AR/VR Chip Market

Market Overview

The global AR/VR chip market size was valued at USD 3.14 billion in 2022. It is estimated to reach USD 19.93 billion by 2031, growing at a CAGR of 22.8% during the forecast period (2023–2031).

A technique known as augmented reality leverages the user's current surroundings and superimposes digital or virtual material or information on top of it. Applications for augmented reality are created using specialized 3D software that enables developers to combine contextual or digital material with the actual environment. At the same time, virtual reality is a 3D environment created by a computer that immerses people in a made-up world without letting them see the real one. With augmented reality (AR) technology, computer-generated data or pictures may correctly and instantly overlap real things.

AR improve users' perceptions, and the available knowledge aids their performance of activities in the actual world. The main elements of an AR system are embedded electronics, screens, and sensors. Applications like video conferencing and staff training frequently use it. Virtual reality (VR) technology uses computer hardware and software to allow users to enter a virtual environment. It offers a completely immersive setting where users may interact with things like those in the real world. Some parts used in VR technology include sensors, embedded electronics, and gesture recognition systems.

Highlights

• Processor ICsdominate the chip-type segment
• Head Mounted Displaydominates the display type segment
• Gaming dominates the end-user segment
• Asia-Pacific is the highest shareholder in the global market

Market Dynamics

Global Market Drivers

Increased Demand for AR/VR Chips in the Gaming Sector

The market expansion is attributable to increased demand for games based on augmented and virtual reality over the forecast period. In recent years, the number of gamers has rapidly increased. Video games are one of the most widely used augmented and virtual reality technology applications. Smartphone manufacturing companies are also integrating additional gaming features into their devices to enhance the overall user interface experience and remain ahead of their competitors in the market, using practical augmented and virtual reality-based solutions. In addition, augmented and virtual reality provide a useful, affordable alternative for training and skill development as it simulates real scenarios using technology-enabled platforms.

For instance, using an actual aircraft to teach a civil or military aviation pilot is more expensive. It might cause harm to people. Augmented and virtual reality solutions provide a synthetic counterpart to the real world, facilitating the use of mental maps in comprehending and solving problems. It is also unethical and dangerous to train future medical professionals, such as nurses or doctors, on actual patients. As a result, solutions based on augmented and virtual reality offer useful tools for training medical personnel without endangering or compromising anyone's life. Such elements are anticipated to fuel the demand for AR/VR chips.

Increased demand for AR/VR applications

The demand for AR/VR chips is increasing due to the rising expenditures and R&D activity in various applications. The medical device, educational, and other industries benefit from new and enhanced capabilities through technological developments in AR/VR chip technologies. In addition, the technology may be utilized for teaching, patient monitoring, and surgical practice. For instance, to provide a live learning experience, the education technology start-up 3rdFlix secured about USD 5 million from Exfinity Ventures. This is anticipated to raise interest in virtual reality, encouraging students to embrace concept learning.

Global Market Restraint

Lack of Knowledge in Developing Countries

Developing countries, especially African countries, cannot use augmented and virtual reality technologies due to a lack of infrastructure development or technical knowledge. People in Africa are eager to use augmented and virtual training technologies in normal settings like education, manufacturing, healthcare, and other areas, according to a survey by Docebo. Regardless, a lack of adequate infrastructure prevents them from moving forward. The equipment cost is still exorbitant in certain nations, discouraging individuals from utilizing the technology and restraining market expansion.

Global Market Opportunities

Technological Innovations in AV/PR

Collaborative seminars, meetings, public lectures, aviation training, military training, training for nurses and medical professionals, and self-learning processes are all possible using augmented and virtual reality technology. It is also projected that key businesses would focus on product innovation through ongoing investments in product development to deliver improved goods or solutions. In addition, numerous industries heavily rely on augmented and virtual reality technologies, including civil aviation, military and security, healthcare, digital manufacturing, education, and entertainment. However, major competitors in the AR/VR chip market are anticipated to focus on introducing solutions tailored to certain industries to increase their market share across various sectors, including mining, oil and gas, and transportation.

Regional Analysis

Asia-Pacific Dominates the Global Market

Based on region, the Global AR/VR Chip Market is bifurcated into North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa.

Asia-Pacific is the most significant global AR/VR chip market shareholder and is estimated to grow at a CAGR of 24.21% over the forecast period. This relates to rising IDC standards and technological advancements in emerging countries like China, India, and Indonesia. In addition, the growing number of internet users, the demand for online content, the growth of online certification programs, the increase in air traffic and the fleet of commercial aircraft, and the increased adoption of technology in the fields of healthcare, digital manufacturing, and defense are the primary drivers of the Asia-Pacific AR/VR chip market. For instance, the government of India, one of the major economies in the Asia-Pacific, established Make in India, Digital India, and other initiatives to entice startups to invest in the most advanced digital technologies. An increase in government initiatives to help the education sector, a growth in the fleet and air traffic of commercial aircraft, an increase in the adoption of serious games, and an increase in Internet users are all factors driving the need for AR/VR chips in this region.

North America is expected to exhibit a CAGR of 23.0% over the forecast period. AR/VR allows users to experience the game environment through a digital platform. The highly competitive consumer electronics industry, where manufacturers prioritize updating their goods such as smartphones, laptops, and digital recorders, is driving an increase in AR/VR chip adoption in consumer electronics devices. In addition, major corporations like Sony, Apple, Samsung, Panasonic, and Google, among others, adopt cutting-edge augmented technologies to continue this trend.

The Europe market is expected to surge in demand during the forecast period. One of the major markets for semiconductor technology is Europe. It is anticipated that European nations will continue cutting defense spending, impacting sales of all military equipment, including military simulators and virtual training systems, over the forecast period. In addition, launching several gaming-related initiatives like the Elektra and LUDUS projects will also result in a considerable market expansion. With the rising adoption rate of AR/VR, European sectors are becoming more familiar with these technologies, according to IDC's European Vertical Markets Survey.

In LAMEA, technological advancements in South America and the Middle East are anticipated to support market growth. The regional market is growing due to the Middle East's fast technological and medical advancements. Supportive government rules and changes in customer preferences are some elements promoting market expansion. In Latin America, there are increasing chances for suppliers of e-learning materials, software, hardware, and other services. In addition, governments of developed nations, like Brazil, are taking the initiative by giving kids laptops. Progress in education and content as a service will boost the LAMEA augmented reality and virtual reality chip market. However, the development of long-term advantages of digital manufacturing solutions, healthcare solutions, and educational tools like mobile phones and the internet proves to be a huge problem due to a lack of infrastructure.

Segmental Analysis

The global AR/VR chip market is bifurcated into chip type, device type, and end-user.

Based on chip type, the global market is bifurcated into processor ICs, user interface ICs, and power management ICs.

The processor ICs segment dominates the global market and is projected to exhibit a CAGR of 23.6% over the forecast period. Contrary to microprocessors, processor-integrated circuits are often less costly and energy-intensive. They are employed in goods and gadgets that are automatically operated, including embedded systems, implanted medical devices, remote controls, smart appliances, and car engine control systems. In addition, small microcontroller size results in lower system costs. The market is booming worldwide because a single chip can contain all the necessary components, including memory, a central processing unit (CPU), and input/output peripherals, reducing costs and increasing efficiency.

Based on device type, the global market is bifurcated into the head-mounted display, head-up display, handheld device, gesture tracking device, and projector and display wall.

The head-mounted display segment owns the highest market share and is predicted to exhibit a CAGR of 23.2% over the forecast period. A type of computer monitor known as a head-mounted display (HMD) is either built into a helmet or worn on the head. This type of display guarantees that no matter which way the user turns their head, the display is positioned precisely in front of their eyes, enabling total immersion in the experience for which it was designed. Typically, this is a device for virtual reality or multimedia entertainment. Additionally, the head mount includes the operating system for head-mounted displays, and the user interfaces of camera-equipped glasses are similar to those of smartphones.

Furthermore, most head-mounted displays run the Android operating system, allowing users to operate the apps through voice input. Many industries can employ technology, including mechanical engineering, logistics, healthcare, crafts, support, and manufacturing. For instance, the Defense Advanced Research Projects Agency (DARPA) funds research and development on head-mounted displays for augmented reality systems to display crisp visuals and allow users to see through them. The military, police, and firefighters also use helmet-mounted displays to present tactical information like maps or thermal imaging data when observing a real-world environment.

Based on end-user, the global market is segmented into gaming, entertainment and media, aerospace and defense, healthcare, and others.

The gaming segment dominates the global market and is predicted to exhibit a CAGR of 21.2% during the forecast period. The video games category includes electronic games created employing augmented and virtual reality technology. Through a digital platform, AR/VR enables the user to experience the game environment in real life. The highly competitive consumer electronics industry, where manufacturers prioritize updating their goods such as smartphones, laptops, and digital recorders, is driving an increase in AR/VR chip adoption in consumer electronics devices.

Major corporations like Sony, Apple, Samsung, Panasonic, and Google, among others, adopt cutting-edge augmented technologies to continue this trend. In addition, the segment's growth is anticipated to be driven by ongoing technological advancements, greater use of mobile devices and gaming consoles, and a sizable expansion of the gaming community. According to Straits Research data, the number of video game users is expected to rise by almost 90% by 2026 compared to 2019. There will be new opportunities for growth in the AR/VR chip market, which is good news for major players. 

Recent Developments

• March 2023- United Microelectronics Corporation (UMC) unveiled the 28eHV+ platform, an upgrade to their industry-leading 28nm embedded high voltage (eHV) technology. 28eHV+ is the perfect display driver solution for next-generation displays used in smartphones, virtual and augmented reality devices, and IoT because it offers improved power efficiency and excellent visual quality.
• February 2023- A brand-new set of smart glasses was unveiled at CES 2023. DigiLens demonstrated how its waveguide technology combined with liquid crystal on silicon (LCOS) panels from Omnivision and Qualcomm's Snapdragon XR2 chipset could deliver something more portable and adaptable than the conventional bulky headsets to provide an extended reality (XR) experience without being enclosed within the headset.