China's AR Industry Gathers Momentum as 30,000 Companies Join the Game

TMTPOST--"The prospects of AR industry are very promising," an AR industry entrepreneur told AsianFin, "With increased attention, and more mature technology, survival has become easier. However, we are still far from a full-scale explosion of the industry."

It has been over a year since the release of Apple's Vision Pro. Although it initially garnered wide interest, the product's momentum has somewhat diminished later on. Many consumers have shown interest in trying the device, but fewer are making purchases.

Harmeet Singh Walia, a senior analyst from Counterpoint, remarked that while Apple's entry into the XR market was highly anticipated, the Vision Pro's impact on the overall market remains modest. They predict Apple will sell only around 500,000 units of the Vision Pro in 2024, making up a small fraction of the global XR market.

The real significance of the Vision Pro, however, lies in its broader impact on the industry rather than its sales figures, Cui Haitao, the founder of Goolton Technology, told AsianFin. Cui noted that Apple's entry is a positive signal for both the supply chain and the terminal market, accelerating industry iteration and development.

Since the Vision Pro's release, the AR industry has entered a new phase of growth, particularly in China. AR devices even surpassed VR in shipment volume in the Chinese market during the fourth quarter of last year. In the first half of 2024, VR sales in China declined by 41%, while AR sales surged by 49%, becoming the main driver of growth in the overall extended reality (XR) market.

The resurgence in AR has also attracted substantial investment. In early 2024, several leading AR brands, including XREAL, Rokid, and Thunderbird Innovation, announced new rounds of financing, marking a strong start to the year. Reports indicate that a total of 12 AR-related financing were recorded in the second quarter, with Chinese hardware companies like Sitan and JBD securing billions in funding.

An investor told AsianFin that Apple's entry into the market has kept investment interest alive in the AR industry. Cui told AsianFin that many institutions are proactively seeking to research and invest in AR, seeing opportunities not only at the consumer end but also in upstream areas like the supply chain. Goolton Technology, now valued at 1.2 billion yuan, has already secured two billion yuan of orders for 2024.

Recently, there have been reports that in addition to developing the standard version of Vision, Apple is also planning to launch AR glasses. Wu Dezhou, founder and CEO of startup ARknovv, told AsianFin that he is confident that AR will experience a transformative leap similar to the transition from feature phones to smartphones. He believes that the explosion of AR technology will undoubtedly usher in the next era of the internet.

Much like the industries of large language models and humanoid robots, the booming of the XR industry has also sparked enthusiasm among local Chinese cities.

According to Qichacha data, there are currently 29,400 VR and AR-related enterprises in China. Over the past decade, the registration of VR and AR companies has shown an overall upward trend, with 3,394 companies registered in the first seven months of this year, roughly on par with the same period last year. Regionally, Guangdong province leads the country with 8,037 related companies, followed by Jiangsu province with 2,192 and Beijing with 1,956. Other significant regions include Zhejiang province and Shandong province.

Government involvement is also playing a pivotal role. For instance, in January 2024, Rokid secured 500 million yuan in financing led by the Hefei municipal government, which will help build a metaverse developer platform. Similar initiatives are underway in cities across Jiangsu and Zhejiang provinces.

The viral success of "Black Myth: Wukong" once triggered a brief surge in interest in AR glasses, but the excitement lasted only a few days. In contrast, AI glasses are currently in the spotlight, capturing attention both from end-users and the capital markets, with related stocks experiencing a meteoric rise.

Xu Chi, the founder of XREAL, commented on social media that AI glasses, similar in essence to smart speakers from years ago, have relatively low technical barriers and will soon become a battleground for AI platform entry points. He predicts that this space will become crowded quickly.

From the perspective of an upstream supplier, Cui holds that AI glasses are merely a transitional phase, an intermediate form in the evolution of wearable technology. Ultimately, he predicts, the future will belong to AR glasses, particularly those using waveguide technology.

The relationship between consumer and manufacturer perspectives is often conflicting in the world of consumer electronics. As new product categories emerge, a balance between user expectations and industry advancements is vital. After smartphones, PCs, tablets, and smartwatches, the extended reality (XR) industry is poised to be the next big boom. Among XR technologies, Augmented Reality (AR) is experiencing rapid growth, with nearly 30,000 Chinese companies now vying for dominance in this competitive market.

In 1968, Ivan Sutherland, often hailed as the father of computer graphics, designed the first virtual reality device. This prototype marked the dawn of what would eventually become VR technology. Over the years, AR, VR, and mixed reality (MR) devices emerged, but their trajectories have been tumultuous, with periods of both high excitement and steep declines.