Hua Er Jie Jian Wen·2026-01-13 23:37Core Viewpoint - Meta is experiencing strong sales momentum for its Ray-Ban Meta glasses and is planning to increase production capacity to meet demand, suggesting a shift in focus towards augmented reality technology and away from virtual reality investments [1][4][8]. Group 1: Production Capacity Expansion - Meta has advised EssilorLuxottica to increase annual production capacity to 20 million units or more by the end of 2026 due to strong sales of Ray-Ban Meta glasses [1]. - Discussions are ongoing about potentially expanding capacity to over 30 million units if demand remains robust [2]. - EssilorLuxottica is nearing its current production target of 10 million units by the end of 2026, indicating a need for expansion to meet rising demand [5]. Group 2: Strategic Shift and Workforce Changes - Meta is restructuring its Reality Labs division, planning to cut over 1,000 jobs, which represents about 10% of the division's workforce, to redirect resources towards AI wearable devices [4][7]. - The company aims to make its metaverse investments more sustainable by shifting focus from fully immersive VR headsets to smart glasses and other mobile devices [7]. - Meta's Reality Labs has incurred over $70 billion in losses since early 2021, prompting the need for a strategic pivot [7]. Group 3: Financial Implications and Market Position - Analysts expect that the gross margin for Ray-Ban Meta smart glasses will be significantly lower than EssilorLuxottica's overall product line, but increased sales and improved component costs may alleviate some financial pressure [5]. - EssilorLuxottica's strong manufacturing capabilities and retail presence provide a substantial platform for Meta to enhance its position in the smart glasses market [5][6]. - Meta's recent acquisition of approximately 3% of EssilorLuxottica's shares strengthens its connection to the manufacturing and retail network [7].