Chinese AR glasses maker raises $60 million to compete with Apple, Meta and Google

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Augmented reality glasses maker Xreal, Apple Inc., Meta Platforms Inc. and Alphabet Inc. is raising fresh funding at a valuation above $1 billion, according to Chief Executive Officer Chi Xu, aimed at furthering future devices from Google.

The Chinese startup is raising $60 million in the round, bringing its total to more than $300 million, Chi said in an interview. That latest money came from a key supply chain partner he declined to identify.

“This will help us scale our manufacturing capabilities and research and development,” he said, adding that the company has enough capacity to meet demand for its glasses this year, but will need money to fulfill orders in 2025.

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Xreal is looking to light a trial in augmented reality — a technology that overlays data and images on real-world views. According to research firm IDC, the company accounted for half of the AR-only device market in the third quarter of last year. The larger combined virtual reality and AR market — known as mixed reality — has Meta as the leader, Sony Group Corp. and ByteDance Limited. Xreal has 4% of the total market.

Chi said his company has the capacity to produce between 500,000 and 1 million units this year. The investment should allow production of 2 million devices next year. The company expects to generate $100 million to $150 million in revenue this year and between $200 million and $300 million in 2025, according to Chi, who said he wants Xreal to go public in the US within two years.

The 7-year-old business now employs 600 people in Beijing. The company's Air Glasses display notifications, games and videos in the wearer's field of view. Magic Leap Inc. And Xreal products from Microsoft Corp., which sells a headset called HoloLens, have made gains on more expensive technology, Chi said.

“2023 is a very good year, and the market size has doubled,” Chi said. Amazon.com Inc. The company, which says it gets most of its sales from its website, offers AR glasses for just a few hundred dollars. But its latest pair — the Air 2 Ultra — believes it will boost future revenue.

“There's a good chance we'll do 50,000 units of the Ultra this year,” Chi said, adding that the cheaper models are “definitely easier to sell” and mass consumers don't want the many bells and whistles they can get. Rival products.

Xreal has no plans to get into virtual reality — the more immersive technology used in Apple's new Vision Pro — but Chi believes his company will compete with the iPhone maker in the coming years.

“I think we're three to five years ahead of them in AR,” Chi said. “However, they are catching up. So we must continue and cross the border.

During the development of Vision Pro, Apple also worked on lightweight AR-only glasses similar to the Xreal offerings. The company paused work on that device because it didn't think the technology was ready yet, Bloomberg News reported last year. Meta and Google say they plan to release their own consumer AR glasses in the coming years.

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