Who makes the Vision Pro?

Using VR to implement AR, Chinese companies are helping Apple realize its Apollo program.

The Vision Pro, which began shipping this week, is Apple's most adventurous product in more than 20 years.

This can be seen from market expectations. According to market research institutes and analysts**, Apple will only sell 500,000 Vision Pro units this year. One of the reasons why it is so low is that it is too expensive, and people are not used to seeing $3499 (250,000 RMB); The second reason is that you can't really make more.

Multiple people close to the industry chain told LatePost that Apple is easing manufacturing bottlenecks with new partners, and it is possible to produce more than 500,000 Vision Pros this year, but it is unlikely to exceed much.

Since the iPod, Apple hasn't launched a new category that sells only a few hundred thousand units a year. The first-generation iPhone sold 1.9 million units in half a year, and the first-generation iPad sold 2 million units in less than two months. Even the first-generation Apple Watch, which was unfavorable, sold 10 million units in its first year.

It's not just sales that are back to their original state. Vision Pro also breaks Apple's 20-plus plus years of product rhythm and goes back to the state when the Mac was introduced 40 years ago: engineering teams put a lot of effort into it, and it still keeps delaying and the cost can't be reduced. By the time the product goes to market, some of the main features are still in beta. The first overseas reviews have already shown that there are several key features of the Vision Pro that are not far from what was shown at the launch event.

Now Apple is an efficiency machine with 160,000 employees, more than 1 billion users, and a market capitalization of $3 trillion. Hundreds of companies around the world join it in investing hundreds of billions of dollars each year in research and development of new technologies. Even so, the technology required for this product was far from mature enough to be suitable for mass production. Today's 2A 50,000 yuan headset is the best effect that can be achieved with the existing technology.

Vision Pro is like Apple's own Apollo program. Relying on its own brand, huge R&D expenses, and a strong position in the first-chain and software ecology, Apple forcibly allows immature technologies to enter mass production, hoping that the first-chain expansion will reduce costs, software developers will find new use scenarios, and finally make a new category something that people want to use and can afford.

After 8 years of research and development, things started selling. Now the pressure is on the ** chain.

Vision Pro is more dependent on Chinese mainland** vendors than iPhones

According to the Nihon Keizai Shimbun and Fomalhaut Techno Solutions teardown report, Chinese mainland** manufacturers account for only 2% of the cost of parts (including processing costs) for the iPhone 15 Pro Max.

At present, there is no dismantling report of Vision Pro, and "LatePost" has compiled a list of major Vision Pro suppliers based on interviews with a number of industry chain people, analysts and investors, as well as research reports from a number of brokerages and research institutions. Judging from this list, the number of Chinese mainland** merchants accounts for nearly half, and the cost of components in Vision Pro accounts for about 20%, which is much higher than the proportion in iPhone.

Apple usually cultivates a second or even a third company after the product and chain are mature, stimulating competition, reducing costs and reducing dependence on a single company. However, the order volume and the maturity of the ** chain of Vision Pro obviously do not support this, so Apple basically only selected one ** company in each link this time. Most of them have been working with Apple for years, but have a new role in the Vision Pro:

Sony: For Apple** Micro OLED screen, this is the most important and most expensive component of Vision Pro, two ** about $700, can buy an iPhone 14, accounting for more than 40% of the cost of Vision Pro's components.

TSMC: In addition to continuing to manufacture chips (M2 and R1) for Apple, it will also provide a silicon-based backplane for the most core component, the Micro OLED screen.

Jade Crystal Light: In the past, it mainly used lenses for iPhone and other products, but this time it produces Pancake optical lenses for Vision Pro. The Pancake solution can fold the optical path to make the device lighter and thinner. Apple uses a snug 3P pancake design that uses more lenses to optimize optical performance (e.g., sharpness, distortion) and reduces the spacing between lenses with an irregular design that uses six lenses per device. However, it will increase the process difficulty, material cost and weight. Ming-Chi Kuo, an analyst at Tianfeng International, estimates that Vision Pro alone will bring about 2RMB 300 million in revenue.

Gao Wei Electronics: **Camera module. Vision Pro is equipped with 12 cameras, including 2 front-facing main cameras that capture their surroundings and recreate the real world in front of the user's eyes. 4 downward, 2 sideways cameras to capture the user's finger movements; On the inside of the screen, the Vision Pro also has 4 infrared cameras for eye tracking and measuring the pupil depth of both eyes (most similar products are equipped with only 2 infrared cameras). There is **chain news that Gao Wei Electronics made a loss, and in order to make up for the loss, Apple gave it more iPhone orders.

Lens Technology: **Front cover glass. The front of the Vision Pro is a single 3D-formed, laminated piece of fully curved glass that is optically polished to serve as a cover for the EyeSight screen and a range of cameras and sensors. This piece of glass if broken, without Applecare+, repairs** $799.

The glass is formed into 3D curved glass by a hot bending process, then coated and cured.

Zhaowei Electromechanical:**Automatic interpupillary distance adjustment module, so that Vision Pro can automatically detect the user's interpupillary distance, adjust the position of the display, so that the picture can be more accurately restored to reality, most similar products need to be manually adjusted. This is the first time that Zhaowei Electromechanical has entered the Apple ** chain.

Lingyi Intelligent Manufacturing: **Headband, heat dissipation module, etc. The Vision Pro comes with two different sizes of headbands, two for each machine, one is a single headband commonly seen in the promotional image, which is knitted in 3D with a 3D knitting process; The other is a double ring belt, which is more convenient to support the device. "Interface News" reported that in the cost of parts of Vision Pro, Lingyi Intelligent Manufacturing is the company with the highest proportion of ** merchants in Chinese mainland.

Changying Precision: Apple's long-term ** business, previously Apple's various device ** shells, such as MacBook metal cases, Apple Watch structural components, etc., is now also the Vision Pro case ** business.

Vision Pro aluminum alloy middle frame CNC milling and grinding process.

Goertek: Previously, it had long produced ear cups and headbands for Apple's various devices** speakers, microphones and other components, as well as headphones AirPods Max. In Vision Pro, in addition to the most advanced acoustic components and blackout eye masks, Goertek is also responsible for the production of external battery modules.

Lixun Precision: In the early days, it was only for Apple** MacBook cables, and later through multiple acquisitions and expansions, it got orders for assembling AirPods and iPhones, and became one of Apple's three major assemblers, and this time it was exclusively responsible for the assembly of Vision Pro.

Companies in Japan, South Korea, and Taiwan are the core components of Vision Pro.

TSMC remains the top choice for advanced chips, Sony is one of the very few companies that has mass-produced and applied micro OLED screens (such as mirrorless cameras) to its products, and Vision Pro memory chips are likely to use products from South Korean manufacturers Samsung or SK hynix.

However, in the relatively basic OEM and lower value-added parts links, more Chinese mainland manufacturers have appeared. Because of the complexity of the design of the Vision Pro, the shape and function design of the product are uncertain in the early stage, and there are not many orders in the initial stage.

A Vision Pro businessman told LatePost that after getting Apple's intended order, the company usually has to build a new production line for Vision Pro, and the follow-up production verification test and material input after entering the NPI (New Product Introduction) process are also borne by the manufacturer. Although the price of the Vision Pro is expensive, considering the complexity of the process and Apple's strict cost control, some ** companies are even losing money.

The above-mentioned person said that if Apple thinks that the yield rate of a component should be 90%, the first time the merchant can only do 70%, and the cost of 20% of the waste product will have to be borne by the merchant himself.

In the end, it was not Apple's largest foundry Foxconn, nor Goertek, which helped Meta OEM Quest headsets, incubated PICO, and has more OEM experience in the field of headsets, but Luxshare Precision, which has become more and more closely cooperating with Apple in recent years.

LatePost learned that the early production commissioning of the Vision Pro was at Pegatron's factory in Kunshan. Pegatron has long been a manufacturer of computers and mobile phones for Apple. During the development of Vision Pro, Luxshare Precision spent 2.1 billion yuan to buy a controlling stake in the factory.

A report in the Financial Times also mentioned that Luxshare Precision was able to win the Vision Pro order in part because it was willing to implement Apple's various "crazy ideas".

The above-mentioned Vision Pro businessman told LatePost that Apple is extremely "demanding" about the details of Vision Pro. For example, many details such as the size of a component, how to scale and so on, will be repeatedly modified. Under normal circumstances, the first merchant receives the demand two years in advance, and it should be mass-produced one year before the sale. But until early last year, none of the Vision Pro parts they were responsible for had completed the pre-production process validation for mass production.

The original iPhone was the first mobile phone to use a capacitive touchscreen, but the prototype was still using a plastic screen until about half a year ago, and after a long experience, Jobs found that this kind of screen was easy to scratch, so he immediately called the design team to change the plan, and approached Corning to temporarily transform the LCD screen factory into a glass factory, and finally mass-produced a strong enough "diamond glass" before it went to market.

There's a similar, but less radical version on the Vision Pro.

A former Apple engineer who worked on the Vision Pro said that at the end of 2021, a hardware module reached the last step before mass production, and the final quality needed to be evaluated. Apple tested how it fell from a height of one, two, and five meters, and finally found that when the device fell from a height of five meters, the plastic frame that wrapped the lens was ten thousandth.

The probability of one or two will crack. Then all relevant personnel from Apple's vice president to the grassroots employees intervened, adjusted the design plan, and stayed up late with the engineers of the leading company to solve the problem.

Apple is not worried about the lack of experience of ** merchants. It will design everything, including the manufacturing process, and then go to the first business to discuss whether it can be implemented. If the selected supplier is unable to produce the required parts, Apple will prioritize the placement of multiple employees to be highly involved and spend months improving the production process.

A senior analyst in the field of headsets interviewed a number of Apple companies and concluded that no matter what business they have done in the past and what products they have made, they are all blank slates in front of Apple. Apple only needs the best suppliers to deliver products to the highest standards, while keeping costs to a minimum.

The biggest bottleneck is the screen, which is also an opportunity for new merchants

The production capacity of the Vision Pro depends on how many Micro OLED screens Apple can get. A number of people close to the chain told "Latepost" that Sony can only pay about 1 million yuan for Apple this year - one for each eye. Apple will also have a hard time finding new suppliers or replacements for Micro OLED quickly.

When using a mobile phone, computer or TV, the resolution of the 55-inch TV is 4K at a normal eye distance, and the human eye can no longer distinguish pixels. According to industry standards, a prerequisite for the human eye to see the image on the screen clearly – 60 pixels (60 ppd) within 1° of the field of view. The headset needs to cover most of a person's field of view with a picture that is more than an inch in size, which means that the Vision Pro needs to be at 14-inch screen with 4K resolution.

The screen of the best phone, computer or TV is attached to the front of the eye, and only a few pixels can be seen within a 1° range. The Quest 3, released in September last year, uses a special fast-LCD screen, which achieves this number to 25, and the picture quality is still not good enough. And Sony's Micro OLED can make this number around 40.

Micro OLED was built for cameras, and Sony needed to enable the electronic viewfinder of high-end mirrorless cameras to display high-definition images with little to no delay.

Instead of doing it on glass like traditional screens, Micro OLED builds light-emitting pixels directly on silicon wafers, and the distance between pixels can be reduced to 7 microns – one-tenth the distance between traditional screens.

Apple sees the custom Micro OLED screen as a major technological breakthrough for the Vision Pro: two stamp-sized (diagonal 1.).4-inch) screen, which can have 23 million pixels, and you can see more pixels than a 4K TV with one eye.

Such a screen is extremely complex to manufacture, and it is necessary to first make two layers of circuitry in TSMC's fab using the etching technology used to make advanced chips, one is the circuit pattern used to drive the display, and the other is the light-emitting pixels. It is then sent to Sony's factory to complete the follow-up steps such as precipitation of light-emitting materials, encapsulation films, etc.

Due to the small pixel pitch on the screen, the manufacture of Micro OLED requires a high-precision evaporation machine to deposit the luminescent material on the silicon wafer. However, the evaporators on the market are all made for the production of mature screens such as OLED, and the accuracy is about ten times worse.

The initial yield rate is only 20%", said a person close to the ** chain, and then slowly increased to about 50%, and then it took about a year for the yield of Micro OLED to increase by 10%.

South Korea** The ELEC reported in June last year that Sony rejected Apple's request to expand production capacity for Micro OLED screens. "If Sony agrees to expand**, and the yield of follow-up products comes up, and the sales of Vision Pro are not as expected, Sony will fall into passivity. The above-mentioned people close to the ** chain said that it is now necessary to invest at least one billion yuan to build a micro OLED production line.

Sony's caution has become an opportunity for other ** companies. After Sony's request for expansion was rejected, Apple contacted Samsung and LG Display for a request. Due to the late layout and other reasons, these two large companies, which often exhibit a variety of advanced screens at CES, have not been able to quickly meet Apple's needs.

The opportunity fell to a startup company based in Hefei, China. Since its establishment in 2016, SeeYA has been developing Micro OLED technology, and in 2019, a production line was built in Hefei to batch the Micro OLED screen for the DJI **ATA supporting flight goggles.

A number of people close to the ** chain told "LatePost" that now SeeYA Technology's products have been verified by Apple, and the two sides have built a new micro OLED production line exclusively for Apple, which is expected to start in the third quarter of this year. The number of screens that SeeYA can give to Apple** largely determines how much Vision Pro production will exceed 500,000 units this year.

A person close to the chain said that Apple has given some Vision Pro manufacturers guidance to produce 1 million Vision Pro parts this year. In a few months, Apple will sell the Vision Pro in China and Europe.

The speed at which Micro OLED matures and evolves will determine the popularity of products like Vision Pro. If you want to make a picture as detailed as a mobile phone that can be seen by the human eye (the so-called "retina screen"), Micro OLED will need to increase the density by at least 50%, or wait for Micro LED technology to mature that can shrink the pixel pitch.

Pursue ease of use first, and then reduce costs

On January 30th, the first batch of Vision Pro ** reviews were released, and some of the features mentioned by Apple when announcing the product were verified, such as intuitive interaction; Render the surrounding environment in real time, without any picture delay in the whole process; The 3D effect is stunning. But these reviews also exposed some of the Vision Pro's problems: it was too heavy; Appears impaired in low light.

All of these problems stem from a choice: Apple has made an AR device with VR technology.

VR (Virtual Reality) is represented by Oculus, which was acquired by Facebook. Once put on, the user is cut off from reality and can only see what is on the screen.

AR (Augmented Reality) is represented by Google Glass and Microsoft Hololens. When put on, the user can use their own eyes to see everything around them normally, but the computer projects some of the generated images onto the retina.

Apple CEO Tim Cook has always believed that Apple's products should change the way people interact with the world, rather than putting people in a closed helmet and being entertained to death. But today's technology doesn't make AR devices that are useful.

Eventually, Apple implemented AR in VR: a dense sensor that captures the outside world and displays it on the Vision Pro's screen in less than 12 milliseconds — 100 milliseconds for a human to blink. In this process, Vision Pro also has to recognize the distance between different objects and people in reality, and deal with the relationship between the application interface and the objects it virtualizes, and cast shadows. Only then can the Vision Pro show the world into believing that they are looking at the world through glasses, not at the screen.

In the first round of evaluations, users wore Vison Pro to catch the ball and ski. Swap it out for Meta, Byte and the same kind of device, it's impossible.

In order to do this, Apple needs to install an R1 processor in the Vision Pro to render the outside world in real time. Then install a MacBook Air M2 processor to run the system and applications, and process complex images. Not only are these chips expensive, but they also generate a lot of heat, so you have to add fans and heatsinks. In the end, despite the use of various advanced metal and fabric manufacturing processes, the battery was made external, but the weight was still more than 600g.

Defects in low light are also limited by today's technology. A mobile-sized camera can't reach the level of the human eye in low light. As for the external display, the suspicious effect of EyeSight (which allows outsiders to "see" the user's eyes through the screen) are also the costs of VR AR.

Apple's chosen product path dictates that the Vision Pro will not be suitable for long-term wear even if it is improved for another 5 years: its display will not be able to reach the level of direct human vision, and it will not be as light as Apple's original 150g goal.

Even weight shouldn't be the ultimate goal. Even if Apple solved all the technical problems today, not too many people would want to have a screen in front of them for 16 hours. If it only takes 2 hours at a time, its weight is not so unacceptable.

Today's Vision Pro is more like something that's good for two hours at a time: a huge TV that you can take with you anywhere, with the computing power of an iPad Pro built-in. Users can use it to watch movies and games on high-speed trains, airplanes, or work in coffee shops as an external screen for Macbooks. With Vision Pro, you're in your own world, without worrying about your neighbor snooping on your computer screen.

For such a use scenario, the display effect and weight of the Vision Pro are already barely acceptable, but ** is the biggest problem. And this is something that Apple has the potential to solve.

The current sale of Vision Pro is Apple's use of its brand power, software ecology and extreme control over the best business to catalyze the market's acceptance of a less mature AR product. As long as a small number of users accept it, it can enable the entire industry chain to expand the production of too niche technologies such as micro OLED, improve yield, dilute R&D expenses, and ultimately reduce costs, so that the entire category can enter a positive commercial cycle.

Although 500,000 units is not much, sales have already exceeded 17$500 million. Meta has been doing VR for ten years and earned 8$300 million.

Palmer Luckey, a pioneer in the VR industry and founder of Oculus, believes that Apple's original product is the right choice to pursue the ultimate experience at any cost: "Virtual reality has to be something that everyone wants, and then it becomes something that everyone can afford." ”

The last time Apple took this path to make an unmature new technology a reality was in 1984. Apple released the Macintosh, which replaced the command line with a graphical interface, driving the popularity of personal computers. But it's just too expensive, $2500** for 4 computers from other brands, and the inflation is close to two Vision Pros. The original Macintosh was a commercial failure, and Jobs was kicked out of the company shortly after.

Compared to 40 years ago, Apple today has a profit of nearly $100 billion a year**. This doesn't guarantee the success of the Vision Pro, but it gives Apple the chance to try it once. There is no second company that has such funds, brand appeal and the right to speak on the first chain to make such an attempt.

And what threatens this attempt is precisely Apple's strong position.

Vision Pro needed as much software as possible to create use cases. That's why Apple has simplified porting, so any developer can get the iPad app to work on the Vision Pro without actively refusing it. But Netfilix, the world's largest paid and free streaming platform**, and YouTube have all refused.

Dave Wiskus, CEO of Nebula, commented that in 2003, when selling iPods, Jobs persuaded the Big Five record labels to sell on iTunes; Today Apple can't even convince the **platform to accept Vision Pro by default.

It's easy to see why, Apple faces antitrust lawsuits in both Europe and the United States. One of the main controversies is whether it has the right to make its own content platform while charging 30% of the commission from other content platforms.

Another visible use case for the Vision Pro is gaming, but Apple is clearly not prepared to plug Sony or Microsoft gaming devices into its own headsets. It requires absolute control of Vision Pro's software ecosystem to make the most profits.

We don't make money by making movies. We're making more movies by making money. Walt Disney once explained Disney's priorities this way. The development of all business companies is about finding a balance between making money and doing something. The existence of Vision Pro shows that Apple is making money to push technology forward; And its challenges show that the company is still trying to take a little too much money.

Title image**: Batman v Superman: Dawn of Justice.