Apple is currently crafting its first XR (extended reality) headset. Supply chain sources hinted that this XR device, codename N301, will be exclusively assembled by Pegatron. Mass production is expected to begin at the end of the first quarter of 2023.
Apple's XR headset has always been something that's mentioned but rarely seen. In reality, Apple's supply chain has been continuously performing verification tests. According to sources, to build its first AR (augmented reality) glasses, Apple is willing to spend the money and even requested the assembly to use semiconductor-level cleanroom production lines.
Industry sources pointed out that the final assembly of Apple's first headset will be exclusively assigned to Pegatron. Sources also pointed out that Apple's XR headset is already in the DVT stage. EVT 1 and 2 are expected to be performed in 2023. Judging by this progress, mass production is expected to begin in March and a demonstration could be in line for April. Pegatron has declined to comment on this information.
Industry sources stated this XR headset mainly targets the commercial markets. The price is higher and the shipment quantity is limited. Previous estimates said that the annual shipment for this device would reach 2.5 million units. However, right now, rough estimates placed the annual shipment at around 0.7 to 0.8 million units. For supply chain manufacturers that benefit from quantity, this is not a particularly profitable order.
Despite the not particularly high profits, the supply chain is still willing to go along with Apple's plans for two main reasons. The first is that Apple's brand recognition makes getting funds in the capital market relatively easy. The second is that verification from the Apple supply chain is an approval of one's technical capability. This makes getting future orders in the AR/VR-related sectors easier. This is especially important since both AR and VR are still in their infancy and there is a lot of optimism about their potential.
While market research institutes haven't reached a consensus on their estimations regarding AR/VR, they all believe that it's full of potential. IDC estimated that in 2022, AR glasses shipment will reach 259,000 units and is expected to have a CAGR of 70.3% for the next five years, reaching 4.1 million units by 2026. As with VR, it's expected to go from 10.81 million units in 2022 to 31.01 million units in 2026.
In terms of AR glasses, the market is very much dominated by Chinese brands right now. According to Strategy Analytics, in the 2021 consumer AR market, Chinese startup Nreal was the leader with a market share of 75%. In the first half of 2022, that figure increased to 81%. As with VR, Meta is the clear frontrunner, with a market share of 85.9% as of the second quarter of 2022, according to data from IDC.
For Apple, although it's usually not the first brand to take on a new product, it's very good at catching up and overtaking. Industry analysis pointed out that the main reason is Apple's massive iPhone user base. In addition, Apple has been accumulating its strength in the AR sector in recent years, with over 14,000 ARKit Apps already available on the App Store.
In addition to application and software, Apple has also made LiDAR, a requirement for AR, a standard feature of the iPad and iPhone Pro. The AirPods' spatial audio is also to pair with the spatial location technology of future AR/VR. On top of that, Apple CEO Tim Cook has recently been mentioning AR in the public with increased frequency. It appears that he intend to create some early hype for this generational new product.
Article translated by Jack Wu
