2026 is shaping up to be the year of displays for AI glasses, with industry projections indicating global AI/AR eyewear shipments will grow by roughly 40% year-over-year in 2026. This anticipated growth is expected to stimulate demand for key upstream components including chips, storage, and optical waveguides. Within China, the smart glasses market is currently experiencing a clear divergence: the audio glasses segment is contracting while the AI/AR category is expanding rapidly.

According to an IDC research report released on September 17th, in Q2 2026, the Chinese smart glasses market saw shipments of audio and audio-camera glasses reach 332,000 units, a year-over-year decrease of 35.4%. In contrast, the AR/VR market segment shipped 279,000 units, representing a substantial year-over-year increase of 85.8%. Notably, the AR glasses sector alone grew by 123%, driven primarily by the adoption of lightweight glasses with AI functionalities. This positive sentiment was reflected in the stock market on September 18th, where the AI glasses sector index rose by 2.45%. Companies like 恒玄科技 (688608.SH), 康希通信 (688653.SH), and 南芯科技 (688484.SH) saw their shares increase by over 5%. Meanwhile, 歌尔股份 (002241.SZ), 思特威 (688213.SH), 全志科技 (300458.SZ), XD佰维存储 (688525.SH), and 芯原股份 (688521.SH) all posted gains exceeding 4%, with 水晶光电 (002273.SZ) also rising by more than 3%.

Audio Glasses Manufacturers Pivot Towards the AR Market

Chen Jun, Deputy General Manager and Chief Analyst at Sigmaintell, explained that this market divergence signals a shift in smart glasses from single-function audio devices towards more advanced intelligent interaction, visual perception, and display capabilities. The decline in the pure audio category is likely due to demand being replaced by upgraded products, while the growth in AI/AR devices is fueled by both substitution and new demand. Overall, AI/AR glasses are currently the primary growth engine for the extended reality (XR) market. Sigmaintell forecasts that global AI/AR glasses shipments will increase by around 40% in 2026.

Yang Lei, Marketing Director at 魔力宝科技, shared on September 19th that their audio glasses shipments have decreased from their peak, and the company is reallocating its remaining production capacity towards more intelligent and specialized AI and AR glasses. This transition exemplifies a broader industry trend. Since starting as an audio glasses OEM in 2019, they have witnessed the market's lifecycle from inception, rise, and stabilization, to the current transition towards AI glasses. The audio glasses sector initially grew out of a desire to satisfy the novelty-seeking needs of cross-border e-commerce platform users, with the market peaking between H2 2024 and H1 2025. During this peak, 魔力宝 shipped as many as 5,000 audio glasses units per day, but that volume has since declined. Since the second half of last year, the smart glasses market has evolved from rapid, unrefined growth to a more focused and quality-driven phase.

魔力宝 has now redirected nearly half of its production capacity towards AI camera glasses, offering outdoor, daily, and business models, responding to users' new demands following their initial novelty experience. To ensure comfortable wearability, smart glasses are evolving toward feature enhancement and specialization. Currently, 60% of their smart glasses are audio-centric, 40% are AI camera glasses with integrated cameras, and they plan to introduce AR glasses featuring optical waveguides. Yang Lei anticipates a period of intense industry consolidation among audio glasses manufacturers. He expects some companies that originated from the Bluetooth headphone or smart watch sectors may retreat to their core businesses or even be eliminated from the market entirely.

Yan Pengfei, CEO of 安塔威, echoed this sentiment, pointing out that the entry barrier for audio glasses is low, as any company making smart earphones can easily produce them. His company chose to enter the market via AI glasses and has already launched monocular single-green and binocular single-green AR glasses. He predicts that as the domestic audio glasses market contracts, production capacity will become oversupplied, leading to the elimination of weaker companies. Zhang Yi, CEO and Chief Analyst at 艾媒咨询, analyzed that audio glasses, with their relatively simple function set, represent a product form being displaced by technological iteration. AI-enabled and AR glasses are the future direction of the smart eyewear market. From this perspective, the transformation and even partial elimination of capacity in the audio glasses sector are natural market and technological progress.

Several companies in the audio supply chain have already diversified into the AI and AR supply chain. For example, 佳禾智能, a company primarily focused on earphones, recently stated that it now has the capability for AI/AR glasses research, design, and mass production delivery. 瑞声科技 (02018.HK), known for its acoustics business, revealed in its interim report that by integrating optical waveguide company Dispelix, it offers "waveguide + light engine" solutions and has achieved mass delivery of full-color light engines.

2026 Marked as the Year of Displays for AI Glasses

A senior industry insider analyzing the situation noted that 2026 is the year of displays for AI glasses. AI glasses with monocular single-green or binocular single-green displays are expected to hit the market in scale in Q4 of this year. With shipment prices potentially under 1,000 yuan and estimated retail prices between 1,500 and 1,800 yuan, these products are set to lower the entry barrier for consumers. The addition of display capabilities is also expected to significantly enhance the perceived technological appeal of AI glasses for many users. Furthermore, starting in H2 of this year, AI glasses with full-color optical waveguides are anticipated to appear on the market, which is expected to provide a major boost to the entire industry.

This shift is set to bring about five key changes for the upstream supply chain. First, while orders for pure audio glasses decline, AI and AR glasses still require speakers and microphones, but demand is moving towards solutions with multi-microphone pickup, wind noise reduction, low leakage, and low power consumption. Second, the growth of AI camera glasses will create new demand for image capture and visual AI interaction, driving the need for miniaturized, low-power camera modules. Third, the evolution from basic Bluetooth audio to image processing, AI interaction, and multitasking will increase the value of chips and storage. Fourth, increasing sales of glasses with display functions will boost demand for optical components such as micro-displays and optical waveguides. Fifth, the increased integration complexity of cameras, acoustics, antennas, and display systems will elevate the need for comprehensive device development, calibration, and testing services.

Cui Haitao, Chairman of 谷东智能, added that during the AI boom, users are not satisfied with audio-only smart glasses and are looking for enhanced display features. This represents a positive development for upstream optical waveguide suppliers. The industry is currently expanding production capacity, with companies like Goertek Optics and 瑞声科技 actively investing in waveguide manufacturing. Yang Lei also observed at the 2026 China International Optoelectronic Expo that most major optics companies have now entered the waveguide business. Micro-display technology is also progressing. Currently, most AR glasses use a "Micro LED/silicon-based OLED + optical waveguide" architecture, and it's anticipated that external clip-on displays for AR glasses will emerge, offering users flexible installation and removal.

Listed companies related to optical waveguides have been accelerating their plans this year. 舜宇光学科技 (02382.HK) disclosed in its interim report that its XR product revenue reached approximately 955.7 million yuan in the first half of the year, up about 11% year-over-year, and its lightweight full-color AR display module has achieved small-batch production. 水晶光电 recently announced that its reflective waveguide pilot production line has been successfully established and relevant products have passed customer certification. It also started mass production for domestic clients this year for its VHG (volume holographic grating) diffractive waveguide. 蓝特光学 (688127.SH) also provides solutions for waveguide systems, optical engine systems, and precision optical components for perception and imaging. The company anticipates that 2028 could be a critical year for leading manufacturers to intensely release mass-market consumer-ready AR products.

In the micro-display field, 视涯科技 (688781.SH) reported that its H1 revenue surged by 287.87% year-over-year to 584 million yuan. Its silicon-based OLED micro-display business has partnered with leading customers to launch optical system solutions for AR and AI glasses, applicable in scenarios like video watching, medical, office work, gaming, tourism, outdoor cycling, and running. Demand for image sensors is also being stimulated. 豪威集团 (603501.SH) recently stated that as large model capabilities are deployed to edge devices, smart glasses require higher performance from image sensors. The company has completed its product layout and saw revenue of 230 million yuan from edge AI terminals in its image sensor business in H1, a year-over-year increase of 8.46%.

Accelerated Localization of Chips and Storage for AI/AR Glasses

As smart glasses become more intelligent, the usage and functionality of upstream chips are set to increase. A review of announcements from relevant listed companies indicates that the domestic supply chain for SoC chips, storage chips, and Wi-Fi chips in AI/AR glasses is gradually maturing, with the industry awaiting a market demand inflection point. 恒玄科技's BES2800 series chips have already been adopted by smart glasses customers like Thunderbird (雷鸟) and Rokid in H1. Its new-generation smart wearable chip, BES6100, has been taped out and will undergo testing and customer sampling in H2, with mass production expected in 2027. This chip is a single-chip solution for smart glasses, balancing high performance and low power consumption while solving issues like complex inter-chip communication, difficult system design, large PCB area, and high cost common in traditional dual-chip solutions.

芯原股份 has launched an ultra-low-power AI/AR glasses SoC platform with a dual-chip architecture and is currently providing one-stop custom chip design services for a leading international internet company for their AR glasses. In H1, more than 10 AI glasses models integrated 芯原股份's technology. In the storage sector, 佰维存储's products are used by companies like Meta, Google, Alibaba, Xiaomi, Rokid, and Thunderbird for their AI/AR glasses and other smart wearables. This year, 佰维 deepened its collaboration with clients like Meta, and its H1 revenue from AI edge storage products reached approximately 2.86 billion yuan, a massive year-over-year increase of 433.58%.

For Wi-Fi and power management chips, 康希通信 has developed its own Wi-Fi 7 chips, now compatible with platforms from Broadcom, Qualcomm, MediaTek, and Realtek, laying the groundwork for mass production and customer adoption, relevant for AR/VR applications. 南芯科技 recently indicated that in H2 this year, it will launch new power management chips targeted at applications like AI glasses. Yang Lei notes that the global supply chain for smart glasses is primarily based in China, and an information gap exists between the overseas and Chinese markets. While there is still room for growth in the overseas audio glasses market, AI and AR glasses are undeniably the future direction. He also believes that smart glasses have not yet fully broken free from dependence on devices like smartphones. He anticipates that within the next two to three, or perhaps three to five years, smart glasses will gradually become independent smart devices, at which point the market will experience an even larger-scale explosion.