According to a research report from China Merchants Securities Co., Ltd. (CMSC), Meta plans to double its AI glasses production capacity to 20 million units by 2026. Concurrently, Google is collaborating with Xreal on Project Aura, and Apple is expected to launch its own AI glasses around 2026, indicating significant international investment in spatial computing. Domestically, emerging brands like TCL RayNeo, Rokid, and Memo, alongside major hardware manufacturers such as Huawei, Xiaomi, and Li Auto, as well as internet giants like ByteDance, Alibaba, and Baidu, are leveraging China's mature consumer electronics supply chain to initiate a "Hundred Glasses Battle" from 2025 to 2026. The firm anticipates the industry will reach its "iPhone moment" by 2027 and advises investors to focus on the associated opportunities. Key viewpoints from CMSC are outlined below.
AI-powered AR glasses are approaching a pivotal adoption phase. Among wearable devices, glasses have the broadest potential user base and enable the most natural AI interaction. Advances in near-eye full-color display technology, improved battery life, and enhanced spatial computing capabilities are positioning AI+AR glasses as potential next-generation mobile smart terminals. IDC statistics forecast global shipments of smart glasses (including AI glasses and AR/VR devices) to reach 14.52 million units in 2025, a 42.5% year-on-year increase, with AI glasses specifically estimated at 7.66 million units, surging 401% (based on Wellsenn XR data). In China, consumer voucher subsidies for smart glasses in 2026 are expected to drive shipments to 4.51 million units, up 78%, comprising 3.43 million AI glasses (up 68%) and 1.07 million AR/VR devices (up 62%). Globally, smart glasses shipments are projected to surpass 23 million units in 2026, with AI glasses exceeding 10 million units.
Sector growth is being propelled by supply chain cost reductions, the implementation of on-device AI, and increasingly diverse functionalities. Since the second half of 2025, intensified focus from overseas players like Meta and Google, alongside participation from domestic hardware leaders (Huawei, Xiaomi, Li Auto), internet companies (Alibaba, Baidu), and startups (TCL RayNeo, Rokid, Xreal, Memo, XGIMI) in the "Hundred Glasses Battle" reflects accelerated supply chain cost efficiencies. AI integration is transforming glasses from novelty items into productivity tools, with scenario-specific applications providing killer use cases, thereby accelerating industry expansion.
From a supply chain perspective, micro-displays and optical modules constitute over half the cost of AI display glasses, while chips account for more than one-third of the cost in AI camera/audio glasses. Progress in chip localization, breakthroughs in optical waveguide manufacturing, and advancements in micro-display technology are driving rapid cost reductions. Addressing the fundamental trade-offs between "weight, battery life, and computing power" in AI glasses relies on key developments in optical displays, structural design, and chip integration to achieve mass production scalability.
The evolution of AI+AR glasses is progressing along three main technological fronts: materials science (glass to silicon carbide), display technology (LCoS to Micro OLED/Micro LED), and optical solutions (BirdBath to geometric/diffractive waveguides). These advancements are converging to ultimately create an all-weather, full-color, comprehensive next-generation computing platform. Currently, due to brightness limitations, Micro OLED combined with BirdBath optics is primarily used for indoor media consumption, whereas Micro LED with diffractive waveguides is favored for outdoor and professional applications. Furthermore, high-refractive-index lenses aid in weight reduction and field-of-view expansion, enhancing wearability and immersion, making materials like silicon carbide increasingly attractive. The industry's supply chain model is evolving from supplying individual micro-displays toward providing integrated optical engine solutions.
Investment recommendations for consumer-related opportunities include focusing on upstream component suppliers: lenses (Shanghai Conant Optical), contract manufacturing (Zhejiang Biyi), and micro-display AR optical engines (Appotronics). Downstream, attention should be paid to brands (TCL Electronics, XGIMI, Hisense Visual, Shenzhen KTC Technology) and retail channels (Boshi Eyewear).
Risk factors include market competition and profitability challenges, policy regulation and privacy concerns, and potential underperformance in product market adoption.
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