Ignite enthusiasm for the metaverse: Apple's new phone is about to come out

The 3D shooting function of iPhone 15 Pro promotes the construction of Vision Pro ecosystem. As Vision Pro goes on sale and the degree of localization increases, hardware manufacturers may benefit from it.

Hu Nan/What needs to be rewritten

On September 13, Apple released the iPhone 15 series of mobile phones. Compared with the previous generation of products, this series of mobile phones has been upgraded in terms of appearance and hardware configuration. However, these changes don't seem to fully meet the expectations of some Apple fans. In China, devices and functions such as type-C interface, transmission speed, and periscope cameras are usually not promoted by Android manufacturers. In addition, the capital market's response to this press conference was not optimistic. Apple stock price has barely risen since the event

However, the iPhone 15 series mobile phones have significantly upgraded their chips. The iPhone 15 Pro and Pro Max models are equipped with the new A17 Pro chip, which is the world's first 3nm process chip to achieve mass production in the field of consumer electronics. Apple uses the "Pro" naming chip for the first time on a mobile phone, which seems to mean that the company places special emphasis on the performance improvements of the chip

An important feature of iPhone 15 Pro is to support 3D shooting function, which will add more elements to the XR industry content library and promote the ecological construction of Apple’s Metaverse product Vision Pro. In addition, five departments including the Ministry of Industry and Information Technology recently released the "Three-Year Action Plan for the Innovation and Development of the Metaverse Industry". As Vision Pro becomes more localized in China, related domestic hardware manufacturers will also benefit from it

Product and policy resonance

On June 1, 2023, Meta, the giant of the Metaverse, quickly released the latest Metaverse device Quest 3 before Apple’s WWDC 23 conference. Zuckerberg said that Quest 3 will be the best device to experience mixed virtual reality and is also the world’s first mainstream high-resolution color hybrid display device

In terms of ecological content, Quest 3 remains backward compatible with Quest 2’s catalog of more than 500 VR games and applications. At this game conference, 15 games including “Assassin’s Creed” and “Arizona Sunshine 2” were included. New VR games have also been unveiled one after another. In terms of price, Quest 3 is also lower than Apple's Vision Pro. The 128G version of Quest 3 starts at only $499, while the Vision Pro is priced at $3,499. At the time, Quest 3 was "ahead" of Vision Pro in terms of ecology and price.

However, the release of the iPhone 15 series of mobile phones has changed this situation to a certain extent. On the iPhone 15 Pro and iPhone 15 Pro Max models, users can use the main camera and ultra-wide-angle lens to shoot 3D videos. Moreover, these videos can be played on the Vision Pro headset, which will be sold in early 2024

It is worth mentioning that the launch of the iPhone 15 series of mobile phones will promote the establishment of the Vision Pro ecosystem. Through iPhone, users can conveniently record important moments, such as vacations, entertainment, extreme sports and family gatherings, without missing the opportunity to use the spatial video function. In addition, users can share 3D videos with other Vision Pro users, thereby promoting the formation of a Vision Pro social circle

In addition, according to a research report by Debon Securities, the application scenarios of VR in the past were mainly PGC, such as movies, games, etc. This is mainly because the threshold for panoramic shooting equipment and post-production is relatively high. However, when VR shooting functions are embedded in mobile phones, equipment and technology will no longer be the threshold that restricts the mass production of VR content. More UGC content is expected to enrich application scenarios, which will further promote the development of the Metaverse industry

At the same time, Vision Pro content and developer ecosystem are also continuing to advance. Apple has opened laboratories around the world for developers to use, and developers can create and display their results in these laboratories. A research report from Guojin Securities shows that Vision Pro’s early content reserve exceeds 100 games.

In addition to North American technology manufacturers, Asian mobile phone manufacturers have also entered the Metaverse hardware track. According to a research report by Industrial Securities, Samsung released Gear VR as early as 2014, and it has been iterated to the sixth generation in 2017; Huawei launched VR Glass 6DOF in 2020, and launched a new product Vision Glass in 2022; OPPO has successively launched it since 2019 Released OPPO AR Glass 2021, OPPO AR Glass and OPPO Air Glass 2.

In order to promote the development of the Yuanverse industry, many domestic departments have recently introduced heavy support policies. On September 8, the Ministry of Industry and Information Technology, the Ministry of Education, the Ministry of Culture and Tourism, the State-owned Assets Supervision and Administration Commission of the State Council, and the General Office of the State Administration of Radio and Television jointly issued the "Three-Year Action Plan for the Innovation and Development of the Yuanshi Industry (2023-2025)" (Part 2 (called "Plan"), this plan is the first national policy focusing on the metaverse industry planning, making systematic plans and strategic deployments from the development goals, key tasks and safeguard measures to promote the innovative development of the metaverse industry.

According to Guosen Securities, the "Plan" proposes 5 major tasks and 14 specific measures, which mainly include building advanced metaverse technology and industrial systems, strengthening new technologies such as artificial intelligence, blockchain, cloud computing, and virtual reality. A generation of information technology to expand the large-scale promotion of immersive display terminals such as XR headsets and naked-eye 3D; cultivate a three-dimensional interactive industrial metaverse and explore B-side industrial data confirmation, pricing, trading and circulation mechanisms; create an immersive interactive digital life Application, build the cultural tourism metaverse, create a public service scene that integrates virtual and real; build systematic and complete industrial support, build a standard and normative system for the metaverse industry, etc.

Driven by policies and with the support of head-mounted display devices such as Vision Pro, Quest 3, and Pico, domestic hardware manufacturers are expected to reap benefits

The content of Vision Pro industry chain review needs to be rewritten

Currently, the global VR and AR equipment market is mainly occupied by Meta’s Quest 2 and Pico Neo 3. Data shows that the sales of Quest 2 exceed the total sales of previously released Oculus series products. As of the first half of 2022, IDC estimates that the cumulative global sales of Quest 2 has reached 14.8 million units; in 2022, IDC estimates that the final sales volume of Pico series products will be 70 More than 10,000 units, and as Pico’s product with the highest market share, Pico Neo 3’s annual sales reached 505,000 units.

According to IDC’s calculations, it is estimated that by 2023, global AR and VR headset shipments will be approximately 10.1 million units, a year-on-year increase of 14%. It is expected that shipments will further accelerate during the forecast period from 2023 to 2027, with a five-year compound annual growth rate of 32.6%

For Apple, its latest product Vision Pro is significantly better than similar products of Meta and Pico in terms of hardware and software, and sales are expected to exceed previous products. However, it should be pointed out that the price of Vision Pro is much higher than that of Quest 2 and Pico Neo 3, and the high price is not conducive to its rapid acquisition of market share in the competition.

According to Zhongguancun Online, the BOM cost of Vision Pro is US$1,509, accounting for 43% of its selling price of US$3,499. According to Wellsenn XR’s survey estimates, the material cost of Vision Pro is approximately US$1,700. For comparison, the material cost of the 10,000-yuan consumer VR Quest Pro is only US$617, and the material cost of Pico 4 is US$348.

It should be pointed out that the material cost of Vision Pro is high mainly because it uses two Sony 4K Micro OLED screens. Currently, consumer brands include Quest, Pico, Sony PSVR, HTC Vive, Huawei, etc. Using the more mature Fast-LCD or Fast-LCD MiniLED solutions, Micro OLED is only used in high-end concept machines, B-end, military and other fields; the cost of its dual-chip solution is also significantly higher than that of the popular Snapdragon XR2 solution in the market.

In addition, according to the product structure table, a total of 7 companies are involved in the production of Vision Pro. Among them, 6 companies from Taiwan participate, 1 company from mainland China participates, 3 companies each participate from South Korea and Japan, and two companies from the United States participate in supply besides Apple itself. In terms of materials, manufacturers in Taiwan, China, have an advantage in the optical field. Manufacturers such as Largan Light, Yang Mingguang, and Yujingguang are all Vision Pro suppliers. Manufacturers from the United States, Japan and South Korea provide materials for them in fields such as displays and advanced chips

From the perspective of the consumer electronics industry, the degree of localization of Vision Pro is crucial to the decline in its selling price, which directly affects its competitiveness in the market

According to CITIC Construction Investment’s research report, many manufacturers in mainland China have already launched plans in the Micro OLED field. BOE is the only company in China that has deployed both 8-inch and 12-inch Micro OLED large-scale production lines. The 8-inch Micro OLED production line invested in Yunnan Chuangshijie began mass production in August 2019. In addition, BOE took the lead in launching a silicon-based OLED screen based on a screen size of only 0.39 inches on May 24, 2022. The screen has the industry's highest ultra-high resolution of 5644ppi and a contrast ratio of 100000:1

Shiya Technology started building a US$300 million Micro OLED 300mm microdisplay production line in 2017. This production line is currently the largest in the world and focuses on the research and development of 12-inch wafer silicon-based OLED micro display components. Base, its Micro OLED products have entered the supply chain of domestic VR manufacturers such as Huawei. In 2022, the FPV flying goggles Goggles 2 released by DJI use the Micro OLED micro display developed and produced by Shiya.

In the first quarter of 2021, Qingyue Technology successfully completed the product lighting of the 8-inch Micro OLED display production line. The production line achieves good performance by effectively integrating silicon-based CMOS driver circuits and high-efficiency organic light-emitting OLED devices. Subsequently, in June 2021, Qingyue Technology successfully achieved its first product shipment

In addition to the localization of Micro OLED, some established manufacturers in the fruit chain will also benefit from the localization process of Vision Pro. According to DigiTimes, Luxshare Precision will become Apple's first-generation MR headset assembly manufacturer. The MR assembly business is expected to become the company's new revenue growth point after the assembly of headphones, watches, and mobile phones.

According to the research report of Industrial Securities, in the field of XR, Changying Precision has established long-term strategic cooperative relationships with multiple core customers. As of now, there are many projects for domestic and foreign key customers in R&D or mass production. At the same time, the company is also in North America. One of the major suppliers of structural parts for MR head-mounted display equipment for major customers.

With the development of the Yuanverse industry and the improvement of the localization of Vision Pro, localized hardware manufacturers may benefit from it.

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