Where are the investment opportunities behind Apple's release of the first MR in June?

Apple's official website recently announced that WWDC23 would be held on June 5th, North American time. Considering that Apple's first-generation MR is mainly aimed at high-end users and developers, we believe Apple may release its first MR product in June this year to encourage content and ecosystem developers to use and create. At the same time, we expect Apple to release a second MR product, targeting C-end consumer groups through lower prices and rich content. Therefore, we should pay attention to the technological innovation brought by the first generation of MR leading the ARVR market trend and the supply chain flexibility brought about by the subsequent second-generation MR stocking and mass production.

Apple's MR hardware innovation may lead the development trend of the industry and promote the continuous growth of industry shipments. Looking back at the era of smartphones, the iPhone references the development of smartphones through functional innovations such as multi-finger touch interaction, acoustic motors, and 3D Sensing, as well as appearance and structural innovations such as Uni-Body and glass back cover. With the release of Meta Quest 2 products selling well, VR shipments have reached tens of millions, and hardware innovations are mainly based on optical and display technologies. We are optimistic about the release of Apple MR, which is expected to promote the breakthrough of VR products in multiple fields, such as appearance, function, and application scenarios, and lead the continued growth of VR industry shipments.

The appearance and functions of Apple MR are expected to bring eye-catching innovations and focus on future "0-1" development opportunities. We think that Apple's MR hardware innovation is worth looking forward to:

Considering the cost and user feedback, we believe that interpupillary distance adjustment is expected to be introduced by non-Apple brands. Among the products already on the market, the Pico 4 series has been equipped with pupil distance adjustment as standard, which is expected to be introduced by Meta and domestic second-tier VR brands in the future. In addition, silicon-based OLEDs may achieve cost reduction after mass production by domestic and Korean suppliers. It is also expected to become a trend for VR screen upgrades.

Apple's MR content ecology is released first, and software and hardware collaborate to create a new virtual reality. The ecological linkage of software and hardware is one of the advantages that Apple distinguishes from other AR/VR head manufacturers. At the same time, considering that there are a large number of third-party content developers in the Apple App Store, we believe that after Apple MR is first released to developers, it is expected to accelerate the maturity of the content ecology, thereby promoting the positive cycle of the software and hardware ecology.