Author: Zhou Yuan / Wall Street Watch

“Recently too busy, schedules are full, it feels like this Industry is about to take off.” On January 7, a technical engineer from an XR company told Wall Street Knowledge.

Following the January 3 announcement that the USA Patent and Trademark Office showed NVIDIA had publicly disclosed a patent for AR (Augmented Reality) glasses (US20250004275A1), named "Backlight-Free Augmented Reality Digital Holographic Technology," sources indicated on January 6 that Apple had also initiated a project for AR glasses, with the internal code name "Atlas."

In the overall cost structure of the Electronic Component for AR glasses, the modules utilizing waveguide technology and Mini LED/Micro LED are the core components, accounting for as much as 30%-40% of the cost.

Which A-share companies in China have such technology and products?

Although there is no information proving that any domestic listed company has entered the Apple AR glasses supply chain with such products, relevant products or technologies exist within listed companies, but their product share remains small.

Preparation for entering the Apple supply chain for AR glasses.

From January 7 to 10, 2025, CES (Consumer Electronics Show) will be held in Las Vegas, USA, where AI will undoubtedly be the focus and theme.

Gartner has listed AI agents as one of the top ten technology trends for 2025.

The AI hardware that matches AI agents software primarily includes AR glasses, as well as AI PCs, AI appliances, and AI home devices.

According to WellsennXR's prediction, starting in 2025, AR smart glasses will rapidly penetrate the traditional eyewear market. By 2035, AR smart glasses sales are expected to reach 1.4 billion pairs.

As the focal point of AI devices at CES 2025, in addition to NVIDIA's recently "leaked" AR glasses patent on January 3, domestic technology companies are also actively participating, such as DPVR announcing they will showcase new DPVR AI glasses at CES; Thunderbird Innovation will jointly exhibit with TCL, launching AI camera glasses V3 and AI+AR waveguide glasses X3 Pro, among others.

Apple has also initiated a project for AR glasses, internally codenamed "Atlas," led by the product systems quality team. They have started gathering feedback from Apple employees on smart glasses and plan to conduct more focus group discussions in the near future to prepare for Apple's entry into the smart glasses market.

More importantly, Wall Street News has just learned that domestic supply chains have begun researching how to enter the supply chain for Apple's "Atlas" project.

Apple's AI glasses focus on enhancing Battery life, Sensor technology, and audio quality to provide users with an unprecedented Virtual Reality experience.

Among them, Sensors mainly include accelerometers, gyroscopes, and ambient light Sensors.

Apple hopes to achieve a breakthrough in the Smart Glasses field through the 'Atlas' program to meet user demand for lightweight and practical wearable devices, thereby replacing the previously unsuccessful Vision Pro (XR) headset.

Although it is still unclear when Apple and NVIDIA will actually launch AR glasses or application technologies, will the AR glasses hype at CES 2025 become a theme for 'value investment' in the A-shares market?

Previously, the AR glasses theme received significant attention in the fourth quarter of 2024, with corresponding listed company stock prices soaring.

From the perspective of the industry structure, the AR glasses Industry Chain can be divided into upstream (precision components), midstream (equipment manufacturing), and downstream (sales services).

Among them, upstream precision components include SoC chips, displays, Sensors, and optical lenses; midstream mainly includes equipment manufacturers and OEMs; downstream includes sales channels and marketing. Additionally, there is a considerable number of Software suppliers, mainly involved in operating systems and various applications.

Although it is currently unknown which A-share listed company can enter Apple's AR glasses supply chain, looking at the current business structures of some listed companies, there are indeed some that possess corresponding technologies and products.

Core components are domestically supplied by technology reserves.

The optical waveguide module is one of the core components of AR Smart Phones, usually accounting for about 30% of the total cost of AR Smart Phones, and belongs to high-value precision parts.

The role of this module is mainly reflected in achieving image transmission and presentation, responsible for transferring the image projected by the optical machine in a proportional manner, and then transmitting it to the human eye, which is the key component to achieve the mixed display effect of reality and virtuality in AR Smart Phones.

For example, when using AR Smart Phones to view navigation information or observe virtual objects, the optical waveguide module can precisely present the virtual images in front of the user, merging them with the scenes of the real world.

At the same time, this module can achieve high-quality image display, providing a clear and realistic visual experience.

Through precise design and optimization of the optical path, it reduces issues such as image distortion and aberration, allowing users to experience a more realistic AR effect. For example, Appotronics Corporation's global first AR optical module with a PPI exceeding 10,000 adopts diffraction waveguide technology, significantly improving the clarity and delicacy of images.

For AR Smart Phones, there are many publicly listed companies related to this concept in the A-shares that need to be identified individually.

From the previous market consensus, Foshan NationStar Optoelectronics has also been included in this concept and has shown a remarkable trend in the short term.

Foshan NationStar Optoelectronics' 2024 semi-annual report shows that the company’s business mainly includes LED Business and Semiconductor Testing Services. Among them, LED packaging is the company's main business sector.

What the market undoubtedly likes is Foshan NationStar Optoelectronics' layout in the LED direct display field, involving products such as Mini LED and Micro LED.

According to statistics from TrendForce, the "LED devices for high-definition display" developed by Foshan NationStar Optoelectronics ranked first in market share among similar products globally from 2020 to 2023.

During the reporting period, Foshan NationStar Optoelectronics successfully developed a 3.1-inch P0.115 Micro full-color display module, with the comprehensive transfer rate of Micro LED increasing to 99.9%.

The comprehensive transfer rate of Micro LED refers to the ratio of the number of effective Micro LED chips that are successfully transferred from the source substrate to the target substrate (such as a display panel) to the total number of Micro LED chips originally provided for transfer.

For example, if there are initially 1,000 Micro LED chips for transfer, and 900 of them are successfully transferred and can operate normally, the comprehensive transfer rate would be 90%.

The comprehensive transfer rate is directly related to the production cost of Micro LED displays. A higher transfer rate means fewer wasted chips during the manufacturing process, which reduces raw material costs. Regarding cost reduction, a high comprehensive transfer rate indicates a higher yield, thus improving production efficiency, lowering mass production difficulty, and costs.

The cost structure of AR glasses shows that Mini/Micro LED costs account for about 40%. Among them, Micro LED technology is more advanced compared to Mini LED, with a higher cost share.

The "no backlight" mentioned in NVIDIA's AR glasses patent should refer to Micro LED from a technical perspective.

Compared to Mini LED, which requires a backlight module to provide a light source, Micro LED is an emissive display technology that does not require a backlight module, allowing each pixel to be individually controlled for illumination.

According to the 2023 annual report, 2024 semi-annual report, and 2024 third-quarter report of Foshan NationStar Optoelectronics, the company's main business focuses on LED packaging and component products, which accounted for 72.49% of revenue in 2024 (as of the third quarter of 2024); the share of epitaxy and chip products is only 3.39%.

Foshan NationStar Optoelectronics has developed a series of Micro LED chips aimed at a P0.3 pitch and a P0.1 pitch, with technology that has achieved a 7.5-micron pixel pitch microdisplay, applicable to a variety of products such as Smart Phones, micro projectors, and AR/VR devices.

It is evident that the share of Mini LED and Micro LED products from Foshan NationStar Optoelectronics is small, but the technical layout aligns with industry demand. Future attention can be paid to the revenue share and gross margin of Foshan NationStar Optoelectronics' Mini LED and Micro LED products.