Expert Meeting Minutes |Comprehensive sorting of Apple MR industry chain

1. MR has both AR and VR interface functions, which can be switched with one button, and the antenna group and data transmission method it uses no longer need auxiliary equipment or similar auxiliary products such as the host for information exchange, and can be switched in time environment, the application environment may be wider, and at the same time, it can follow Apple's other products in the industry chain for information exchange in a timely manner, and the weight will be much lighter than the products produced by other VR manufacturers (weight 400g-410g ), more convenient and more diverse application scenarios.

2. It is still in the preparatory stage before mass production, and there are still problems in heat generation and compatibility. Product positioning: non-profit products (entering mass production this year) and the number of sales are not enough to cover the initial development cost, not as a profitable project). At the June conference, Apple may release and introduce the iOS system first, and then promote MR products.

3. After the release of MR products, the impact on the virtual reality industry: Apple's goals: 1. Summarize the technical experience in development and use; 2. Inform other companies that Apple has also stepped into the XR field; 3. Respectively for VR/AR To summarize the product development technology, Apple has previously considered that there will be an AR glasses project this year, but it has not yet started. Quantity: The second half of this year mainly considers the order volume of 400,000-500,000 units.

Software system:

From the field of assembly and production, we focus on Apple’s self-developed iOS system. We have been in contact with several versions of the iOS system, but there are still some problems in compatibility between the iOS system and iOS system products. Edges may need further modification and testing. In terms of other fields, the software systems used by products such as MR that we have come into contact with are basically game and video software. In this regard, we have come into contact with mainly two companies: iQiyi and Sony. Sony mainly provides online games or game scenes, while iQiyi mainly supplies video software. In addition, other functions are constructed by Apple based on the bottom layer of the iOS system. However, the current situation we foresee is that there are still some problems with compatibility, because Apple products under the iOS system have some problems in the Internet. Compatibility issues are still being changed. At the conference in June, Apple may announce and introduce the iOS system first, and then promote MR products.

Product positioning: non-profit product (it will not be regarded as a profitable project when it enters mass production this year and when the quantity sold is insufficient to cover the initial development costs)

Current stage and release rhythm:

Now it is the preparatory work before mass production. Now we have 1000 trial productions here. The purpose is to set up the assembly line and track the product yield of each supplier. There are still some problems in the assembly and the production line. Training of key personnel. In addition, after it is produced, we allow the product to collect simple data, and the prototype to be released must be selected from the middle, so that customers can prepare for the release. The exact time period should be before June 15, but it may not be fully released at WWDC. The system may be released at WWDC, and the hardware product will be released a week later.

The main problems at present are: 1) Because the customer has developed a new system (reality os) for the product, but this system currently hopes to be used in conjunction with the ios system, but currently found that there are some related software or compatibility can't do it well; 2) The customer is worried about the later product launch and the computing power of the product is not enough. Currently, one of the existing chips is changed and upgraded. Although the computing power is sufficient, it has adverse effects, and its power consumption and heat generation have increased. So in the case of heat, it needs to use more energy to cool it down, so there are relatively small changes at present. 3) In terms of the yield rate of the screen, the yield rate has not reached the expected value given by us. It must exceed 97%, and reach the relatively high yield rate requirement of 99.1%. This also needs to be coordinated with customers at present, and their suppliers are invited to do it Yield improvement and situation analysis. 4) Currently, data collection in production is also being carried out. Because of data collection such as projection screen, display, and sound frequency, we need to determine a specification with the customer. The range of DB in which its sound is a qualified product can be detected by the screen display. Finally, how much light transmittance is required is a qualified value, so now we need to grasp the range of data collected from previous trial production and assembly processes and provide them to customers, and ask them to confirm subsequent production to ensure that it is within this range It is regarded as a qualified product before leaving the factory, and those that are not within this range will be scrapped or repaired, mainly to do these operations. 5) There is still work on testing items for harmful substances, because the EU has added testing items for harmful substances this year, so we have to do testing items based on EU standards. Because this test is a chemical test, that is to say, it is destructive, and a lot of equipment needs to be put into it for the test. These are things that need to be completed this month. The above is the current preparation status of the product before mass production.

Q: Briefly break down the value of each hardware component in the MR headset.

A: The chip is split into two (Apple self-developed): $120-140 per piece; (all chips will be upgraded to M2)

Silicon-based OLED screen (Sony): $280-320;

Pancake (Largan Precision, Yujingguang): $75-80;

Camera (14 cameras will be used with an additional one in the middle, Goertek): $160;

Optical lens system and assembly: $70-80;

Back mirror bonding: $13-15; (a company acquired by Foxconn and now renamed as GIS Business Unit)

IPD adjustment module (Zhaowei Electromechanical): $30-35;3D sensor part: $80-90;

Metal frame (Changying): During the NPI stage, it was 2,000 RMB ($311) which later costs $85-$95/piece in mass production;

Appearance parts (plastic parts, mold injection molding): $15-20;External battery pack (Desai, kernel co-operates with Xinwangda): $22 to $25, Mic (Mitek): $21-22, Speaker (Goertek): $16-18

PCB+FPC (Pengding): $40-45/set

RAM+ROM storage part (Samsung): $40-45

Other chipsets such as wifi, PMIC, etc. add up: $60-70;Overall, the cost is around $1300-$1400, and with shipping costs, the cost estimate remains under $1600.

Q: What are the hardware innovations of the MR headset, and will these innovations lead the trend of VR/AR innovations?

A: The main hardware innovations are: 1) added visual conduits not found in VR glasses. People with visual impairments, such as myopia or glare, feel sensory-deprived when using VR products due to their own conditions. With the four-level interpupillary distance adjustment in MR, it can be more suitable for some people to use this product without the need of glasses. This function allows better use of vision in MR, and later manufacturers will implement this hardware in the production process. 2) Silicon-based OLED screens, which offer superior resolution than before and soon-to-be-technologically upgraded versions. 3) The one-touch switch between AR and VR, eliminating the need for a separate AR or VR product. 4) Motion control through gestures instead of joysticks. These new features may lead the way in future technological innovations.

Q: How will Apple integrate its MR software and ecosystem into its self-owned ecosystem? Will AI be included?

A: Eventually, MR can work with the Reality OS system and iOS. However, when it was first introduced, the intention was to create a stand-alone product independent of the iOS system. AI may be included in the future, but it isn't currently planned for this product. Its emphasis is on human interaction, rather than being dominated by AI operation.

Q: What are the biggest features of Apple's ROS system? What is Apple's position on its functionality? I heard it was aimed at office scenarios previously.

A: The main roles are:

Video usage: some customers watch videos or movies through the product. Because LoveTV has developed VR products and video-related business, they are negotiating with Apple about possible cooperation opportunities.

Gaming: Sony contributes to game console sales and game development. Consequently, they have considerable experience and have already contributed to gaming innovations.

Work applications: for example, remote event handling. There are limitations to using mobile phones in this scenario, but MR can use AR's function and stream the scenarios that users see through the front-facing camera to another person who can observe on their screen. This feature is optimal for telemedicine, industrial device installation and debugging, and other work applications where people can remotely control their works and communicate with each other.

Q: Are there any mature games that have been ported to the MR?

A: There is a multiplayer online game developed specifically by Sony for it.

Q: Is its office functionality currently achievable?

A: Yes.

Q: Was Sony's game entirely developed from scratch or did it exist before?

A: The concept was brought over from a client on another computer, but the game was developed specifically for this product.

Q: What is the current yield rate of our assembly line?

A: According to the current SOP checkpoints, the assembly yield rate can reach over 97%. However, the yield rate is sometimes lowered due to supplier issues, especially with OLED screens.

Q: Who provides the equipment to test the screens?

A: It is provided by Huaxing Yuan Chuang. Their testing equipment, wiring, and automated processes meet Apple's requirements for review, and the company does well in the production process of both OLED and LCD/LED screens.

Q: The operating system will be released in June, and does that mean the whole machine can be sold after a week, or what does that mean?

A: We will begin preparations 15 days before its release, but the specific first batch production volume cannot be confirmed until customers place orders. According to customer estimates, the 23H2 batch is expected to be around 400,000-500,000, which we assess to be 420,000, and the production capacity can fully cover this. The product is listed as a non-profit item for 2023, meaning that it cannot be sold as a profitable product. Within three months, we will observe feedback and order quantities from customers on product sales before considering increasing production capacity and other aspects.

Q: Will the WWDC event showcase the whole machine or just the software platform?

A: The system is the system, and the whole machine is the whole machine. Both will be showcased separately. Seven or eight senior executives have requested that they be sent assembled products so they can feel what it's like to use the product and consider subsequent actions.

Q: What is important is showcasing a software platform at the WWDC event, how will the prototype be shown to consumers later? I heard it would be delayed until September.

A: Currently, there are no issues with hardware assembly; they are also fixing some bugs. If fixed, they will definitely showcase the whole machine, and it will not be delayed until September. If they delay it again, they still won't be able to achieve mass production and shipping, which will disappoint people who have waited for so long. According to the project leader, the product will be released after one week of exhibition.

Q: Why was the hardware delayed while the software was showcased separately?

A: There were no major issues with hardware, mainly because there were compatibility issues with the ROS system and adjustments were needed.

Q: What is the current status of interaction?

A: Currently, there is seamless interaction with headphones. However, there may be some issues with transmitting information from Apple computers, tablets, or phones to the product.

Q: Is finger recognition and foot motion recognition different from other VR devices and a particularly amazing feature for users?

A: I have been involved in design and development from the beginning to the landing of this product. 1) This product eliminates the need for controller-based control, and its biggest feature is portability and ease of use. Whether or not a controller is present, there is not much difference for me personally. For war games or products that require frequent button presses, this product is much better than those with controllers. 2) It uses trajectory or gesture recognition instead of buttons, reducing the chance of damage and quality issues.

Q: Can this product be used outdoors?

A: Yes, you can even wear it while riding a bicycle.

Q: What is the battery life like?

A: The continuous usage time is below 2.5-4 hours (if you are not playing network games that consume a lot of power), but it can last for more than 3 hours generally speaking. The battery can be larger because it's external now.

Q: What is the weight of the product?

A: The current product weighs around 400-410g after accounting for measurement errors. It is generally 130g lighter than other comparable products.

Q: How does it provide feedback during gesture operation?

A: Small devices (made from a skin-friendly material similar to cloth) are worn on each fingertip. These devices act as rings and track your finger movements through sensors and cameras. Leg motion tracking scans from the thigh to the knee to detect walking-related actions before performing action recognition.

Q: Does it have finger recognition and foot motion recognition features, which are unique from other VR devices and particularly amazing for users?

A: As someone who has been involved in the design and development of the product from the beginning to its release, there are two main factors: 1) This product eliminates the need for controller-based control, making it very portable and easy to use. Personally, I do not find there is much difference between using or not using controllers. For war games or products that require frequent button presses, this product is superior to those with controllers. 2) It uses trajectory or gesture recognition instead of buttons, reducing the likelihood of damage and improving quality.

Q: Is camera-based recognition involved in gesture tracking?

A: It relies on a combination of cameras, 3D sensors, and algorithms from a company that specializes in tracking technology to achieve gesture recognition.

Q: Besides this MR product, is Apple developing other products?

A: Initially, Apple planned to develop an AR glasses product this year, but Google announced in the first half of the year that they are no longer producing AR glasses. This led Apple to consider whether 1) the market for AR glasses is not as big as expected and 2) Microsoft's plan creates competition. As a result, Apple has put their AR glasses project on hold.

Q: Approximately how many production lines are there, and what is the maximum monthly output capability?

A: We currently have one mass production line, which can produce over 70,000 units per month. This ensures that we can meet the demand for a minimum of 70,000 units per month, taking the product's yield rate into account. If customer demands increase later, we can easily set up and add more production lines, with a maximum theoretical limit of almost 20 lines.

Q: What testing equipment do we use for our one production line that can handle up to 70,000 units per month?

A: The equipment comes from JETPT, Huaxing Yuan Chuang, and Zhilifang. Huaxing Yuan Chuang supplies screens, Zhilifang provides visual adjustment modules, and JETPT mainly identifies the orientation and scope of the product's cameras. Depending on the product's demand, we may automate the manual testing stations and ask JETPT for help to install automated testing equipment.

Q: How many units of each equipment do we need, and at what cost per unit?

A: Each type of equipment usually requires around four units in our production line, plus additional configurations offline and from suppliers of various components, but we're not sure about the specifics. Generally, the most expensive equipment comes from Huaxing Yuan Chuang, which can reach millions of yuan, while other equipment ranges from a few hundred thousand to several million yuan.