Meta's AR glasses are coming, and the supply chain benefits are far greater than those of AI glasses

Following the Ray-Ban co-branded smart glasses series, Meta is set to launch its highly anticipated first consumer-grade AR glasses - Meta Celeste (internal code name Hypernova) at the Connect conference from September 17 to 18.

According to reports from the Wind Trading Desk, Bank of America analyst Katherine Zhu and her team recently released a research report stating that the bill of materials (BOM) cost of AR glasses is several times that of AI glasses, and it is expected to unlock a market for the hardware supply chain that is far larger than before starting around 2027.

Bank of America predicts that as the market focus shifts from AI devices to AR experiences, the supply chain landscape for consumer electronics hardware will be reshaped, with the market size for smart glasses components expected to soar from less than $1 billion in 2024 to over $14 billion by 2030.

Specifically, while assembly factories will benefit first from the initial wave driven by AI glasses, the long-term and more profitable growth will be captured by core component suppliers of AR glasses, especially those companies that hold technological advantages in high-value areas such as optical waveguides and micro-displays, which opens up new and lucrative revenue sources for a supply chain dominated by Chinese manufacturers.

AI Glasses Lead, Meta Drives Short-Term Growth

Before AR glasses technology matures, the market will first be driven by AI glasses.

The report points out that AI glasses, with their stylish and easy-to-wear design, convenient first-person perspective (POV) content creation, and AI-assisted features, are gaining increasing favor among consumers. For example, the Ray-Ban Meta, a product co-developed by Meta and Ray-Ban, has already exceeded 2 million units shipped in 2024 and is expected to surpass 15 million units by 2026.

Currently, AI glasses on the market typically do not have display functions, mainly integrating cameras, audio, processors, and batteries, with designs that are closer to traditional glasses, generally weighing between 40 to 50 grams. Their core applications include listening to music, taking photos and videos, and receiving audio information pushed by AI.

The report predicts that between 2025 and 2027, AI glasses will contribute over 90% of the sales in the entire smart glasses market. In addition to Meta, according to the report, Samsung and Apple also plan to launch AI glasses products similar to Ray-Ban Meta in 2026, further promoting market adoption.

AR Glasses Take Over, Material Costs Increase to Over 3 Times

The real market transformation will come after 2027, when AR glasses will gradually replace AI glasses as the main driver of growth.

Unlike AI glasses, AR glasses can achieve more interactive applications such as navigation, real-time translation, and information prompts through display functions, and are seen as the ultimate form of smart glasses.

The cost of this functional leap is high hardware costs. According to the report's estimates, the BOM cost of a pair of AI glasses is currently about $150, while the BOM cost of a pair of binocular AR glasses is over $400 to $1,000. The report points out that the cost differences mainly come from two newly added core components: optical waveguides and micro-displays. These two components account for 35%-50% and 30%-40% of the BOM cost of AR glasses, respectively.

The report predicts that as technological bottlenecks are overcome and mass production improves yield rates, the average BOM cost of AR glasses is expected to drop to around $400 by 2030, at which point their market shipment share will exceed 50%.

Meta has been actively laying out plans, in addition to the monocular full-color AR glasses scheduled for release in the second half of 2025, it also intends to launch binocular AR glasses using different technological paths in 2026. Additionally, Amazon, ByteDance, and Alibaba are also developing related products.

Chinese Supply Chain Dominates, Core Component Manufacturers Welcome Long-term Benefits

The report particularly emphasizes that over 80% of the suppliers in the smart glasses supply chain come from China, and it is expected that these manufacturers' revenues will become more significant by the time of AR glasses.

The report states that during the AI glasses phase, due to the relatively low hardware added value, the revenue contribution to the supply chain is limited. Assembly manufacturers such as Goertek will benefit most in the short term due to their high market share (expected to account for 80% of the global AI glasses assembly share) and one-stop service capabilities.

In the long term, as the market shifts to high-value AR glasses, the true long-term winners will be the suppliers of core optical components.

• Goertek: With its vertical integration capabilities from waveguides and micro-displays to complete assembly, it will remain a core beneficiary in the AR glasses era. The report estimates that by 2027, the AR glasses business is expected to contribute 9.5% to its net profit.

• Crystal Optoelectronics: As a potential supplier for Meta's geometric waveguide solution, its revenue and profit contribution from AR glasses is expected to grow from nearly zero in 2025 to about 9% by 2027.

• Sunny Optical: As a leading supplier of camera modules and diffractive waveguides, its revenue contribution from smart glasses is expected to grow to 4% by 2027, with profit contribution reaching 6%.