Meta glasses are selling so well that production capacity is planned to double to meet surging demand.

Ray-Ban Meta glasses are extremely popular, and Meta wants to increase production capacity.

On January 13th, according to Bloomberg citing informed sources, as Ray-Ban Meta glasses sales continue to surge, Meta has suggested that EssilorLuxottica SA boost annual production capacity to 20 million units or more by the end of 2026.

The two sides also discussed further expanding capacity to over 30 million units if demand is strong enough. After the expansion news, shares of Paris-based EssilorLuxottica reversed losses and ended higher.

This production expansion plan is proceeding in sync with Meta’s strategic adjustments. According to Bloomberg, Meta is laying off more than a thousand positions in its Reality Labs division, redirecting resources from virtual reality and metaverse products to artificial intelligence wearable devices.

According to an internal announcement from Meta’s CTO Andrew Bosworth cited in the report, the layoffs are expected to affect about 10% of Reality Labs employees.

Production Capacity Nearing Limit, Plans to Expand Further

Reports indicate that EssilorLuxottica, which is responsible for manufacturing, is already close to its current target of 10 million units of production capacity by the end of 2026.

Wallstreetcn mentioned that last week at CES in Las Vegas, Meta announced that due to “unprecedented demand and limited inventory,” it has paused further international expansion of the new glasses to markets including the UK, France, Italy, and Canada.

Scaling up production will also pose challenges for EssilorLuxottica, which needs to balance growth with the costs of upgrading its factories.

According to analysts at RBC Capital Markets, the gross margin on Ray-Ban Meta smart glasses will be significantly lower than EssilorLuxottica’s overall product line. Analysts said that as sales rise, higher revenue and improved component costs may alleviate some of the pressure.

Analysts are expected to ask EssilorLuxottica about its capacity plans with Meta when it announces its annual results in early February.

As the world’s largest eyeglass manufacturer, EssilorLuxottica owns brands such as Ray-Ban and Oakley, as well as retailers like Sunglass Hut and LensCrafters. Its manufacturing footprint and customer reach provide Meta a large-scale platform to expand its leadership in smart glasses.

The two companies began cooperation in 2019 and launched their first Ray-Ban branded smart glasses in 2021.

EssilorLuxottica stated last October that Meta smart glasses helped drive revenue growth in the third quarter. In September last year, Meta launched the latest Meta Ray-Ban Display in the US, priced at $799, for the first time displaying text directly on the right lens.

Meta Begins Layoffs, Shifts Focus from Metaverse to AI Wearables

Meta is shifting its focus to augmented reality technology for smart glasses, reducing investment in fully immersive VR headsets.

Reports say that the layoffs are expected to affect about 10% of the Reality Labs Group, which has about 15,000 employees.

As part of the layoffs, Meta is shifting its metaverse business focus to mobile devices, and plans to cut virtual reality investment to make the business "more sustainable". A Meta spokesperson said:

Last month we announced that some investment would be shifted from the metaverse to wearable devices. This move is part of that strategy. We plan to reinvest the money saved to support growth in the wearable devices business this year.

Reality Labs is Meta's base for hardware and other next-generation product development, including VR headsets, AI glasses, and virtual world products. But since early 2021, Reality Labs has lost over $70 billion, as many investments have yet to yield substantial returns.

Last year Meta acquired about 3% of EssilorLuxottica’s shares, allowing closer access to the company's manufacturing business and retail network.

Analysts believe that as Meta shifts focus to smart glasses and reduces investment in fully immersive VR headsets, the partnership between the two companies in manufacturing will continue to deepen.

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