2024 will be a crucial year in the long journey of AR/VR industry development.
After a decade of preparation, the Apple Vision Pro is finally set to debut in the consumer market. What will the leading developers deliver? Over the past year, many companies have encountered development bottlenecks, while new players are still flooding in. Who is taking over whose market share? As we enter 2024, there are just over 700 days left until the ten-year mark since capital first surged into the industry. Global industry players have high hopes for China's supply chain to drive down costs. Will the original vision of the next-generation computing platform be realized on time?
Regarding shipment trends, hardware product features, user demand scenarios, supply chain development, and the competitive landscape among manufacturers, IDC has summarized and presented the top 10 insights into China's AR/VR market in 2024. The specific points are as follows:
Insight 1: In 2024, China's AR market shipments are expected to grow by 101.0%, with split-type AR devices projected to account for 87.6% of the overall AR market.

In 2023, China's AR market is expected to ship 240,000 units for the entire year, representing a year-on-year growth of 133.9%.
Among these, standalone AR devices are projected to ship 35,000 units, while split-type AR devices (which currently mostly require a connection to a smartphone) are expected to ship 205,000 units. In 2024, AR shipments are anticipated to continue growing at a high rate, with an estimated growth rate of 101.0%. Split-type AR devices will remain the mainstream in the AR category, but it's worth noting that with the release of Qualcomm's dedicated AR chips and advancements in waveguide technology, mainstream manufacturers will successively release or iterate standalone AR glasses. Shipments of these devices in 2024 are expected to reach 60,000 units, marking a 68.5% increase.
Insight 2: AI is driving the accelerated integration of AR/VR devices into smart living scenarios, with ongoing deepening cooperation between AR hardware manufacturers and large model developers.

In 2024, the development trend of AI + AR will enable glasses products to achieve better NLP (Natural Language Processing) interaction and display quality.
High-speed text processing, accurate intelligent Q&A dialogues, precise semantic understanding, and efficient command recognition will shine in applications such as real-time translation, navigation, video recording, and personal assistants. AR hardware manufacturers will adopt a parallel approach of in-house development and collaboration. Hardware developed in cooperation with large model companies will also be gradually launched, guiding users to experience, accept, and rely on these more efficient and convenient new productivity tools.
Insight 3: Image processing chips are making a strong entry into the market, efficiently handling real-time information to help achieve seamless integration between the virtual and real worlds.

In 2024, the AI + AR development trend will enhance glasses products by enabling better NLP (Natural Language Processing) interactions and improved display quality.
High-speed text processing, accurate intelligent Q&A dialogues, precise semantic understanding, and efficient command recognition will play a significant role in applications like real-time translation, navigation, video recording, and personal assistants. AR hardware manufacturers will adopt a dual approach of in-house development and collaboration. Hardware developed in partnership with large model companies will be gradually launched, guiding users to experience, accept, and rely on these more efficient and convenient new productivity tools.
Insight 3: Image processing chips are making a strong entry into the market, efficiently handling real-time information to facilitate seamless integration between the virtual and real worlds.

The M2 + R1 dual-chip design used in the Apple Vision Pro has brought widespread attention to the importance of image processing chips.
In terms of visual and spatial experiences, image processing chips provide real-time processing of sensory input, reducing the latency in users' perception of their surroundings and facilitating seamless integration between the virtual and real worlds. Domestic chip manufacturers are also deepening their efforts in this field.
Insight 4: The industry is entering the "1+3" era, centered around visual experiences, with comprehensive upgrades in sensory experiences including smell, touch, and hearing. The performance of related components is entering a phase of rapid optimization.

In 2024, VR devices will make significant strides in upgrading from LCD screens to Micro-OLED displays, while AR glasses will transition from Birdbath optics to waveguide solutions, greatly enhancing the visual experience.
Beyond visual improvements, AR glasses will also see key advancements in the design of directional speakers, focusing on directional sound transmission, audio quality, and privacy, which will become critical points of competition among manufacturers. Technologies such as gas sensors, VR interaction gloves, and controller linear motors will continue to be optimized. Centered around visual experiences, there will be comprehensive upgrades in sensory experiences, including smell, touch, and hearing.
Insight 5: Differences in scenarios will drive the continued development of multimodal interaction, with multiple interaction methods coexisting for the long term.

The demand for differentiated scenarios dictates that AR/VR devices will support multiple interaction methods in the future.
In scenarios like entertainment, media, and fitness, controllers will play a significant role. Smart rings or finger rings can assist users in better controlling AR glasses with voice commands. In productivity applications using mixed reality headsets, gesture interaction will offer a more efficient and streamlined experience. These various interaction methods will complement each other and evolve together.
Insight 6: The connectivity between XR devices and other terminals will become tighter, reducing the barriers to entry.

In the past, the connection between AR/VR devices and external terminals was primarily through PCs and smartphones, which imposed various requirements and limitations on CPU and GPU configurations of PCs and the brand and model of smartphones.
With the continuous improvement of connection adapters and application compatibility, tablets, gaming consoles (such as Switch, PS, Xbox), and smart cars will connect more seamlessly with AR/VR devices. This will allow AR/VR devices to integrate more smoothly into the smart terminal ecosystem, playing a role in transportation, productivity, and entertainment scenarios.
Insight 7: The cost of key components in the supply chain will continue to decline, and the proportion of domestically produced components in multiple segments of the XR industry chain will continue to increase.
 

With the launch of the Apple Vision Pro in 2024, the domestic supply chain will accelerate its entry into the market, leading to a decrease in display screen costs. Manufacturers' cost pressures will begin to ease, making it easier to achieve hardware profitability in the post-subsidy era. From the perspective of supply chain layout, the proportion of domestically produced components in various segments, including complete assembly, image chips, displays, speakers, and batteries, will continue to increase.
Insight 8: The offline channel system is becoming increasingly diverse, leading manufacturers to engage in multidimensional competition in terms of sales channels, marketing strategies, content layout, and supply chain costs.

From the perspective of channel system layout, manufacturers are increasingly collaborating with general agents, intensifying their cost investments and strategic planning in offline retail stores. In terms of marketing, digital enthusiasts remain the primary target audience for manufacturers' advertising efforts. Regarding content layout, manufacturers are adopting a competitive strategy that combines both introduction and in-house development of content applications. From the perspective of supply chain costs, traditional hardware manufacturers, such as those in the smartphone industry, hold a competitive advantage. Currently, competition among AR/VR terminal manufacturers has shifted from a focus solely on hardware products to multidimensional competition involving sales channels, marketing strategies, content layout, and supply chain costs.
Insight 9: The competitive landscape among manufacturers is facing a reshuffling.

In the first three quarters of 2023, Pico achieved a 58.5% shipment share in China's VR market, ranking first throughout all three quarters. In the AR market, Xreal, Thunder, and Rokid accounted for over 70% of shipments, with rankings varying by quarter. It is worth noting that this year has also been challenging for Chinese AR/VR manufacturers, as several leading companies have faced layoffs, structural adjustments, funding issues, and even market exits. In 2024, major overseas manufacturers are expected to enter the Chinese market, with Apple’s new products making a strong debut and smartphone manufacturers gearing up to launch new AR glasses, leading to significant changes in the competitive landscape of the Chinese market.
Insight 10: The progress of standardization in the domestic virtual reality industry will continue to accelerate.

In recent years, the Ministry of Industry and Information Technology and other organizations have repeatedly released documents such as the action plan for the integration and development of virtual reality and industry applications, promoting the unification of industry standards from multiple aspects, including basic general standards, content production, content distribution, and testing and evaluation. Compatibility issues, format differences, and high costs remain challenges that the entire industry needs to address collectively. In 2024, the progress of standardization in the domestic virtual reality industry will continue to accelerate.