A report from the Financial Times maintains Meta is currently in talks with AR headset creator Magic Leap to strike a multiyear deal, which could include intellectual property licensing and contract manufacturing of AR headsets in North America.

The AR unicorn is said to possess valuable IP regarding custom components, including its optics, waveguides, and software.

It’s said a potential deal may also allow Meta to lessen its reliance on China for component manufacturing. In 2019, Magic Leap partnered with manufacturing solutions company Jabil to create a Guadalajara, Mexico plant which the report maintains can assemble headsets in “the tens of thousands a year.”

Magic Leap 2 | Photo by Road to VR

Citing people with knowledge of the talks, the report maintains however a specific joint Meta-Magic Leap headset isn’t expected.

While both companies didn’t comment on a potential partnership, Magic Leap said this to the Financial Times:

“Given the complexities of developing true augmented reality technologies and the intricacies involved with manufacturing these optics, as well as the issues many companies experience with overseas supply chain dependencies, we have entered into several non-exclusive IP licensing and manufacturing partnerships with companies looking to enter the AR market or expand their current position.”

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Since it exited stealth in 2014, Magic Leap has released two AR headsets, Magic Leap 1 and Magic Leap 2, which have been compared in functionality to Microsoft’s HoloLens AR headsets.

The company has raised over $4 billion, with minority investors including Google, Alibaba, Qualcomm, AT&T, and Axel Springer. Its majority stakeholder is Saudi Arabia’s state-owned sovereign wealth fund.

In addition to Quest Pro mixed reality headset, Meta has confirmed it’s currently working on its next iteration of Quest, likely Quest 3, as well as its own AR glasses. Meta started real-world testing of Project Aria in 2020, a platform for training its AR perception systems and asses public perception of the technology.

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Well before the first modern XR products hit the market, Scott recognized the potential of the technology and set out to understand and document its growth. He has been professionally reporting on the space for nearly a decade as Editor at Road to VR, authoring more than 3,500 articles on the topic. Scott brings that seasoned insight to his reporting from major industry events across the globe.
  • Christian Schildwaechter

    Given that Magic Leap hasn’t been a commercial success and may not have the funding to keep running for several years until their technology is finally advanced and cheap enough for the mass market, this may be a mostly strategic move. Meta gets access to a lot of technology that at least adds to their own research for a moderate price, as Magic Leap cannot negotiate from a position of strength. This keep Magic Leap afloat, reducing the risk that the company folds and the remains get acquired by one of Meta’s competitors. And even if Magic Leaps has to sell itself, Meta already has the rights to use the tech, preventing them from being sued.

    I doubt that taking over Magic Leap completely would be an option for Meta, when they got in trouble with the FTC for trying to buy Supernatural. Outright buying pretty much the only remaining mayor player currently shipping standalone AR glasses after Microsoft seems to drop Hololens, would without doubt be seen as a move by Meta to buy their way to market dominance in AR, when they already are the biggest player by far in VR, with a high chance of regulatory intervention.

    Though I doubt that getting access to NA production facilities capable of assembling “tens of thousands a year” was a driving factor here, because there are very few items outside of server hardware that I imaging Meta would be interested in producing in so low numbers.

  • Jeremiah Tothenations

    Hehe, you said “asses”!