (FB).  Qualcomm has also indicated that it is working with a number of OEMs to include the chipset in upcoming devices.  Qualcomm specified Lenovo (992.HK), LG (066570.KS), Nreal (pvt), Oppo (pvt), Rokid (pvt), Sharp (6753.JP), TCL (000100.CH), Vuzix (VUZI), and Xiaomi (1810.HK), among others as those developing platforms using the AR2 – Gen 1.  This comes in what is a particularly weak year for AR/VR after a strong growth year (units) in 2021. 
While we do see the AR/VR space as one that is growing, the industry and forecasts for the industry seem very oriented toward 2023 and 2024, likely based on expectations that Apple (AAPL) will release an XR product.  There is already some very significant differences in forecasts for AR/VR in forward years, 29.1% between high & low forecasts for 2022, 46.6% for 2023, and 105.1% for 2024, so we put little faith in any forward estimates after this year’s much revised forecasts, but we compile as many as possible to give a composite of group, and begin to map out our own set of unit volume estimates early next year.

AR/VR is a controversial subject in the CE space, with some CE companies making big bets on the technology, while others are still skeptical as to the validity of the technology as a competitor to more typical visual modalities.  We understand that those who have a stake in the AR/VR world will be far more optimistic about its prospects than the average Joe, and we therefore take most forecasts, especially those in the out years, with a grain of salt, and rightly so as estimates, even for this year, have come down considerably.  For example an estimate made in 2020 for XR unit shipments in 2025 has been reduced from 43.5m units to 23.8m units, with similar changes in earlier years.  That said, our attention to the space is predicated on the eventual adoption of XR by a number of major CE companies, whose motivation is not to promote a ‘new world’ or lifestyle, but to sell devices, assumedly the goal of all CE companies.
We do believe that the adoption of XR will be somewhat generational, with those that have grown up with smartphones as an extension of their bodies and personalities more willing to accept the notion of XR without the trepidation that comes from a generation that grew up with radio and TV as ‘social media’, and that will take time, but we believe the adoption of XR by Apple (AAPL) will help to legitimize XR and push it further into the more consumer oriented spotlight.  We do see a bit of a divergence between the two components of XR, with AR being the more practical application and VR having a more entertainment oriented focus, although AR will continue to have a smaller share of the XR unit total at least for the next year or so.  We also expect the two segments to merge somewhat, with a number of devices allowing the user to use the headset as an AR device, while also providing for a ‘blocking’ system that will allow the user an immersive VR experience.
Aside from the potential usage characteristics for XR, there is another important aspect of XR devices that needs to be addressed, that of ‘wearability’, and by wearability we do not mean how comfortable a headset might be but more how it looks to the outside world.  We have all seen pictures of those wearing VR headsets wildly gesticulating as they stand in the middle of a room or sit on a couch, and that is certainly an image that does not serve to entice a broad swath of consumers to try such a device, although it is likely quite attractive to the gaming population.  More to the point would be AR headsets, which are slowly evolving into devices that are close to normal glasses, thanks to optical solutions like pancake lenses, that reduce the bulk behind AR headsets, which makes them more practical for their use as an ‘everyday’ item that can be worn without the stigma of a VR headset, and will eventually become unobtrusive to consumers.
Of course there are many practical applications for both AR and VR, but while VR unit volumes are substantially higher than AR unit volumes, we see AR as the more ubiquitous device for the long-term, especially from a generational standpoint, with the information currently presented on a smartphone display projected in front of you, without blocking normal vision, a way of reducing the need to look at a screen that you have to take out of a pocket as it is always on and in front of you.
Right now, we have to look at the XR space more from the standpoint of a typical consumer device, and as almost all consumer devices have a visual interface, we start with the displays that have been and will be used in AR and VR devices.  There are a number of existing and potential displays that have been and can be used in AR and VR devices, so we offer a bit of a primer on what they are, how they work, and our data on which are gaining or losing traction.  We note that these displays tend to be more complex to manufacture than smartphone displays, particularly as they are situated within millimeters of the user’s eyes, making the resolution and pixel pitch[1] key metrics.  Such displays are considered ‘near-eye’ displays and while they are typically produced on display production lines similar to those used to produce CE displays, their characteristics are pushing the technology needed to satisfy near-eye criteria toward less typical production methods.
Most CE displays are based on a glass or plastic substrate, and while those platforms are certyainly acceptable for typical CE displays, the higher tolerances of near-eye displays have pushed development toward silicon-based displays, which are just beginning to show merit as to reducing the feature sizes needed for near-eye displays.  What makes this even more attractive to display producers is the processes use equipment that display producers already have on the fab floor, particularly semiconductor lithography tools that are used to make display TFT backplanes.  This gives the DoS (Display on Silicon) world a path into the future that requires potentially less capital and infrastructure than would be the case for a ‘new’ display technology, and gives the industry an easier path to building pilot DoS lines to further develop the technology.
That said, the AR/VR industry still has the necessity of having access to mass production that can keep costs at reasonable levels and that tends to lean toward existing display modalities, so we looked at all of the AR/VR devices produced since 2013 and traced the display types used in those devices.  Not all of the device manufacturers have been forthcoming about the type of display used, so there is an ‘unknown’ component, but we broke down the display usage into groups for those that disclosed the information, using the manufacturers ‘classification’ as to the type of display.  In some instances there were nuances that made us wonder if the AR/VR brand was accurately portraying the dive display, but without disassembling a multitude of AR/VR headsets, we took the brand’s word at face value.
This broke down the displays into eight categories based on four technologies, Liquid Crystal displays (LCD), OLED displays, LED displays, and DLP, which we describe in brief below.

• Liquid Crystal Display (LCD) – A display in which light is generated by a BLU (backlight unit), which passes through or is blocked by a liquid crystal material.  The liquid crystal is ‘controlled’ by TFT (Thin-film Transistors) circuitry that can shift the optical characteristics of the liquid crystal to let the light through or block it.  If the liquid crystal is ‘open’, the light passes into a color filter, essentially a sheet of red, green, and blue phosphors that change the white backlight to their respective colors.
• OLED Displays (OLED) – A display that uses phosphorescent and fluorescent materials that emit light when controlled by a TFT system similar to that used in LCD displays.  In small OLED displays, the OLED materials are arranged to form a pixel composed of red, green, and blue OLED materials, each of which can be individually controlled.  Since these materials are self-emissive, there is no need for a color filter.
• LED displays (LED) – As mentioned above, LCD displays require a backlight that is usually an array of LEDs (Light-emitting Diodes), and in most cases the term ‘LED display’ is used to mean an LCD display that uses an LED backlight, however, there are also display technologies that are based on the LEDs themselves as emitting devices.  In some cases individual red, green, and blue LEDs are used as self-emissive components, similar to the way OLED materials are used, and in other instances single color LEDs are used, using a number of methods for converting the color of the light (more below).
• DLP (Digital Light Processing) – This technology uses a white light source that is split into primary colors.  Three micro-mirror chips for each pixel, which are individually controlled, reflect the prism’s light or block it, to create each pixel’s color combination.  More commonly used in cinema projection systems, the technology is rarely used in near-eye devices.

While those are the main near-eye display categories, there are a number of ‘flavors’, as noted below:

• Mini-LED – Essentially an LCD display, but with much smaller LEDs in the backlight, giving a higher level of control over each pixel.
• QLED (Quantum Dot) – Similar to the Mini-LED above, these displays use quantum dots to narrow the spectrum of the LED light and enhance the color characteristics.  In some cases, the quantum dots can be used as a substitute for the color filter, shifting the white light to red, green, and blue, rather than filtering to preserve brightness.
• LCoS (Liquid crystal on Silicon) – Similar to DLP and LCD, LCoS uses liquid crystal to reflect or block the RGB light sources, and is based on a silicon substrate.  LCoS is also used for projection devices but has been used in some near-eye displays.
• Micro-LED – Micro-LED displays are based on self-emissive LEDs that are either a single color or have a red, green, and blue LED for each pixel.  In single color micro-LED displays quantum dots are typically used to shift the single color light to RGB as RGB micro-LEDs are relatively difficult to produce.
• Micro-OLED – Similar to more typical self-emissive RGB OLED displays, micro-OLED displays are produced on silicon and do not use typical evaporative OLED material deposition.  While there are a number of potential micro-OLED processes, rather than the masks used to create pixels with OLED materials, micro-OLED displays are created using photolithography on silicon.
• eQD – While not in our data for existing AR/VR headsets, we note that at some point in the future we expect that quantum dots will also be used as a self-emissive light source, likely based on silicon photolithography.  Right now QDs are typically used as ‘color shifters’ converting one color of light to another, a step above phosphors which filter out other colors.  By electrically or optically stimulating QDs, they give off light that is easily tailored to specific colors.  Not yet a product but one that will inevitably be used in near-eye displays.

As noted above, we traced the evolution of Ar and VR display technology back to the early days of XR and mapped the progress (or demise) of each technology according to the number of devices that used the technology.  This data is not unit based in terms of units sold but based on the technology share of the number of models available to consumers on a yearly basis.  While this would not be a basis for determining which technology ‘sells’ the most units, it does show trends, especially the right-hand column noted as ‘unreleased’.  This represents those AR and VR devices that have been announced but have yet to be released and would represent the (hopefully) leading edge of AR/VR display technology.  While Figure 1 and Figure 2 show the composite AR/VR Display history and Figure 3 shows the combined totals, the AR/VR Display History Individual Charts (Figure 4 - Figure 12) tell more of a story.
LCD is still the Oculus 2 (FB), the only release in 2014 contained an OLED display, giving it dominance that year, and while OLED has seen its share decline in both AR and VR over the last few years, Figure 11 shows that Micro-OLED is gaining traction over the last two years, and in those devices still unreleased.  Mini-LED, Micro-LED and QLED near-eye displays are still in the emerging category, while DLP has disappeared.  LCoS, as a reflective technology remains viable for AR (Magic Leap (pvt)), but we expect micro-OLED and modern optics will lessen its appearance.
Once again, we note that regardless of the forecasts for XR, the CE space is always looking for new hardware to sell, and while AR/VR is a bit different than your usual CE fare, it has the potential to become another revenue source for CE companies and the display industry.  As few CE devices are not display oriented in some way, we focus considerable attention to the display space to spot trends, both in the near-term and on a long-term basis.  Should a large CE company decide that XR is a viable consumer product, the media will blast the web with headlines about the merits of AR/VR and how it will change the world and the way we see it.  Therefore, we look to keep one step ahead and look to spot trends and direction that will move the XR space ahead or delay its (2nd or 3rd) ‘dawning’.


[1] Pixel pitch is the distance from the center of a pixel to the center of an adjacent pixel and is usually measured in millimeters or microns.

As always we take long-term estimates for new CE products with a grain of salt with the understanding that rarely are products out substantially ahead of timelines and volume estimates exceeded, but we understand the necessity for some to extrapolate  earlier growth rates in order to stimulate interest or sell products.  The AR/VR product space has been just such a new product sector, falling short of promises made as far back as 2013 when Google (GOOG) Glass (AR) appeared as well as the Oculus Rift VR headset, with pundits forecasting that the global population would soon be walking around wearing AR glasses, no longer having to pull out a smartphone or ask for directions, while those at home would spend their days gazing at endangered species in Africa or climbing the Alp, virtually of course.
As far as consumer products go, AR/VR headsets and associated accessories are small potatoes, and despite the exhortations over 27% y/y increase in VR unit shipments this year, the total count is likely just under 14m units, and at a average ASP of ~$400, it’s a $5b market as compared to the TV set market of ~$100b or the smartphone market of $520b.  That said, there are many that see the growth of the AR/VR space, led by the still somewhat nebulous Metaverse, as the next mass market CE product, and one that will spread like wildfire across the globe.
While they wax poetic about AR/VR, there are a number of obstacles in the way of such mass adoption, despite the notion that Apple (AAPL) will be joining the AR/VR headset world in the ‘near’ future.  VR headsets are uncomfortable and even the most ardent supporters admit that they fatigue rather quickly in the VR environment, while AR glasses are considerably less so and are nearing designs and capabilities that are near acceptable norms.  Progress has certainly been made toward bringing down the weight and bulkiness of VR headsets over the last few years, while improvements in optics and display design and capabilities continues to improve ‘wear-time’, but smartphones allow you to communicate with the world and TVs allow you to access a vast repository of information, entertainment, and content, while VR headsets allow you to play games.  We are not criticizing VR gamers, but there is very little VR content outside of games and the ability to create VR content is limited to a relatively small segment of the global population.
So what is missing are applications.  Not FP shooters, MMOs, or BC miner games but applications that provide that enhance that connection folks desire from their phones, their TVs, or social media.  Yes, one day there will probably be enough content that one could spend hours a day prancing through Transylvanian castles alongside Dracula or tending a curio shop on some obscure exoplanet, but VR needs a killer application that adds to an individual’s ability to communicate with others, and despite the pitfalls of social media and the low quality offerings of most streaming services, the estimates won’t really matter until such an application is found.  The success of Twitch (AMZN) or Tik Tok (pvt) prove out that isolating folks in a VR world, no matter how interesting, is really a distraction to the desire to stay connected to friends, family and the world in general, and the direction that VR application developers need to go.  AR is far less isolating, and applications that allow AR glasses wearers to share what they see with their friends should be relatively easy to create, and some of the AR applications that we have mentioned in the past, particularly face-to-face language translation give AR a place in the real world, but if one is looking to forecast units, it should be based on applications as an application that becomes popular will drive the improvements in hardware faster than any government subsidy or industry-sponsored development program would.  Sort of “if you build it, they will come” for the application and “If they come, you will build it…” for the hardware.

Xiaomi (1810.HK) opened potential customers to a crowdfunding source that will allow them to purchase the company’s Mijia AR glasses at a discount for a limited amount of time.  The headset, which was announced on July 31 of this year, will be available for pre-order for ~$370, a discount of 7.3%, from the $400 suggested retail price.  The device is a standalone system that is based on a single Sony (SNE) micro-OLED micro-display (pixel density of 3,281 PPI) that can generate 3,000 nits, although typically 1,800 nits and weighs ~100 g. (~3.53 oz.).  It runs on an 8 core CPU with a Qualcomm (QCOM) chipset and has 3GB of memory and 32GB of storage capacity, with  a 1020 mAh battery that is expected to last between 100 minutes and 3 hours and takes about a half hour to charge.  There is a 50mp wide-angle camera and a 8mp periscope camera with native pass through.
According to what we have seen and read, this device is less an AR device and more a mobile camera, essentially a wearable camera and Xiaomi seems to be promoting it as such, with additional applications such as Chinese to English  translation and one-click sharing and exporting of images to the Xiaomi smartphone app.  The design of the glasses does not seem to be oriented toward the sleek design approach we would expect from Apple (AAPL) or Samsung (005930.KS), but more of a ‘proud to be a nerd’ approach that might not help to create a broad customer base.  While one would expect Xiaomi to fund the development and production of such a device, the product is crowd-sourced and will begin production when it has raised sufficient capital to justify manufacturing (to be done by Seiko (6286.JP)), which is expected to be only available in China, at least for now.  A bit on the disappointing side.

​Apple (AAPL) devices are among the most fertile fodder for speculation and rumors, with everyone from ‘leakers’ to analysts citing “Everything You Need to Know About the (insert Apple Product Here)”, with much of the information meeting the analytical standard of ‘…even a stopped clock is right twice a day…’, but the media needs content and to many rumors are content, correct or not, so the mill continues to grind out speculation on a daily basis.  As we have noted previously, Apple did not mention anything about the potential release of an AR/VR/XR product at the last developers conference, to the disappointment of many who were looking for some indication that such a device was imminent or at least in a later stage of development, however that has done little to stymie the flow of speculation about such a potential Apple release, in fact it seems to have increased the tide of conjecture.
Most recently there has been some specific reference to the Apple AR/VR/XR supply chain, which, according to some, is gearing up in anticipation of a product (aka ‘Project N301’) release as early as the end of this year or early 2023, with a 2nd product (aka ‘Product N421’) slated for 2024.  The first product release is said to be a VR headset with additional AR capabilities, while the 2nd is either an updated version of the N301 or an AR only device.  While we know Apple has a number of display research projects in the works, Micro-OLED seems to be getting the most attention as a VR display for such a project, and where LCoS (Liquid Crystal on Silicon) was the early AR display favorite, that technology has been mostly replaced with Micro-OLED, given the infrastructure that has been developed around small panel RGB displays and to a lesser extent OLED lighting. 
While the substrate for smartphones is a flexible plastic or glass, Micro-OLED displays are constructed on Silicon substrates and can therefore utilize semiconductor tools for many of the associated processes, and through systems such as multiple stacks and direct patterning, high resolution and high brightness OLED displays can be produced.  With typical small (1” to 2”) OLED displays being very low resolution (450x450) and relatively low brightness (350 to 450 nits), such displays are not suitable for AR or VR applications, which require resolution of 1920x1080 at a minimum and brightness levels of multiple thousands of nits, and as earlier AR/VR displays used WOLED display technology that required a color filter, such levels were not achievable.  As Micro-OLED uses patterned RGB emitters, it requires no color filter, which can vastly improve brightness.
But the problem with Micro-OLED technology is it is relatively new and each company developing the technology has their own way of patterning and driving the OLED materials, which means an ‘un-common’ infrastructure and supply chain.  While an AR or VR device by Apple will go a long way toward developing a supply chain around Apple’s BOM and chosen technology, we expect that technology to change very rapidly, making the development of a mass market infrastructure hard to develop., especially if Apple’s technology differs from that of Meta (FB), who is the current share leader in the VR headset space. There are a number of companies that produce Micro-LED displays, some of which are focused on the display side while others are dedicated to projection modules but each has its way of differentiating itself from competitors.  
Large display panel producers like China’s BOE (200725.CH) or LG Display (LPL) or well-known image sensor manufacturers like Sony (SNE), and more specialized OLED producers like eMagin (EMAN) and Kopin (KOPN) are all working toward the goal of finding an inexpensive way of producing Micro-OLED displays to feed the XR space, particularly AR development, but Apple itself is deeply involved in such development, having applied for or been granted over 53 patents related to AR and 51 related to VR just in the US, going back as far as September 1999 and as recently as last month.  While many of these patents have to do with the mechanics of display image processing or optical systems that bring images to the user’s eyes, Apple is deeply involved and likely has the goal of producing some device that they can sell and provide content for. 
Whether the device appears this year, next year, or in 2024, Apple’s ‘legitimization’ of AR and VR technology to the average consumer will be a big step forward for the industry, which is currently quite fragmented, but as we have said in the past, the key to really expanding AR usage is the creation of applications that will drive consumers toward the technology, not because Apple says its good and they can show off a well-designed AR device, but because the applications become ingrained in our culture.  Selling product will be the focus for retail applications and location services will certainly be enhanced, but an application such as language translation would be a killer application in our view.  Imagine walking down the street in a foreign country and just by looking at a person, you could understand what they are saying in any language.  Of course the quality of the translation systems are a key, but just the ability to get an understand of local culture by listening to everyday conversations would be a benefit to all, and that’s only one application, so if Apple really wants to sell AR products they should be spending mucho dollars on application development, as without effective consumer applications, the best you get a a good-looking headset that sits in a drawer.

​AR or Augmented Reality needs one very important piece of information if it is to provide a service to consumers, and that is where it is.  While you can see where you are through the AR lenses, if the system is to project other images or data onto your actual image, it has to know where in space the glasses are to position things correctly, especially directional information, which we expect to be an integral part of AR for consumers.  Without location data the AR system will not be able to point you toward a particular destination or help you pick out your rideshare in an airport waiting line, and more importantly, it could point you in the wrong direction if being used in a driving situation.  At a recent conference, Google (GOOG) highlighted its work in what it calls Google Live View for developers, which is based on Google’s Street View database, a 20m+ GB collection that comprises satellite imagery, geological surveys, municipal maps, and the 10m+ miles of roadway taken by its Street View cars, all combined to produce accurate maps, turn-by-turn navigation, business locations and real-time  traffic information, much of which is sourced from GPS enabled smartphone users, all of which will be licensed (API) to developers who wish to use this incredibly accurate mapping data.
While we expect Google will certainly be a player in the AR application market, the company is limited in what applications they can develop, both by resources and by the necessity not to undercut their client base, so by licensing this vast data resource, the API gives developers direct access without having to build their own interface which might include built-in sensors or ‘anchors’ that would have to be pre-defined and expensive and completed to develop on their own.  Google seems to have stepped forward as the de facto supplier of the geospatial information needed to make AR work, and is already using the API as part of its Live View mode inside the Google Maps application and as the AR Places filter in Google Lens.  The idea of the API is to free developers from having to build out their own spatial information interfaces by just using (and licensing) the Geospatial API.
GPS is commonly used for location data, but the accuracy of that data is not always accurate, especially in densely built-out areas, leading to between 5 and 10 meters of positional accuracy and 35 to 40⁰ of rotational accuracy, which could lead to AR images being out of view or the necessity for consumers to place anchors at a particular location to allow the system to have a point of reference, which might work well in a small space but not in a larger venue  By using the Google Geospatial API all of the amassed location and image data that Google has collected over the last 15 years becomes available to the developers application, at least anywhere where Google has StreetView data (not in Germany, North Korea or China and a number of other countries), which gives almost pinpoint accuracy and an easy way to guide users to location where they might spend some money.
After spending some time understanding how the Google API works from a technical standpoint, we were even more impressed than just listening to the company’s promo.  Without going into detail, the API links the user’s mobile camera to the company’s servers and matches the cameras image to the Google data.  Given that the StreetView data has been filtered by Google AI to eliminate non-stationary objects like cars and people, the algorithm matches the camera image by comparing against the buildings in its database, which includes buildings all over the world.  Once a match is made, the detailed coordinates are sent to the API from the Google servers and the AR application can then accurately overlay the new information on the camera image.  Considering the billions of buildings the algorithm has to ‘look at’ to match the camera image, the technology is quite incredible
While it might seem that we are favorable toward Google, as we have singled out their AR translation application previously and the API mentioned above, Google has amassed such a large volume of disparate data that it seems able to coordinate, that they can easily create applications and data for developers and customers that is unavailable from other sources.  In reality our favorable view of Google from an AR point of view comes from the fact that the company not only collects user information, as many social platforms do, but has been collecting other, sometimes seemingly strange data, for so many years that its databases are the most fertile grounds for AI learning, whether it be image related or data related, so the edge that it gives the company for things like the positional data mentioned above or the translation data we have mentioned in the past is a distinct advantage over other data collectors that have not been doing so for an extended period or to the extent Google has. 
As the globes primary search engine, the company has had access to so much consumer data that would likely be unavailable to others, it puts the company in the sights of those concerned with anti-competitive behavior.  But the fact that the company has had the foresight to spend the time and resources to collect what might have seemed irrelevant data is more the reason why it was collected and not as much for the world domination that some consider Google’s goal.  They had the opportunity and were willing to allocate the resources likely without the ultimate goal of using it for such specific applications.  That’s smart thinking, and while it might lead to world domination in data resources, it was good planning years ago that made it possible.