I. Optical Technology as the Core Breakthrough in the XR Industry

Augmented reality (AR) and virtual reality (VR) devices are undergoing a critical transition from "technical validation" to "consumer-grade adoption." In this process, the optical system serves as the "last mile" connecting digital content to the human eye, with technological breakthroughs directly determining device size, weight, display quality, and wearable comfort.

Between 2023 and 2026, the global AR/VR optical sector witnessed multiple milestone innovations: In VR, Pancake lenses fully replaced Fresnel lenses as the mainstream solution; in AR, waveguide technology matured, while the integration of silicon carbide (SiC) materials, MicroLED microdisplays, and nanoimprint processes reshaped the industry landscape.

By 2026, the industry reached an inflection point: From January to May 2026, online sales of smart glasses in China surged by 81.2% year-on-year, with first-half omnichannel sales volume up 85.5% and revenue nearly doubling. Forty-three AR glasses models were launched, and waveguide production lines went fully operational. Supported by policy subsidies and capital markets, the AR glasses supply chain officially entered mass production competition.

Source: VRAR Planet

II. VR Optical Technology: Pancake Lenses Lead, Advancing Toward Higher Clarity and Lighter Form Factors

2.1 Full Adoption of Pancake Lenses Drives Optical Module Miniaturization

Pancake lenses, with their ultra-thin profile, fully replaced Fresnel lenses between 2023–2025, becoming the standard for VR headsets. Compared to traditional Fresnel lenses, Pancake lenses utilize multi-layer reflective surfaces to fold optical paths, reducing module thickness by nearly 40% while effectively eliminating the "god ray" artifacts inherent to Fresnel designs.

Domestic Milestones:

Goertek launched a new Pancake lens module with a 110° field of view (FOV) in 2023, reducing headset optical thickness by 35% compared to early Fresnel designs.

Jiangxi Lianchuang Electronics introduced high-precision VR Fresnel lenses in 2024, supporting 4K-per-eye display resolution with distortion below 1% (primarily for legacy upgrades and specific B2B scenarios).

International Milestones:

Apple Vision Pro (2024) features dual Micro-OLED 4K+ displays (23 million pixels total) paired with a custom Pancake optical system, achieving 4K-per-eye resolution and 90Hz refresh rate with 32 PPD (pixels per degree)—the highest among standalone headsets.

Meta Quest 3 (2023) also adopted Pancake lenses, offering approximately 110° FOV.

Industry statistics show that nearly 60% of VR headsets released in 2024 utilized Pancake lens technology.

Source: AppleInsider

2.2 Advanced Materials and Adaptive Optics

Despite their advantages, Pancake lenses face challenges such as low optical efficiency, ghosting, and high costs. The industry is pursuing breakthroughs in two directions:

Hybrid Glass-Polymer Lenses: Manufacturers are developing hybrid glass-polymer lenses to balance durability and lightweight design, potentially reducing headset weight by up to 45%.

Adaptive Focus Lenses: In 2025, Deep Optics Ltd introduced adaptive focus lenses capable of dynamically adjusting focal length from 0.5 meters to infinity, alleviating visual fatigue in mixed reality headsets and addressing the "vergence-accommodation conflict" (VAC).

Source: eyes on glance

III. AR Optical Technology: Waveguides Diversify, SiC and MicroLED Drive Innovation

3.1 Waveguides Dominate AR Optics

With ultra-thin profiles (2–5mm) and high light transmittance, waveguide technology has become the preferred optical solution for AR smart glasses. Around 48% of AR prototypes released in 2023–2024 adopted waveguide systems, with over 28 models in 2024 using waveguide optics.

Current waveguide technologies fall into three main categories:

Each route has distinct positioning: Diffractive waveguides (SRG surface relief gratings) leverage mature semiconductor processes and cost control, dominating consumer AR but suffering from rainbow artifacts and low light efficiency. Geometric/array waveguides offer superior image quality without rainbow artifacts but face manufacturing challenges and low yields, primarily used in high-end B2B scenarios. Volume holographic gratings (VHG/PVG) promise high theoretical light efficiency and cost potential but remain constrained by photosensitive material stability and large-scale production challenges, seen as the long-term wildcard.

3.2 Silicon Carbide (SiC) Waveguides: A Material Revolution

As a third-generation semiconductor material, silicon carbide’s high refractive index, thermal conductivity, and low optical loss made it a breakthrough material in AR optics by 2024.

International Breakthroughs:

Meta Orion (2024 concept product) adopted SiC diffractive waveguides with a 70° FOV—the largest achieved in the market at the time—systematically addressing narrow FOV, rainbow artifacts, and thermal management issues in AR glasses.

Domestic Breakthroughs:

Goertek Optics debuted industry-leading SiC-etched full-color diffractive waveguides in 2025–2026, achieving two breakthroughs: a 50° FOV and module thickness reduction from 1.2mm to 0.65mm. Innovative grating designs and dry etching processes eliminated residual shadows and rainbow artifacts common in AR waveguides. Paired with compact full-color LCoS engines, the solution delivers over 1,500 nits of brightness to the eye.

According to the *2025 AI+AR Glasses Optical Display Research White Paper*, SiC waveguide lens shipments are projected to reach nearly 500,000 units by 2027 and 7 million units by 2030.

Source: Westlake University

3.3 Display Engines: MicroLED and LCoS Coexist

AR glasses display engines are diversifying around FOV requirements. Currently, MicroLED dominates in China, with cutting-edge prototypes like Meta Orion adopting MicroLED (LEDoS) solutions, while consumer-grade products like Meta Ray-Ban Display use LCoS technology. Both technologies are expected to coexist long-term: LCoS suits wider FOVs, while MicroLED excels in lightweight designs with narrower FOVs.

MicroLED Microdisplay Breakthroughs:

JBD (Xianyao Display Tech): By late 2024, over 30 AR glasses models using JBD’s solutions had launched. Its 2024 Hummingbird Mini II engine (0.15cc volume) seamlessly integrates into glasses temples, while the new Hummingbird I full-color optical module delivers over 6,000 nits brightness—far exceeding traditional limits.

Porotech: In 2024, Porotech partnered with Foxconn, Powerchip, and GIS to establish the world’s first 8-inch fabrication platform dedicated to MicroLED, covering GaN materials, wafer manufacturing, and optical module integration. By late 2024, the team achieved 1.25μm pixel sizes, targeting high-specification MicroLED product development and commercialization in 2025. Its Dynamic Pixel Tuning (DPT) technology won the SPIE Prism Award.

Yanshan Technology’s "Weimang" (July 2026): Westlake Yanshan Technology unveiled its self-developed MicroLED microdisplay engine "Weimang," featuring a proprietary VGA008 silicon-based driver chip with 2.4μm pixels. It achieves 640×480 resolution in a 0.08-inch display area with PPI reaching ten thousand. Under specified test conditions, the chip delivers over 3 million nits brightness with >95% display uniformity, advancing productization via an 8-inch MicroLED microdisplay platform.

LCoS Engine Breakthroughs:

Goertek Optics developed a 0.7cc ultra-compact LCoS engine paired with single-engine binocular diffractive waveguides, available in monochrome (with Micro-LED) and full-color versions to reduce costs and ensure display consistency.

3.4 Waveguide Manufacturing: Nanoimprint and Direct Etching Advance

Waveguide manufacturing is transitioning from labs to mass production, with multiple processes coexisting:

Entry/Mid-Range: Dominated by Radiant, AUO, and Vuzix using "permanent nanoimprint lithography (Permanent NIL)".

Mid-Tier Products: Represented by Magic Leap’s "nanoimprint lithography combined with etching".

High-End Products: Primarily use "direct etching" advanced by AAC Technologies, Dispelix, Applied Materials, and GlobalFoundries, supplemented by Lumus and SCHOTT’s "geometric waveguide" solutions.

AUO showcased its proprietary waveguide technology at SID 2025, using nanoimprint SRG diffractive waveguides to project virtual images directly onto glasses lenses, achieving superior brightness uniformity and HD display.

ZhigTech’s Fully Automated Production Line: ZhigTech built the industry’s first fully automated diffractive waveguide production line, enabling 8-inch/12-inch full-stack automation with a monthly capacity of 100,000 units and current shipments of 20,000 units/month. By 2026, it expects to deliver over 1 million waveguides, with post-expansion monthly capacity reaching 250,000 units and annual capacity of 3 million units.

Source: ZhigTech

3.5 Optical Efficiency and Dimming Technology

High-Transmittance Waveguides:

Carl Zeiss developed advanced waveguide optics in 2024 with >85% light transmittance, significantly enhancing visual clarity in AR smart glasses.

Sunny Optical and JBD’s full-color binocular diffractive waveguide module achieves 85% transmittance, >200nits brightness, 40° FOV, and a total weight of ~46g.

ZhigTech’s waveguide lenses exceed 98% overall transmittance (>99% in non-grating areas), approaching premium lens levels, and developed a "rainbow-free" patented technology eliminating artifacts in ~95% of scenarios.

Active Dimming Technology:

Dimming has become essential for see-through AR headsets, evolving from global dimming (uniform across the entire FOV) to pixel-level dimming, enabling high-contrast, realistic virtual images and deep blacks in bright environments. Products like Snap Spectacles and Xreal Air 2 Pro already feature active dimming.

Source: Techradar

IV. Key Domestic and International Enterprise Layouts and Industrialization Progress

4.1 Domestic Optical Companies

4.2 International Optical Companies

V. Latest Updates: July–August 2026

Mass Production Competition Fully Underway

5.1 Market Explosion: From "Proof-of-Concept" to "Mass Production Rivalry"

The AR glasses market achieved historic growth in H1 2026. Online sales of smart glasses in China surged 81.2% YoY from January to May 2026, with average prices reaching 2,041 yuan. First-half omnichannel sales volume jumped 85.5% YoY, and revenue nearly doubled. Forty-three AR glasses models with displays were released, pre-sold, or launched in H1 2026 across 23 brands. Terminal products trended toward lower prices and lighter weights, with some early-bird offers dropping to 999 yuan, waveguide-based models entering the 2,000-yuan range, and 35–50g ultra-light AR glasses becoming mainstream for daily wear.

5.2 Full-scale Production of Optical Waveguide Lines: Accelerated Import Substitution

In the first half of 2026, the mass production of domestic optical waveguides will be fully realized, marking the transition of AR optics from "laboratory samples" to "million-unit shipments":

Goertek Aolai Optics: In June 2026, the 12-inch transparent substrate wafer AR glasses micro-nano optical product project officially commenced production in Lingang, Shanghai. It became the country's first 12-inch AR micro-nano optical wafer manufacturing base to achieve large-scale mass production, with a total investment of approximately RMB 3.28 billion, focusing on high-end optical components such as AR waveguide sheets, electrochromic lenses, and micro-lens arrays.

Nika Optics: In June 2026, the world's first million-unit-level volumetric holographic waveguide automated production line officially commenced production in Tianjin, with a designed annual capacity of 1 million units. After adding the Guangzhou base, the overall planned capacity reaches 1.3 million units, with orders in hand exceeding 1 million units, breaking the overseas monopoly on the large-scale mass production of volumetric holographic waveguides.

Zhig Technology: It is expected to deliver over 1 million waveguides in 2026, with a monthly production capacity of 250,000 units after expansion, corresponding to an annual capacity of 3 million units.

Image Source: VRAR Planet

5.3 Countdown to Entry of Tech Giants Apple and Google

Apple: In July 2026, it was granted the patent for the "Optical Bridge" AR glasses display calibration architecture, which can automatically maintain precise alignment of the projected images for the left and right eyes when the frame bends, is dropped, or undergoes thermal expansion. By encapsulating the optical components in a rigid housing and incorporating a front-hinge design, it resolves visual misalignment and ghosting issues caused by daily physical deformations. Meanwhile, Apple's smart glasses are planned to debut as early as WWDC 2027 and go on sale in autumn 2027.

Google: It confirmed that it will release a monocular AI AR glasses based on Raxium MicroLED in 2026, adopting the Android XR system and collaborating with eyewear brands such as Warby Parker and Gentle Monster on design, with a binocular version to follow.

XREAL Aura: The world's first flagship glasses based on Android XR, featuring the largest practical 70° field of view among consumer-grade AR products.

5.4 Release of Policy Dividends

In 2026, smart glasses were included in the national subsidy list for trade-ins of home appliances and digital products for the first time, with a subsidy standard of 15% of the product's sales price and a cap of RMB 500 per unit. At the local level, Bao'an District, Shenzhen, released eight support measures for the smart glasses industry at the end of June 2026, establishing a special fund to provide targeted subsidies for upstream production lines of optical waveguides, Micro LEDs, and dedicated chips. Companies such as XREAL, Thunderbird, and Rokid have also initiated preparations for listing.

Image Source: VRAR Planet

VI. Technical Challenges and Future Trends

6.1 Current Core Challenges

1. Optical Waveguide Mass Production Bottlenecks: According to industry estimates, to meet the demand for 100 million AR devices annually, optical waveguide production capacity would need to be several times that of TSMC's wafer capacity. Although multiple production lines commenced operations in 2026, there is still a huge gap to achieve hundred-million-unit shipments.

2. Efficiency and Cost of Pancake Lenses: Although Pancake lenses are thin and lightweight, they suffer from low optical efficiency, ghosting issues, and high costs, requiring continuous optimization in materials and coating processes.

3. Single-Panel Full-Color MicroLED: The first large-scale mass-produced RGB MicroLED solutions still adopt a three-panel architecture. The manufacturing process for single-panel RGB MicroLED is expected to mature only by 2028.

6.2 Future Development Trends

4. "Optical Waveguide + MicroLED" Becomes the Standard AR Architecture: The industry is accelerating towards this standard architecture. With the decline in mass production costs of MicroLEDs and the improvement in waveguide efficiency, lightweight AR glasses are expected to see explosive growth between 2026 and 2028.

5. Accelerated Penetration of SiC Optical Waveguides: Silicon carbide materials will transition from small-batch verification to large-scale applications. The commencement of production at Goertek's 12-inch line is a significant milestone, with shipment volume (shipment volume) expected to grow exponentially between 2027 and 2030.

6. Laser Display and Free-Space Optics: Laser-based display solutions are expected to enable volumetric AR and completely resolve the vergence-accommodation conflict (VAC) problem. The optical system may shift towards a free-space architecture (such as holographic mirrors), competing with the diffractive waveguide route.

7. AI Glasses Drive Optical Demand: Global AI glasses sales exceeded 2 million units in 2024, with online sales in China in the first half of 2026 increasing by over 80% year-on-year. AI applications require simple and lightweight optical components to display notifications, prompts, and contextual information, driving the evolution of consumer-grade AR glasses optical solutions towards thinner, lighter, and lower-power designs.

8. Integration of Prescription Lenses: Integrated solutions combining prescription correction and waveguide encapsulation (such as Meta's collaboration with Luxexcel) will be key to the popularization of consumer-grade AR glasses.

9. Dense Product Launches by Tech Giants in 2027: The entry of Apple's smart glasses (autumn 2027) and Google's binocular AR glasses (expected 2027) will redefine consumer-grade AR optical standards, driving upgrades across the entire industry chain.

Image Source: Samsung Mobiel Press

VII. Optical Revolution: The XR Industry Enters the Era of Large-Scale Competition

From 2023 to 2026, AR/VR optical technology has undergone a critical transition from "usable" to "user-friendly" and then to "mass production." In the VR field, Pancake lenses have replaced Fresnel lenses, with 4K per-eye resolution and adaptive optics becoming the new benchmarks. In the AR field, the optical waveguide technology route has become increasingly clear. The introduction of silicon carbide materials, the maturation of MicroLED micro-displays, and advancements in nanoimprint/direct etching processes are collectively pushing AR glasses closer to the form of "ordinary glasses."

Since July and August 2026, the industry has witnessed qualitative changes: full-scale production of optical waveguide lines (Goertek's 12-inch line, Nika's million-unit-level line, Zhig's delivery of 1 million units), breakthroughs in MicroLED chip brightness exceeding 3 million nits (Yanshan Technology), the countdown to the entry of tech giants Apple and Google, dual support from policy subsidies and capital markets, and over 80% growth in sales in the first half of the year—all these signals indicate that the AR/VR optical industry has officially transitioned from the "technology reserve phase" to the "large-scale competition phase."

Chinese companies are playing an increasingly important role in the global AR/VR optical industry chain: Goertek has achieved dual leadership in Pancake and SiC waveguide technologies and established a 12-inch wafer production line. Crystal-Optech has taken the lead in the commercialization of volumetric holographic waveguides. Zhig Technology is leading the large-scale production of diffractive waveguides with fully automated production lines. Nika Optics has broken the overseas monopoly on volumetric holographic mass production. Sunny Optical has collaborated with JBD and Hydro Opto to build a complete diffractive waveguide ecosystem. Meanwhile, international tech giants such as Meta, Apple, Google, and Carl Zeiss continue to lead in system-level integration and high-end materials.

Looking ahead, as AI injects "killer application" potential into smart glasses, every breakthrough in optical technology will accelerate the historical transition of XR devices from "geek toys" to "mass consumer products." 2027 may become the "iPhone moment" for consumer-grade smart glasses—and optics will be the core variable defining this moment.

Text by Victor