According to a research report by Soochow Securities, as reported by The Verge, as of May 2024, global sales of Ray-Ban Meta smart glasses have exceeded 1 million units, and it is expected that the annual shipment volume will exceed 1.5 million pairs in 2024. With the rapid development of multimodal AI, AR glasses empowered by AI not only greatly enhance their interaction capabilities, making them more intelligent and user-friendly, but also expand the application scenarios of AR glasses. In terms of the layout of industrial giants, Meta, the leader in the XR field, is also actively deploying in the AI+AR field. The success of Ray-Ban Meta proves the feasibility of smart glasses products becoming AI terminal landing scenes. In the future, with the acceleration of industrial giants' layout and the improvement of supply chain efficiency, AI+AR glasses are expected to develop rapidly.

The main viewpoints of Soochow Securities are as follows:

Ray-Ban Meta's sales have exceeded one million, and smart glasses are becoming an important form of AI hardware landing.

"AI glasses" can be defined as the introduction of multimodal AI functions on the basis of ordinary glasses/sunglasses, and it is an important exploration of AI application scenarios on the client side. Glasses + multimodal AI is one of the best forms for personal AI agents, and smart glasses are becoming an important form of AI hardware landing, especially expected to become an important carrier of universal multimodal AI assistants.

In September 2023, Meta and Ray-Ban released the second-generation joint product Ray-Ban Meta, which has a comfortable and stylish design, and is close to the weight and appearance of traditional glasses. The hardware is equipped with the Qualcomm AR1 chip, a 12 million pixel camera, a newly designed speaker, a five-microphone array, and also integrates Meta's Llama model, which can achieve real-time translation and answer user questions. Users only need to say "HeyMeta" to activate the built-in AI assistant for interaction. According to The Verge, as of May 2024, global sales of Ray-Ban Meta smart glasses have exceeded 1 million units, and it is expected that the annual shipment volume will exceed 1.5 million pairs in 2024.

AI+AR glasses may be the next development trend in the industry, and industrial giants are actively laying out.

According to IDC data, the global AR/VR device shipments in 2023 decreased by 8.3% YoY to 8.1 million units. Specifically, the VR device shipments in 2023 decreased by 10.7% YoY to 7.6 million units, while the AR device shipments increased by 63.5% YoY to 0.5 million units. It is expected that the total shipment of AR headsets in 2024 will reach 0.845 million units, an 85.6% YoY increase, far outpacing other XR products.

With the rapid development of multimodal AI, AR glasses empowered by AI not only greatly enhance their interactive capabilities, making them smarter and more user-friendly, but also expand the application scenarios of AR glasses. In terms of the layout of industry giants, Meta, which has the highest market share in the XR field, is actively deploying in the AI+AR field. According to IT House, Meta plans to showcase its first intelligent AR glasses, "Orion," in September 2024. This glasses is expected to use a geometric waveguide + LCoS full-color micro-display solution.

AR display devices and optical solutions are the core links for cost reduction and efficiency improvement, and the development of MicroLED + waveguide shows promising prospects.

AR devices mainly consist of components such as chips, perception interaction, sensors, optical modules, and frames. Among them, the optical module composed of display devices and optical solutions is the highest-value component, accounting for about 50% of the cost of AR devices. It is also the component that has the most direct impact on product user experience and is the core link for cost reduction and efficiency improvement in the industry chain.

Currently, the AR glasses market is mainly dominated by film-viewing glasses that use the Bird bath + Micro OLED solution. Due to the low transmittance, large module size, and high light loss of the Bird bath optical solution, and the low brightness and limited lifespan of Micro OLED, the waveguide solution has advantages in terms of volume, clarity, and field of view (FOV). MicroLED has better luminous brightness, response speed, and lifespan than Micro OLED, making the MicroLED + waveguide the optimal display solution for AR glasses. It is expected to become the main development direction after the production process and technology mature.

Investment Recommendation: The success of Ray-Ban Meta has proven the feasibility of intelligent glasses as AI terminal landing scenarios. In the future, with the accelerated layout of industry giants and the promotion of supply chain cost reduction and efficiency improvement, AI+AR glasses are expected to develop rapidly. It is recommended to pay attention to ODM companies and representatives in the acoustic sector such as Goertek Inc. (002241.SZ); ODM representatives such as Longqi Technology (603341.SH), Huagin Technology (603296.SH), Yidao Information (001314.SZ); Optical sector companies such as Zhejiang Crystal-optech (002273.SZ), Zhejiang Lante Optics (688127.SH); SoC and storage sector companies such as Bestechnic (Shanghai) Co., Ltd. (688608.SH), Rokid-storage (688525.SH); Terminal brand sector companies such as Skyworth Digital (000810.SZ), Doctorglasses Chain (300622.SZ), etc.

Risk warning: The expansion of application scenarios for glasses products may not meet expectations; downstream demand may not meet expectations; technology research and development may not meet expectations.