China’s AR Glasses Frenzy: A Panoramic Industry Analysis

Introduction:
Recently, a user on an overseas social media platform leaked information regarding Meta’s upcoming AR glasses under the project codename Hypernova. As a leading manufacturer with millions of units sold through its Ray-Ban smart glasses, Meta’s entry into the AR glasses space has drawn widespread attention. It also highlights 2025 as a pivotal year in which AR glasses are shifting from novelty to necessity. So how should we understand the overall landscape of China’s AR glasses industry and its competitive dynamics? How do we identify the key differentiating factors among major players? And how can we grasp the future trends in both technology and commercialization?

Overview of the AR Glasses Industry in China
By definition, AR (augmented reality) glasses must have a display function—this is the core distinction from AI smart glasses. Certainly, some AR glasses can incorporate AI large model features via API integration, but display remains a defining feature of the AR glasses category.
In the past two to three years, as technology has matured, AR glasses have further differentiated into two categories:

• AR glasses for entertainment and video viewing. These function as mobile extended screens and currently use primarily Birdbath optical solutions. Typically shaped like sunglasses, they feature projection lenses for near-eye display layered within regular lenses. They allow visibility of the real world but reduce light transmittance by over 40–50%.
• AR glasses for information prompts. These prioritize lightweight build, low power consumption, and information input capabilities. Most mainstream designs use waveguide technology and currently offer monochrome displays, though they reduce light transmittance by only 10–20%, meaning users can still clearly see the real world. A transition from monochrome to full-color displays is now underway.

According to Wellsenn XR, a research firm, global AR (including headset-style AR glasses) sales reached 500,000 units in 2024, roughly the same as in 2023. Of these, 350,000 units (70%) were entertainment AR glasses, while the information-prompt category showed notable growth.
By region, sales were primarily overseas, with China accounting for only 180,000 units, or 36% of global sales.

BCC experts identify three main industry drivers:

1. Entertainment AR glasses face growth bottlenecks. The technology stack is mature and fixed, but cannot fundamentally resolve size, power, and comfort limitations. These products are suited only to limited use scenarios.
2. Technical advances are enabling vertical-market penetration in consumer-end (C-end) information AR glasses. Diffraction waveguide technology and Micro LED screens allow seamless integration of virtual and real worlds, offering features like navigation, translation, and teleprompting without disrupting daily use. However, due to suboptimal wearability and high prices, they remain targeted at high-end or early adopters. Catalysts are needed downstream to drive scale-based cost reduction upstream.
3. The AI boom has raised consumer awareness of AR glasses. Although fundamentally different in definition, general consumers tend to group AI-integrated AR glasses with the more popular AI glasses, driving increased interest and purchase intent.

Competitive Landscape of AR Glasses in China
The competitive landscape for AR glasses in China remains unclear. On one hand, AR glasses are mainly sold online, and brand performance varies significantly based on product release schedules and marketing intensity on e-commerce platforms. On the other hand, as an “experience-driven” product, online return rates can reach 40–60%, making online shipment-based market share data somewhat unreliable.

BCC experts also analyze from a supply chain angle. For example, considering the widely used Qualcomm AR1 main chip, a total of 400,000 units were distributed in China by Q3 2025—250,000 to Xiaomi, 50,000 to Thunderbird (雷鸟), and the remaining 100,000 split among dozens of other companies. Therefore, no brand’s actual sales can exceed the chip supply.

Currently recognized leaders in information-type AR glasses include Thunderbird, Meizu, and INMO, while entertainment-type leaders include XREAL and Rokid. All maintain high visibility both in the market and in capital investment. Public records show:

Differentiation Factors Among Mainstream AR Glass Players
The core components of the AR glasses value chain include:

• hardware (waveguide optical components and light sources),
• mainstream chip platform ecosystems,
• and consumer-end (to-C) application development.

Hardware:
This segment is largely controlled by upstream suppliers. There are about 7–8 suppliers for waveguide components. The leading diffraction waveguide technologies can be divided into imprinting and etching methods.

• Imprinting is mature for mass production and sufficient for monochrome green AR displays.
• Etching supports full-color displays and represents the future direction.
  However, the cost is a bottleneck: imprinting costs around RMB 300 per unit (approx. USD 41 / KRW 57,000), while etching ranges from RMB 700–800 (approx. USD 96–110 / KRW 133,000–152,000).

Light sources are mainly supplied by JBD, which developed a low-power 640×480 Micro LED module back in 2018. Annual output has now stabilized at 100,000 units, reducing R&D and wafer costs to just a few hundred RMB per unit, giving JBD strong market competitiveness.

Midstream manufacturers differ primarily in product structure design. For instance, how a waveguide directs light in and out is tailored to the eyewear’s form factor and requires about two years of experience to refine. It’s difficult to expect upstream suppliers to assist in this design while manufacturing.

Chips:
Competitiveness is shaped by the chosen main chip. BCC experts note that self-developed chips likely cannot support a scalable business model unless a brand like Meta has the scale (millions of units) to negotiate NRE (non-recurring engineering) with chip providers like Qualcomm.

Applications:

• Entertainment AR glasses can integrate into Android ecosystems, similar to replacing a phone display with Micro OLED + BB (Birdbath) displays. APIs and protocols remain the same.
• Information AR glasses typically lack a universal OS. Each manufacturer often develops their own OS and application features. For example, implementing a conversation feature might require hardcoding a function that opens the microphone, uploads the recording to a cloud server, transcribes it to text, and sends it back—all without a true OS structure.

Thus, the quality of the application experience heavily depends on the manufacturer’s resource allocation. Some users report that Brand A has slower translation performance than Brand B, but due to lower shipment volumes, the former may have no incentive to invest in improvement.

Future Trends in AR Glasses
From a market perspective, information-type AR glasses will likely continue driving growth, possibly achieving 2–3x sales increases. The entry of tech giants like Alibaba and ByteDance will inject incremental momentum through their e-commerce traffic and upstream integration power.
In the long run, Meta’s global leadership will be key to scaling the category to the million-unit milestone—likely around 2026 or later.

Until total industry shipments reach 1 million units, upstream manufacturing costs will remain high. Therefore, AR glasses companies will continue evolving within segmented product categories. The overall market has not yet reached full competition or price war stages.

On the technical side, key focus areas for 2025 include:

• optimizing waveguide transmittance and stray light suppression,
• streamlining API-based large-model integration via cloud access,
• and improving response speed relative to shipment volume.

Before new consumer groups or industrial verticals emerge, the industry may remain in a transition phase—favoring single-green imprinting over full-color etching, and cloud-based API access over self-hosted large models.

[Disclaimer]: The above content reflects analysis of publicly available information, expert insights, and BCC research. It does not constitute investment advice. BCC is not responsible for any losses resulting from reliance on the views expressed herein. Investors should exercise caution.