2025-05-14 05:24Investment Rating - Will Semiconductor Co Ltd Shanghai upgraded from Equal-weight to Overweight with a price target increase from Rmb140.00 to Rmb160.00 [1] Core Insights - The report identifies key semiconductor beneficiaries in the AI glasses supply chain, particularly if shipments ramp up rapidly, including Will Semi, Himax, and MediaTek, all rated Overweight [1][7] - The success of AI glasses is attributed to advancements in generative AI, with significant sales of over 2 million units for the second-generation Ray-Ban Meta glasses since their launch in September 2023 [3][27] - The report anticipates that AI glasses will evolve into a new trend in consumer electronics, providing functionalities that can substitute some smartphone capabilities [27][68] Summary by Sections AI Glasses Market Overview - The smart glasses industry has struggled since the introduction of Google Glass in 2012 due to hardware constraints and a lack of compelling applications [2] - The introduction of AI glasses 2.0, such as Ray-Ban Meta glasses, has revitalized the market, leveraging generative AI for enhanced user experiences [3][27] Key Components and Beneficiaries - System on a Chip (SoC) and display semiconductors are identified as critical components for AI glasses, with Qualcomm currently being the major SoC supplier [4][5] - Will Semi is well-positioned in the semiconductor market due to its expertise in CMOS image sensors and LCOS technology, which are essential for AI glasses [41][42] Future Developments - Meta is expected to introduce new AI+AR glasses in September 2025, utilizing a cost-optimized display solution to enhance market appeal [6][29] - Google has also unveiled its Android XR system, showcasing advanced functionalities for AI+AR glasses, indicating a competitive landscape [30][60] Market Dynamics and Competition - The report notes increasing competition in the AI glasses market, with major players like Google, Huawei, and Xiaomi entering the field [34][56] - AI glasses are expected to serve as a complementary device to smartphones initially, similar to the trajectory of smartwatches [38][51] Semiconductor Constraints - The report highlights critical semiconductor constraints affecting AI glasses, including processing power, battery life, and memory limitations [35][70] - Improvements in SoC performance and power efficiency are deemed essential for the future success of AI glasses [36][74]