Increased Efficiency of XR Devices with On-Device AI
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As artificial intelligence (AI) technology rapidly advances, extended reality (XR) devices are gaining attention as the "second smartphone." Amid competition among Samsung Electronics, LG Electronics, Apple, and Meta to dominate the XR market, XR-related stocks such as Interflex and Newflex are drawing attention in the domestic stock market. Following the spotlight on AI semiconductor-related stocks like on-device AI and Compute Express Link (CXL) since the end of last year, new terminal component companies expected to grow rapidly by leveraging AI technology seem to be stimulating investor sentiment.
On the morning of the 22nd, Interflex rose nearly 20% compared to the previous trading day, surpassing the 18,000 KRW mark. After hitting the price limit on the 19th, the sharp upward trend has continued. Newflex also rose more than 13%. Rino Industrial reached an all-time high, pushing its market capitalization beyond 3.5 trillion KRW.
XR is a concept encompassing augmented reality (AR), virtual reality (VR), and mixed reality (MR), and is regarded as the next-generation platform following smartphones. According to market research firm MarketsandMarkets, the XR market size is expected to grow from $40.1 billion (approximately 53.5 trillion KRW) last year to $111.5 billion (approximately 148.7 trillion KRW) by 2028, with a compound annual growth rate of 22.7%.
Samsung Electronics is continuously preparing various initiatives to capture the XR market. Recently, Qualcomm unveiled a chip for XR devices jointly developed by Samsung Electronics and Google. Utilizing the ‘Snapdragon XR2+ 2nd generation’ platform, which offers more detailed VR and MR experiences, XR devices are expected to be introduced. Devices equipped with the Snapdragon XR2+ 2nd generation support on-device AI and track user movements and surrounding environments through more than 12 simultaneous cameras. Once Samsung and Google's XR products are released, competition with Apple's Vision Pro is expected to be inevitable.
Samsung Display, a subsidiary of Samsung Electronics, acquired Imagine, a company possessing core technology in the XR field. The 'Direct Patterning (dPd)' technology secured by Imagine is considered a key technology for micro LED. It enables XR implementation while reducing device size and extending battery life.
Park Kang-ho, a researcher at Daishin Securities, explained, "Apple is scheduled to launch the Vision Pro (an MR device) next month," and "as the related ecosystem expands, new demand will begin to emerge in earnest." He added, "Samsung Electronics is also expected to release a new XR device around the third quarter," and "Interflex is likely to benefit."
Meritz Securities predicted that the XR market will expand due to the effect of the XR implementation program 'UEVR.' UEVR is a program that implements PC and console games based on Epic Games' Unreal Engine into XR for free. It provides consumers with an immersive experience as if they have entered the world inside PC and console games, gaining popularity.
Yang Seung-su, a researcher at Meritz Securities, stated, "It is understood that about 1,000 games that were not previously available in XR can be converted into XR games through UEVR," and "UEVR is expected to have the effect of rapidly increasing gamers' inflow into the XR market." He added, "Reflecting the mix improvement through expanded production for XR and S24 Ultra, we are raising this year's operating profit estimates for Newflex."
The advancement of AI technology influences the enhancement of XR device utility. Solostech's ‘AirGo3,’ equipped with generative AI ChatGPT, provides real-time interpretation and translation in audio and text formats. Chinese home appliance company TCL released the Rayneo X2 Lite equipped with its own AI. Netflix set up a dedicated booth at CES to introduce its immersive content that can be enjoyed using headsets.
According to market research firm IDC, global XR device shipments are expected to increase from 18 million units in 2022 to 110 million units in 2025 and 1 billion units by 2030. Demand is anticipated to grow as much as that of smartphones.
Lee Sang-heon, a researcher at Hi Investment & Securities, analyzed, "In the XR device market, growth will become visible starting this year as competition between Apple and the Google Android camp intensifies," and "as demand for new application (app) terminal sockets increases, Rino Industrial is expected to benefit."
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