The best carrier for AI on the edge? An overview of the AI glasses industry chain

As artificial intelligence penetrates terminal devices, AI glasses are rapidly becoming the focus of industry attention thanks to their lightweight form factor and intuitive interaction. According to a research report by Tianfeng Securities on the 26th, the massive existing user base for glasses and the extremely low AI penetration rate suggest a broad market driven by gradual replacement, bringing clear growth prospects to the relevant industry chain.

The momentum of the industry's growth has already begun to emerge. Recently, technology giants have rushed into the market. On the 27th, Alibaba released its first AI glasses powered by its self-developed Qianwen large model, officially entering the consumer-grade AI wearable device market. These glasses are deeply integrated with Alibaba’s ecosystem services such as Alipay, Taobao, and Amap, enabling intelligent interactions in payment, navigation, shooting, and more.

Globally, Meta teamed up with Ray-Ban in September to launch smart glasses. The market reaction has been enthusiastic. According to Meta's Chief Technology Officer Andrew Bosworth, the new smart glasses have sold out in almost all offline retail stores, and consumer demand is strong.

This trend is also supported by data. According to IDC predictions, global smart glasses shipments will reach 12.8 million units in 2025, a year-on-year increase of 26%, with growth in the Chinese market hitting 107%, leading the world. The market is expected to officially enter a new stage of large-scale growth in 2026.

Looking ahead, Tianfeng Securities stated that the integration of AI and AR technologies will be the core driving force for the industry’s entry into a period of rapid development. According to Wellsenn XR’s forecast, when the industry matures, global sales of AI+AR smart glasses are expected to reach 1.4 billion units, with penetration rates as high as 70%, representing enormous replacement potential for the traditional glasses market worth hundreds of billions.

Market Potential: Vast Space Under Incremental Replacement

Tianfeng Securities' report points out that the core logic of the AI glasses market growth lies in replacing the massive existing market. Taking China as an example, the proportion of people with myopia is close to 50%, with about 700 million potential wearers. Annual sales of myopia glasses are about 150 million pairs and continue to grow steadily. At the same time, yearly sales of sunglasses also remain at the hundred-million-unit level. However, AI's current penetration in the glasses category is still at a very low level, which provides huge imaginative space for intelligent upgrades.

The report believes that as AI and AR technologies mature and accelerate integration after 2030, AI+AR smart glasses will enter a period of rapid development, with their core momentum coming from the gradual replacement of traditional functional glasses (such as myopia glasses and sunglasses).

According to Wellsenn XR, an information agency, at the mature stage of the industry, global AI+AR smart glasses sales are expected to reach about 1.4 billion units, corresponding to about a 70% penetration rate.

Cost Core: Chips and Optics Dominate Industry Chain Value

Breaking down the cost structure of AI glasses reveals that chips and optics are the most valuable links in the industry chain. Tianfeng Securities’ report predicts that the ultimate form of AI glasses in the future will be a fusion of “AR optical display + AI services.”

According to Tianfeng Securities' analysis, while the AI glasses industry chain covers modules such as display, structural parts, batteries, and sensors, chips and optical modules are the two core factors determining their cost structure and product form.

The research report points out through case studies that different forms of AI glasses have different cost focuses. In Huawei’s AR glasses, which core is display, the combined cost of optical modules and screens accounts for up to 78%. In Xiaomi’s AI glasses, which emphasize AI interaction and photography, the main chip accounts for over 25% of the cost, making it the most expensive single component. Therefore, the report concludes that under the future trend of "AI+AR" integration, the computing chip, optical module, and screen display will constitute the three main cost expenditures of AI glasses, becoming the focus of investment in the industry chain.

Technological Path: Iterative Direction of Optics and Display

In the field of core hardware, the choice of technical route determines the final form and user experience of the product.

In the field of optical display, Tianfeng Securities’ report points out that most mainstream AR glasses on the market currently use the Birdbath solution. This solution is widely used due to its low cost, mature process, and ability to work with OLED screens to achieve excellent display effects. However, it also has significant shortcomings, including about 25% low light transmittance, thick modules, limited field of view, and light leakage, making it difficult to achieve the daily wear form factor of ordinary glasses.

The waveguide solution is regarded as the ideal technical direction to solve these contradictions. With advantages such as high light transmittance, thin and light form, and side-placed optical engines, it can effectively balance performance, comfort, and appearance. Among various waveguide technologies, geometric waveguides based on reflection principles can provide high color accuracy and low color distortion, offering excellent image quality and are considered the key development direction for the future. However, its complex manufacturing process and low yield result in high costs, which is the main bottleneck for mass commercialization at present.

The microdisplay that matches the optical module also follows two technical evolution paths. The research report notes that Micro OLED (silicon-based OLED) is currently mainstream, and its high contrast advantage makes it the first choice for most products. However, Micro OLED’s shortcomings in brightness and relatively short lifespan limit its application performance in strong outdoor light environments.

Micro LED technology, which is highly anticipated, is considered a more ideal AR solution. It has the core advantages of high brightness and long lifespan and better meets all-day usage scenarios. Although promising, Micro LED is currently limited by immature manufacturing processes and low yields, and still needs time before mass production. Tianfeng Securities cites Wellsenn XR’s forecast data that the intensive release of XR products such as AI glasses will continue to drive demand for microdisplays, with the market scale for XR-use Micro OLED and Micro LED expected to rise to $9.4 billion and $7.6 billion respectively by 2030, showing robust growth with dual technical routes.

Computing Power "Brain": SoC+MCU As Ideal Combination

As the "brain" of AI glasses, the choice of computing unit directly affects performance and battery life. Tianfeng Securities’ report analyzes three mainstream chip solutions for AI glasses with cameras:

System-level SoC solution: High degree of integration, strong computing power, but high power consumption poses a huge challenge for battery life.MCU-level SoC + external ISP solution: Controllable power consumption, but weak computing power and limited functions.SoC + MCU collaborative solution: Dynamic scheduling of big and small cores, ensuring full functionality and high performance, but also low power consumption and long battery life.

Tianfeng Securities believes that although currently the highest in cost, the “SoC+MCU” collaborative solution is expected to become the optimal technical answer for the future thanks to its best balance between performance and power consumption. With the expansion of the AI glasses market, the overall SoC market will also continue to increase. According to Mordor Intelligence, the global SoC market is expected to grow from $161.9 billion in 2025 to $237.8 billion in 2030.

Industry Chain Puzzle: Storage, Battery, and Other Key Segments Cannot Be Ignored

In addition to core chips and optics, the research report also highlights the important value of other components in the AI glasses industry.

For storage, ePOP and eMCP are currently the two main solutions. Among them, ePOP-type storage products are considered highly suitable for AI glasses and other smart wearable devices with strict space and power consumption requirements due to their thin, compact, and low-power characteristics.

For batteries, high-density steel shell batteries are becoming the key technology to break the “impossible triangle” dilemma of weight, battery life, and computing power in AI glasses. They provide sufficient energy for more powerful computing platforms and higher-definition sensors without significantly increasing size or weight.

In addition, IMU inertial measurement units and depth cameras used for spatial positioning and environmental sensing, as well as OEM/ODM manufacturers (such as Goertek) offering manufacturing services, together form a complete and complex industry chain map for AI glasses.

Risk warning and disclaimerThe market has risks, investment needs caution. This article does not constitute personal investment advice, nor does it take into account individual users' unique investment objectives, financial situations, or needs. Users should consider whether any opinions, views, or conclusions in this article fit their specific situation. Investment based on this is at your own risk.