Home Metaverse Japan’s Sharp bets on VR hardware as ‘metaverse’ takes off

Japan’s Sharp bets on VR hardware as ‘metaverse’ takes off

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Foxconn unit ships over 1m displays for VR headsets each month for Meta, others

TAIPEI — Years of quietly developing high-powered virtual reality displays is starting to pay off for Japan’s Sharp as the company make an aggressive bet on the “metaverse.”

Sharp forayed into VR development in 2016, when it was acquired by Taiwanese electronics titan Foxconn and began devoting more resources to higher-margin, niche markets like virtual reality and automotive solutions.

The segment finally started to generate meaningful revenue for Sharp last year, sources familiar with the company’s progress said, with monthly shipments of high-end VR displays exceeding 1 million units since the October-December quarter. The company has also become the single biggest supplier of displays for the Oculus Quest 2 headset made by Facebook parent Meta, sources added.

Revenue for Sharp’s VR display shipments came to more than $200 million for all of 2021, based on an estimated cost of around $50 per display, according to Nikkei Asia’s analysis and interviews. Displays and processor chips are most expensive components in VR devices.

VR demand has been surging due to the growth of remote working and higher gaming demand amid the COVID-19 pandemic, while a slight easing in the global chip and component shortage that has plagued the tech industry has allowed producers to keep up.

The emergence of the metaverse concept has also helped fuel demand for VR devices, sources said, referring to an immersive digital world where people can “attend” events together or take part in common activities despite being in different locations.

“Visuals are crucial to the experience in the metaverse. Sharp’s yearslong efforts in the VR arena would give the company an edge in securing a leading position in the booming metaverse industry,” one of the people told Nikkei Asia.

Facebook formally changed its name to Meta in October last year to demonstrate the company’s commitment to fostering the metaverse and capitalizing on its business opportunities. Meta, one of Sharp’s key VR customers, is already the leader in the VR device market. Its flagship Oculus series accounts for 75% of the total standalone VR market, according to IDC. Newcomers DPVR and Bytedance’s Pico, both of China, hold the No. 2 and No. 3 positions.

The market for virtual and augmented reality devices is expected to grow to 32.8 million units by 2025, a compound annual growth rate of 45.9%, IDC said.

Because they are placed close to users’ eyes, displays for VR devices require resolutions of some 800 pixels per inch, far higher than the 460 PPI of the iPhone 13 Pro, one of the most advanced smartphones on the market. The resolution requirement for VR displays could soon rise to 1,200-1,300 PPI, according to industry sources.

With the smartphone market maturing, Meta is just one of many tech companies betting on the metaverse as its next growth engine. Apple, which has a large display research center, is working on its first AR device, while Microsoft’s HoloLens mixed-reality goggles for industrial use has enjoyed strong demand amid the pandemic and the growth of remote work. Nvidia, the graphic chip developer, has also touted the possibilities presented by the metaverse.

China is likewise keen to ride the metaverse wave. TikTok owner ByteDance made its entrance into virtual reality last year when it acquired local startup Pico. DPVR, a VR device startup founded in 2015, is now one of the global leaders by shipments.

Social media and video gaming giant Tencent has filed nearly a hundred metaverse-related trademark applications since last September, while e-commerce giant Alibaba also has registered several related trademarks. Baidu, the Chinese search engine giant, has applied to trademark the term “metaapp.”

Meanwhile Foxconn, Sharp’s largest stakeholder, will “definitely” secure a position in metaverse-related supply chains, according to Chairman Young Liu. The iPhone assembler said last month it had signed a strategic collaborative framework with Xrspace, a Taiwanese builder of 3D models with its eye on metaverse infrastructure. Foxconn will invest up to $100 million in the startup in the coming years, with an initial investment of $15 million.

Sharp told Nikkei Asia that in recent years it has “focused on AR/VR as a new growth field, and [is] also increasing the number of LCD panels shipments rapidly.” The company said it has ultra-high-definition and other technologies that are “indispensable for the VR/AR field. We will further strengthen our superiority in this field.”


Revenue from shipments of Sharp’s VR displays came to more than $200 million in 2021, based on an estimated cost of around $50 per unit. (Source photo by AP)


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