The Zhitong Finance App learned that Huaxi Securities released a research report saying that smart glasses officially entered the development period after Google released Google Glass in 2012. The initial form was mainly AR glasses. Due to technical and cost reasons, AR glasses have always been a niche item with sales of less than one million. With the improvement of the integration of electronic devices and chips, smart glasses have evolved into various forms such as smart glasses for watching movies, smart glasses for auxiliary information display, smart glasses for photography, smart audio glasses, etc., and have created popular products such as RayBan Meta. Subsequently, with the continuous development of artificial intelligence technology, optical display technology, etc., various forms of smart glasses products will accelerate iterative integration, and the ideal form of smart glasses is just around the corner.

Smart glasses come in a variety of forms and are accelerating integration and iteration

Meta and EssilorLuxottica launched the second-generation smart glasses product RayBan Meta in September 2023, which can achieve basic functions such as video/photo shooting and voice/video calls. Later, in April 2024, it was equipped with the Meta Llama 3 multi-modal large model, which can achieve many functions such as system command interaction, object recognition, and text translation.

Huaxi Securities believes that the popularity of RayBan Meta has benefited from the qualitative changes eventually brought about by continuous iteration of product hardware. While the price of the second-generation products remained the same, the second-generation products were comprehensively upgraded in terms of image, audio, computing, and storage compared to the first-generation products. At the same time, the power of the large model made the product interaction experience better and more complete. The explosion of RayBan Meta has verified the product logic of “glasses first, then embed smart technology”. In the future, other manufacturers are expected to launch corresponding products one after another to accelerate the penetration of smart glasses on the C-side.

Thanks to hardware upgrades and AI empowerment, the popularity of RayBan Meta has accelerated the penetration of smart glasses into the C-end

Currently, split movie viewing AR glasses account for the main share. Micro LED+ optical waveguide development is expected. Currently, the AR glasses market is mainly for viewing glasses using the BirdBath+MircroOLED scheme. Since Birdbath optical solutions have problems of low external light transmittance, large module size, and high light loss, microOLED brightness is low, and the material service life is limited, and this type of AR glasses is temporarily a transition product. The waveguide solution has advantages in terms of volume, clarity, FOV, etc. Micro LED is superior to microOLED in terms of luminance, response speed, and service life. Micro LED+ optical waveguides may be the optimal light display solution for AR glasses. It is expected to occupy a major market share in the future after the production process and technology are mature.

Investment advice: With the accelerated iterative integration of various smart glasses products and the development of artificial intelligence and other technologies, smart glasses are expected to enter the fast track of rapid development in the short to medium term. It is hoped to see more and more explosions similar to RayBan Meta in the future, and companies related to the industry chain are expected to benefit deeply. Beneficial targets: Goertek Co., Ltd. (002241.SZ), Longqi Technology (603341.SH), Crystal Optoelectronics (002273.SZ), Baiwei Storage (688525.SH), Hengxuan Technology (688608.SH), etc.

Risk warning: Downstream demand falls short of expectations, and technology research and development falls short of expectations.