AR/VR 2026

Discover our new edition of AR VR 2026: From Display and Optics to Advanced Sensing and Processing.

This report provides a comprehensive overview of the AR, VR and smart eyewear markets, connecting product adoption, technology evolution and supply chain readiness. It explores how lighter, AI-driven glasses, new display interfaces and renewed momentum from major technology companies are reshaping the market outlook.

The report analyzes market forecasts, key technology roadmaps, display engine dynamics, waveguide manufacturing capacity, sensing and processing trends, and the competitive ecosystem. It also highlights the major bottlenecks that could influence the pace of adoption, from optics integration to scalable waveguide production.

What’s new since the last update?

• Propose a deeper segmentation of the smart eyewear and AR glasses market.
• Forecast the penetration of different technologies to address the different segments.
• Analyze marketing elements, use cases, and subsequent business models related to AR and AI.
• Forecast AR waveguide supply capacity for the next five years, eventually showing the opening of a supply/demand gap.
• Provide a clear mapping of waveguide manufacturers’ processes.

Report’s objectives

This report aims to provide readers with a clear overview of the different product taxonomies within the AR and VR fields.

It seeks to establish a link between technological advancements and the user experiences they enable.

For these experiences and related devices, the report explores the targeted markets and their growth dynamics. These markets are analyzed in terms of size and segmented by end systems, such as headsets and glasses, as well as by modules.

The growth of AR is closely intertwined with technological advancements, particularly in displays and optics. This report identifies key bottlenecks, major challenges, and the strategies employed to address them.

Market players come from various regions of the world and differ in size and positioning, yet all contribute across the supply chain. This report outlines who is doing what and highlights partnerships, relevant collaborations, and competition.

Towards a 60-million-unit market for audio and AR glasses by 2031

Yole Group forecasts the audio glasses and AR glasses market to reach 60 million units by 2031, split roughly evenly between the two categories. Growth will be driven by Western entrants such as Google, Samsung, and Apple, which bring fresh value propositions, legitimize the form factor, and leverage years of OS dominance across laptops, tablets, and especially smartphones. The addition of a visual interface enables differentiation while remaining familiar and improves the quality of interaction.

The expected 35% CAGR from 2025 to 2031 rests on a scenario in which more OEMs enter the market and adoption follows the familiar diffusion curve of previous consumer products, such as smartwatches. Crossing the chasm will depend on influencer ambassadors and on whether the glasses’ purpose and wearer etiquette position them as gimmicks or as genuine enhancements to the digital experience and agentic AI interaction.

Can a nascent supply chain catch up with a fast-growing market?

In AR, the scaling constraint lies in optics and integration. Sensors from Bosch, TDK, STMicroelectronics, Sony, Syntiant, ams OSRAM, and Goertek, as well as compute chips from Qualcomm and MediaTek, draw on mature, high-volume consumer supply chains. However, displays and waveguides rely on nascent technologies and a still-limited supplier base.

The waveguide is the likely manufacturing bottleneck. Meta’s claim that a 100 million unit-per-year market would require six times TSMC’s wafer capacity is flagged even in the source as exaggerated, since the processes and throughputs are not comparable. Rather than one winning process, segmented coexistence is expected: permanent NIL from Radiant, AUO, and Vuzix for entry-level and mid-range products; NIL plus etching from Magic Leap for the mid-range; and direct etching from AAC, Dispelix, and Applied Materials with GlobalFoundries, alongside geometric waveguides from Lumus and SCHOTT, for the high end.

No single winner: AR displays split by field of view

Display engines are poised to serve field-of-view-defined segments. Today, microLED dominates in China, while Meta’s first Western generation uses LCoS. The two technologies should coexist: LCoS serves wider FoVs, while microLED addresses narrower FoVs where its coarser pitch is still sufficient. The first mass-volume RGB microLED solutions will be based on a three-panel architecture, as single-panel manufacturing maturity is not expected before 2028.

On the optics side, geometric waveguides offer the best performance and remain discreet, but they scale poorly. Diffractive waveguides, by contrast, map onto standard semiconductor front-end processes and could become the mainstream solution if volume materializes. The industry is consolidating around a waveguide-plus-LED-engine standard.

The real fork lies in laser-based solutions. These could enable volumetric AR and address the vergence-accommodation conflict. If adopted, optics could eventually shift toward free-space architectures, such as holographic mirrors, conflicting with the diffractive path and reshaping integration.

About the authors

Glossary

Companies cited

What we got right, what we got wrong

3-page summary

Context

• All over the body – The consumer electronics arsenal
• Which intersection do AR and smart eyewear sit at?

Market forecasts

• 2021–2031, VR, AR and smart eyewear market forecast – Volume (Mu)
• 2021–2031, smart eyewear and AR market forecast – Volume (Mu) – Segments breakdown
• 2021–2031, waveguide for consumer AR market forecast – Volume (Mu)
• 2021–2031, geometric waveguide market forecast – Volume (Mu)
• 2021–2031, optics for AR market forecast – Volume (Mu) and Revenue ($M) – All segments
• 2021–2031, wafer for AR diffractive waveguides forecast – Volume (Mu) – Material breakdown
• 2021–2031, display engines for consumer AR market forecast – Volume (Mu)
• 2021–2031, display engines for AR market forecast – Volume (Mu) and Revenue ($M) – All segments
• 2021–2031, sensors for entry consumer AR, professional and sport market forecast – Volume (Mu) and Revenue ($M)
• 2021–2031, sensors for mid-end consumer AR and birdbath market forecast – Volume (Mu) and Revenue ($M)
• 2027–2031, sensors for AR high-end market forecast – Volume (Mu) and Revenue ($M)
• 2021–2031, VR headsets market forecast – Volume (Mu)
• 2021–2031, displays for VR market forecast – Volume (Mu) and Revenue ($M)
• 2021–2031, sensing for VR market forecast – Volume (Mu) and Revenue ($M)
• 2021–2031, computing chips for AR, VR and smart eyewear – Wafer volume (kwpy) and Revenue ($M)

Market trends

• AI and AR
• On the impact of memory cost increase on consumer electronics and AR
• Market segmentation
• Consumer AR and smart eyewear segmentation
• AR and smart eyewear cost structures
• Fitting Meta’s 100/4/100 – Display and optics cost evolution
• Distribution channels
• AR ecosystems and markets – Geographic breakdown
• Chinese domestic ecosystem/market
• Western vs Chinese market comparison
• AR and smart eyewear niche markets
• VR products positioning
• The barriers – Obstacles to adoption
• Beware the backlash
• Culture, etiquette and nudging

Ecosystem and value chain

• AR glasses typical value chain
• Meta Ray-Ban Display supply chain
• Multiple ODMs have developed strong expertise and ecosystems in smart glasses
• Goertek company profile
• Industry news (2021–2026)
• Start-up funding history
• Map of the VR players
• Map of smart glasses OEMs
• Major ecosystems overview
  • Meta
  • EssilorLuxottica
  • Google
  • Apple
  • Snap
• Ecosystem and supply chain – Microdisplays
• Map of the microdisplays for AR players
• Microdisplay supply chains – MicroLED focus

Ecosystem and value chain – Optics

• Map of the optics for AR players
• Optics for AR value chain
• Meta Ray-Ban Display: Lumus and Schott
• Applied Materials
• Magic Leap’s evolution
• Waveguide global capacity forecast – Players breakdown (inferred)
• Players positioning in material vs. process
• Ecosystem and supply chain – Sensing and processing

Technology trends

• Glasses power budget
• Glasses weight budget
• Guided vs. free-space architectures
• System-level brightness constraints
• Technology trends – Microdisplays
• LED-based AD microdisplay technologies
• LED LCoS display engine – Analysis of the Meta Ray-Ban Display
• Laser-based display engine technologies
• Microdisplay technologies comparison
• Technology trends – AR optics
• Anatomy of a waveguide – Geometric waveguide
• AR waveguide technologies
• Diffractive waveguide manufacturing method comparison
• Technology trends – Sensing and processing
• In the Meta Ray-Ban Display, the sensors still represent a small fraction of the BOM (<1%)
• Interaction modalities dictate emerging sensing techniques
• AR technologies roadmap

Outlook

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Yole Group Corporate Presentation

3D Micromac, AAC Technologies, ActiveLook, AddOptics, AdHawk, AGC, Aledia, Alibaba, Allos, AMS Osram, Analog Devices, Anduril, Applied Materials, Appotronics, Asus, AUO, Avegant, Baidu, BOE, Bosch, ByteDance, Canon, Cellid, Cirrus Logic, Coherent, ColorChip, Compound Photonics, Corning, Creal, Dai Nippon Printing, Delo, Digilens, Dispelix, DNP, eMagin, EmteqLabs, Engo, EssilorLuxottica, Eulitha, EV Group, Even Realities, Exalos, Foxconn, GentleMonster, Germanlitho, GIS, Gixel, GlobalFoundries, Goertek, Google, Greatar, HC Semitek, HighRI Optics Inc., Himax, Hongshi, HOYA, HTC, Huawei, Inkron, Inlighten, Inmo, Innolux, Innovision, IQE, Jabil, Jade Bird Display, JDI, Jorjin, JSG, Knowles, Kopin, LAM Research, LGInnotek, LightTrans, Lucyd, Lumus, Luxexcel, Luxshare, Lynx, Magic Leap, Mediatek, Meizu, Meta, Micro Resist Technology, Micron, Microoled, Microsoft, Mitsui Chemical, Mojo Vision, Morphotonics, Murata, Myrias Optics, Nichia, Nikon, NIL Technology, North Ocean, Ohara, Omnivision, Oppo, Optiark, OptoFidelity, Oqmented, Ostendo, Oxford Optical Labs, Pegatron, Pico, Pimax, Pixelligent, PlayNitride, Plessey, poLight, Porotech, Prophesee, PSMC, PupilLabs, Q-Pixel, Qualcomm, Quanta Computer, Radiant, Raith, Raontech, Raxium, RayNeo, Raysolve, Renesas, Rokid, Samsung, Saphlux, Sapien Semiconductors, Schott, SCIA Systems, Scil, SCIVAX, SeeYa, SICC, Sidtek, Sitan, SK Hynix, Skyworks, SMIC, Snap, Solnil, Solos, Sony, ST Microelectronics, Stensborg, Sunny Optical, Swave, TankBlue, TCL, TDK, Tekscend Photomask, TEL, Tencent, Texas Instruments, Tobii, Toyo Gosei, TriLite, TSMC, USI, Varjo, Veeco, Viewpoint, Vitrealab, Viture, VoxelSensors, Vuzix, Warby Parker, Wavelord, WaveOptics, Winbond, Wolfspeed, Xiaomi, xMEMS, Xreal, Zeiss.