Meta glasses are selling so well that they plan to double production capacity to meet the surge in demand

Ray-Ban Meta glasses are extremely popular, and Meta wants to increase production capacity.

On January 13, Bloomberg reported, citing informed sources, that as sales momentum for Ray-Ban Meta glasses remains strong, Meta has suggested that EssilorLuxottica SA increase its annual production capacity to 20 million pairs or more by the end of 2026.

The two parties also discussed further establishing a capacity of over 30 million pairs if demand is sufficiently strong. Following the news of the expansion, shares of Paris-based EssilorLuxottica reversed their downward trend and closed higher.

This capacity expansion plan is in sync with Meta's strategic adjustments. According to Bloomberg, Meta is in the process of cutting over a thousand positions in its Reality Labs division, shifting resources from virtual reality and metaverse products to artificial intelligence wearable devices.

The report cited an internal announcement from Meta's Chief Technology Officer Andrew Bosworth, indicating that the layoffs are expected to affect about 10% of the employees in the Reality Labs division.

Capacity Nearing Limits, Plans for Expansion

According to reports, EssilorLuxottica, responsible for manufacturing, is nearing its current target of 10 million pairs by the end of 2026.

Wall Street Journal mentioned that last week at the CES exhibition in Las Vegas, Meta stated that due to "unprecedented demand and limited inventory," it has paused the expansion of the new glasses into international markets such as the UK, France, Italy, and Canada.

A larger-scale capacity increase will also pose challenges for EssilorLuxottica, as the company needs to seek a balance between growth and factory renovation costs.

According to RBC Capital Markets analysts, the gross margin for Ray-Ban Meta smart glasses is expected to be significantly lower than EssilorLuxottica's overall product line. Analysts noted that as sales increase, higher revenue and improved component costs may alleviate some of the pressure.

Analysts expect to inquire about EssilorLuxottica's capacity plans with Meta when the company announces its annual results in early February.

As the world's largest eyewear manufacturer, EssilorLuxottica owns brands such as Ray-Ban and Oakley, as well as retailers like Sunglass Hut and LensCrafters, providing a large-scale platform for Meta to expand its leading position in smart glasses.

The two companies began collaborating in 2019 and launched the first Ray-Ban branded smart glasses in 2021 EssilorLuxottica stated last October that Meta's smart glasses helped drive revenue growth in the third quarter. In September last year, Meta launched the latest Meta Ray-Ban Display in the U.S. at a price of $799, which for the first time directly displays text on the right lens.

Meta Begins Layoffs, Shifting from Metaverse to AI Wearables

Meta is shifting its focus to augmented reality technology for smart glasses and reducing its investment in fully immersive VR headsets.

It is reported that the layoffs are expected to affect about 10% of the employees in the Reality Labs group, which has approximately 15,000 employees.

As part of the layoffs, Meta is shifting its focus from the metaverse business to mobile devices and plans to cut virtual reality investments to make the business "more sustainable." A Meta spokesperson stated:

We announced last month that we would shift some investments from the metaverse to the wearables sector. This initiative is part of that strategy, and we plan to reinvest the savings to support the growth of the wearables business this year.

Reality Labs is Meta's research and development base for hardware and other future products, including VR headsets, AI glasses, and virtual world products. However, since the beginning of 2021, Reality Labs has incurred losses of over $70 billion, as many investments have yet to yield substantial returns.

Last year, Meta acquired about 3% of EssilorLuxottica's shares, bringing it closer to the company's manufacturing operations and retail network.

Analysts believe that as Meta shifts its focus to smart glasses and reduces investment in fully immersive VR headsets, the cooperative relationship between the two companies in production will continue to deepen