THIS MATERIAL IS A MARKETING COMMUNICATION.
Metaverse Devices and Semiconductors
VR/AR Devices-Tech companies are racing to launch the most compelling headset
Designing a new hardware platform is challenging, especially considering VR/AR devices are used to support a new generation of human-machine interaction which happens in an immersive, three-dimensional world. We are still in the early stages of interface design, and VR/AR device performance will improve significantly over the next decade with new technology and rapid evolution in design iterations.
We can draw a comparison to the success of smartphones whose golden era in 2010 was supported by the development of many different technologies, from high-speed mobile internet (4G), semiconductor technology migration, to display technology. The success of AR/VR will also depend on the development of technologies that will make a compelling, practical end device possible.
Global AR/VR headsets shipment is expected to reach 42 mn units by 2025, or US$12.6 bn market, representing 48% shipment CAGR and 36% revenue CAGR over 2020-25. (IDC, CS estimates, 2021) We expect the adoption of AR/VR devices to increase, driven by improvement in hardware performance, development in software ecosystem and platforms, and new applications for AR/VR devices.
We see two main groups of players in the hardware space for metaverse devices. One group is large technology companies like Meta, Microsoft, Apple, ByteDance, etc. The other group is start-ups or smaller tech companies like Magic Leap, HTC, realwear, etc.
Oculus has been one of the most successful hardware products in AR/VR devices. The Oculus Quest 2 continues to be a key unit driver of the industry. Before the launch of Oculus Quest 2 in 4Q20, the industry struggled to get traction with various headset designs.
Sony PlayStation VR
Sony’s PlayStation VR2 system and PS VR2 Sense controllers at CES (Consumer Electronics Show) 2022 is a tethered headset leveraging computing power from the PlayStation to power the headset. Sony aims to increase the penetration of this new generation VR in PlayStation since the first generation only recorded around 6% penetration in PS4.
AR headset HoloLens 2 was released in 2019, and HoloLens 3 is expected to be released in 2024. The company currently focuses on enterprise applications with the HoloLens, considering the high price of the HoloLens 2 (US$3,500). However, given the strong content portfolio of Microsoft, we believe it has the right resources to enter the consumer VR/AR space. Key applications of the Hololens include manufacturing, engineering, healthcare and education.
Improvement in Semiconductor Technology to enable user experience breakthrough
Connectivity – Wifi 7: The industry is on track to deliver wifi 7 products in 2023. High-speed WiFi 7 technology will provide 30Gbps data transmission speed, which is 3x faster than the WiFi 6 (adopted by Oculus Quest 2). This will enable higher resolution and real-time experience on VR/AR devices. MediaTek and Broadcom are industry pioneers for WiFi 7.
Performance/power efficiency – foundry node migration: Migration in semiconductor technology will allow companies to design faster chips with lower power consumption and higher transistor density. This is crucial for high-performance graphics on portable devices. VR/AR workloads are challenging as they are compute-intensive, complex concurrencies and real-time.
The Qualcomm Snapdragon XR2 5G Platform is the core chip that currently powers the majority of the standalone VR/AR devices in the market, supporting 8K 360° video, 5G connectivity and seven camera inputs. IC design companies will continue to work with foundries to improve the performance of future platforms.
Cloud computing infrastructure: The metaverse has enormous potential to further expand or divert screen time (Americans average 10+ hours/day on media, including 3+ hours on TV) (CS estimate, 2022) and drive more bandwidth consumption. Internet traffic is already 80% video and has been growing at a 30% CAGR. (CS 2022) Building the metaverse will require powerful graphics and cloud computing infrastructure to house such a complicated platform and contents. We therefore see structural demand to invest in the build-out and upgrade of data centres, benefiting companies like Nvidia, AMD, etc.
Eye tracking, environment reconstruction- CIS (CMOS image sensor): Companies like Will Semi develop CIS solutions for VR/AR devices. Image sensors are required for eye-tracking, motion tracking as well as recreating environments in VR devices. Will Semi's CIS is already adopted in the Oculus with around US$10 content per box. (MS, 2021)
Staying Ahead with Mirae Asset’s Latest Insights
Disclaimer & Information for Investors
No distribution, solicitation or advice: This document is provided for information and illustrative purposes and is intended for your use only. It is not a solicitation, offer or recommendation to buy or sell any security or other financial instrument. The information contained in this document has been provided as a general market commentary only and does not constitute any form of regulated financial advice, legal, tax or other regulated service.
The views and information discussed or referred in this document are as of the date of publication. Certain of the statements contained in this document are statements of future expectations and other forward-looking statements. Views, opinions and estimates may change without notice and are based on a number of assumptions which may or may not eventuate or prove to be accurate. Actual results, performance or events may differ materially from those in such statements. In addition, the opinions expressed may differ from those of other Mirae Asset Global Investments’ investment professionals.
Investment involves risk: Past performance is not indicative of future performance. It cannot be guaranteed that the performance of the Fund will generate a return and there may be circumstances where no return is generated or the amount invested is lost. It may not be suitable for persons unfamiliar with the underlying securities or who are unwilling or unable to bear the risk of loss and ownership of such investment. Before making any investment decision, investors should read the Prospectus for details and the risk factors. Investors should ensure they fully understand the risks associated with the Fund and should also consider their own investment objective and risk tolerance level. Investors are advised to seek independent professional advice before making any investment.
Sources: Information and opinions presented in this document have been obtained or derived from sources which in the opinion of Mirae Asset Global Investments (“MAGI”) are reliable, but we make no representation as to their accuracy or completeness. We accept no liability for a loss arising from the use of this document.
Products, services and information may not be available in your jurisdiction and may be offered by affiliates, subsidiaries and/or distributors of MAGI as stipulated by local laws and regulations. Please consult with your professional adviser for further information on the availability of products and services within your jurisdiction. This document is issued by Mirae Asset Global Investments (HK) Limited and has not been reviewed by the Securities and Futures Commission.
Information for EU investors pursuant to Regulation (EU) 2019/1156: This document is a marketing communication and is intended for Professional Investors only. A Prospectus is available for the Mirae Asset Global Discovery Fund (the “Company”) a société d'investissement à capital variable (SICAV) domiciled in Luxembourg structured as an umbrella with a number of sub-funds. Key Investor Information Documents (“KIIDs”) are available for each share class of each of the sub-funds of the Company.
The Company’s Prospectus and the KIIDs can be obtained from www.am.miraeasset.eu/fund-literature . The Prospectus is available in English, French, German, and Danish, while the KIIDs are available in one of the official languages of each of the EU Member States into which each sub-fund has been notified for marketing under the Directive 2009/65/EC (the “UCITS Directive”). Please refer to the Prospectus and the KIID before making any final investment decisions.
A summary of investor rights is available in English from www.am.miraeasset.eu/investor-rights-summary.
The sub-funds of the Company are currently notified for marketing into a number of EU Member States under the UCITS Directive. FundRock Management Company can terminate such notifications for any share class and/or sub-fund of the Company at any time using the process contained in Article 93a of the UCITS Directive.
Hong Kong: This document is intended for Hong Kong investors. Before making any investment decision to invest in the Fund, Investors should read the Fund’s Prospectus and the information for Hong Kong investors (of applicable) of the Fund for details and the risk factors. The individual and Mirae Asset Global Investments (Hong Kong) Limited may hold the individual securities mentioned. This document is issued by Mirae Asset Global Investments (HK) Limited and has not been reviewed by the Securities and Futures Commission.
Copyright 2021. All rights reserved. No part of this document may be reproduced in any form, or referred to in any other publication, without express written permission of Mirae Asset Global Investments (Hong Kong) Limited.