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What is the next electronic device that humans will rely on after smartphones?
Many tech giants have provided answers, including Meta, Apple, Google, and others who have successively entered the XR (XR includes VR, AR, MR) track. In the midst of these giants, four startups—Rokid, Thunder Innovation, XREAL, and INMO—have emerged, being praised as the &#34;Four Little Dragons of AR&#34; due to their leading shipment volumes and market presence.
Now, XREAL has taken the lead, becoming the first company to submit a prospectus to the Hong Kong Stock Exchange. Since its establishment in 2017, it has quietly surpassed its competitors with the support of half the investment circle, becoming the global sales champion of AR glasses. If the IPO goes smoothly, it will claim the title of &#34;the first stock of smart glasses.&#34; However, under the halo of being &#34;number one in the world&#34; and collaborating with Google, the listing is also a &#34;cry for help&#34; that XREAL must issue.
As a startup established nearly 10 years ago, XREAL has carved out its own niche in the global AR glasses market.
By 2025, XREAL ranks first in both sales revenue and shipment volume. According to the prospectus, XREAL holds a 27% market share in the AR glasses market and a 24.8% share in shipment volume, firmly sitting atop the global dual crown, leading the second place by nearly 10 percentage points.
If we broaden the view to include the wider smart glasses market, which encompasses AR glasses and non-display glasses, the competitive landscape becomes more diverse. In terms of sales revenue, XREAL ranks second in the market; in terms of shipment volume, it ranks fifth.
More critically, as a hardware company focused on AR glasses, over 77% of its revenue comes from AR glasses; at the same time, over 70% of its revenue is sourced from overseas markets. From 2023 to 2025, XREAL's revenue is expected to grow from 390 million yuan to 516 million yuan, with the gross profit margin soaring from 18.8% to 35.2%. In the consumer electronics sector, an increase in gross profit margin often indicates that a brand is no longer solely relying on a low-price volume model for survival.
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Optimizing the product structure is key to the rise in gross profit margin and is a choice made by XREAL. While many manufacturers are eager to grab market share with low-priced smart glasses through supply chain integration, XREAL founder Xu Chi has clearly stated: &#34;The first half of the AR glasses battle should not be a price war.&#34;
Currently, AR glasses include three major series: the One series, Air series, and Light-Ultra-Aura product line. In 2022, XREAL launched the Air series, opening up the market for them. However, the bulk of revenue in 2025 will come from the One series, which is set to launch in 2024, with sales expected to grow from 13,500 units that year to 111,400 units in 2025, and the average selling price rising from 2,709 yuan to 3,196 yuan. In contrast, the entry-level Air series saw a sharp decline in sales from 134,000 units in 2023 to 17,400 units, with the average price dropping from around 2,000 yuan to 1,656 yuan. XREAL explained that the main reason for this was the launch of the new generation of products, leading to the clearance of old stock. In comparison, the high-end Light-Ultra-Aura series currently has a smaller volume, selling less than 5,000 units in 2025, and it plays more of a role as a technological benchmark.
Xu Chi boldly claims that &#34;we do not engage in price wars,&#34; and his confidence stems from XREAL's commitment to a heavy asset investment path since its inception—over the past three years, the cumulative R&amp;D investment has exceeded 600 million yuan, accounting for more than 40% of revenue. XREAL has independently developed the X-Prism optical engine and the edge-side co-processor X1, and even built an AR optical module manufacturing factory in Wuxi. The result is that the self-research rate of components for the XREAL One Pro is as high as 65%, with layouts in all core links of the entire industry chain from chips to optical machines.
In the past three years, XREAL has accumulated losses exceeding 2 billion yuan. Although the losses are clearly narrowing, they have yet to find the &#34;profitability code.&#34; Sales of their AR glasses have remained around 130,000 units without significant improvement.
Behind the narrowing losses is XREAL's drastic &#34;cost-cutting surgery.&#34; Between 2023 and 2025, the company's various expenditure ratios have significantly decreased. Among them, R&amp;D expenses dropped from 55.3% to 35.5%, sales and distribution expenses were halved from 54.9% to 25.4%, and administrative expenses slightly decreased from 27.4% to 21.8%. The total of these three core expenditures as a proportion of revenue has significantly fallen from 137.7% in 2023 to 82.6% in 2025.
By the end of 2025, XREAL will have only 63.63 million yuan in cash on hand. Standing at the threshold of an IPO, XREAL seems to be running on the edge of a cliff; without continuous financing, striving for an early listing may be the only option. In the current capital market, which is highly sensitive to profitability, achieving a break-even point is a huge challenge.
Xu Chi compares the current smart glasses industry to the smartphone market in 2005—fragmented ecosystems and unstandardized norms, waiting for that industry-redefining &#34;iPhone moment.&#34; He predicts that this turning point will arrive between 2027 and 2028
XREAL is betting on this upcoming explosive node.
41-year-old Xu Chi graduated from Zhejiang University in 2007 and went to the University of Minnesota Twin Cities to pursue a Ph.D. in electronic engineering, focusing on computer architecture. After graduation, he joined NVIDIA and became a member of the GPU core architecture team. During his time at NVIDIA, he realized that the semiconductor industry was slow and lacked sufficient challenges and interest, so he chose to join the newly established AR company Magic Leap in 2011.
At that time, tech giants in the industry began to lay out their plans in related fields. In 2012, Google launched the consumer-grade AR glasses &#34;Google Glass,&#34; which supported basic functions such as voice-controlled photography, video calls, and information processing. In 2015, Microsoft launched the MR headset HoloLens, priced at over 20,000 yuan.
Xu Chi believed that AR glasses would become the next generation of computing terminals. In 2016, he decided to return to China to start a business, teaming up with Zhejiang University alumni Xiao Bing and Wu Kejian to establish the country's earliest company focused on lightweight consumer-grade AR glasses, initially named Nreal, later renamed XREAL.
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From the beginning, Xu Chi rejected the idea of &#34;first doing low-end projects to survive.&#34; He is known in the industry for his famous metaphor of &#34;Michelin and barbecue stalls&#34;: once accustomed to the business model of making quick money, one can never achieve the dream of &#34;Michelin three stars&#34; through a &#34;barbecue stall.&#34;
However, the AR glasses he insisted on pursuing is a difficult track. In 2018, the once-prominent Magic Leap's first product faced a setback, and Microsoft's HoloLens made slow progress. In China, capital also began to retreat. Although XREAL went against the trend and launched its first commercial product Light at CES the following year, securing tens of millions of dollars in financing, the growing pains soon followed. Xu Chi's former employer Magic Leap initiated a patent lawsuit, accusing him of stealing technology. Although this turmoil ultimately ended with XREAL winning the lawsuit, it placed significant public pressure on the company from the very beginning.
Along the way, relying on &#34;full-stack self-research&#34; technology positioning, XREAL has occupied its current market position and attracted capital attention.
Xu Chi once bluntly stated that &#34;the biggest factor hindering the next iPhone moment is capital,&#34; expressing an extreme desire for funding. In nearly 10 years since its establishment, XREAL has completed 12 rounds of financing, raising over 2.3 billion yuan in total, with its pre-IPO valuation climbing to 1 billion dollars. Its shareholder lineup includes nearly half of the internet and hard technology sectors, including well-known investment institutions and industrial capital such as Hillhouse, Sequoia, Alibaba, Kuaishou, Taobao, Nio Capital, and Luxshare Precision
However, capital does not solely favor it; Sequoia and Hillhouse Capital, while betting on XREAL, have also invested in Lingxi Weiguang, Multi-Screen Future, and others. Alibaba has also extended an olive branch to Rokid and incubated its own Quark glasses. Their &#34;mutual combat&#34; investment landscape not only confirms the heat of the AR track but also indicates that the future melee among the &#34;Four Little Dragons&#34; will be exceptionally fierce.
AR glasses have undergone decades of accumulation and have welcomed an explosion after breakthroughs in AI technology. Tech giants have rushed in, with smartphone manufacturers and automotive companies competing to cross boundaries, marking the beginning of a &#34;Battle of a Hundred Glasses&#34; last year.
So far, major companies including Alibaba, Baidu, Huawei, and Xiaomi have showcased their products; Li Auto has also released its first AI glasses, Livis, attempting to extend the interactive experience of smart cockpits to wearable devices. The intensity of industry competition continues to rise, with the &#34;Four Little Dragons&#34; of AR collectively securing nearly 2 billion yuan in financing in just the first quarter. Notably, the emerging brand VITURE, established in 2021, completed a $100 million Series C financing in February this year, becoming a new variable in the track.
Currently, the &#34;Battle of a Hundred Glasses&#34; has formed a competitive landscape with three major camps: tech giants leveraging their ecological and financial advantages to expand territory, cross-industry players like automotive companies innovating through scenario creation to open new tracks, and startups deeply cultivating niche areas with technological barriers. Their competitive focus has shifted from single hardware parameters to a comprehensive contest of ecosystems and AI capabilities.
Since last year, a patent dispute has erupted between XREAL and VITURE. Both parties have initiated patent lawsuits in the United States, Germany, and China, involving core technologies such as electrochromism, becoming the &#34;first intellectual property case&#34; in the industry.
Another undeniable fact is that the profitability prospects of the AR glasses track remain unclear, and the overall market size is not large. Even though XREAL showcased an impressive growth curve in its prospectus, claiming a 27% market share, its annual revenue is only 500 million yuan.
XREAL is anxious. &#34;Ecological cooperation&#34; with giants is the key to breaking the deadlock.
To explore more scenarios, XREAL plans to launch a new generation of Air series products, codenamed &#34;Project Helen,&#34; at a lower price in 2026, aiming to cover a broader range of price-sensitive users, which is crucial for the product's move into the mass market. Meanwhile, in the vertical niche field, XREAL has deepened cooperation with ASUS's top gaming brand ROG to jointly develop an AR glasses product for gaming enthusiasts—ROG XREAL R1, which is expected to be officially launched in 2026.
XREAL's ecological cooperation with Google is also a focus this year. Project Aura is XREAL's highest-level product, serving as its flagship product line for the evolution towards the next generation of spatial computing. This product is expected to debut in the second half of 2026 and will deeply integrate Google's Android XR platform with the Gemini AI large model
The industry generally believes that the smart glasses sector is relatively niche, with a limited capital window, and companies that start slowly will miss the opportunity. Faced with profit pressure and fierce competition, going public has become a crucial battle for XREAL to secure funding and establish its market position.
However, XREAL's competitors are also not to be underestimated. In March of this year, Rokid completed its share reform. According to Caijing Tianxia, its founder Zhu Mingming responded on April 8 that this was mainly to optimize international and domestic operations, and stated that the company has ample ammunition reserves, with &#34;other priorities not on the list&#34; aside from developing new products. However, from the outside perspective, this is still a standard action for many companies before their IPO. Additionally, after completing its Series C financing at the beginning of this year, there are also rumors in the market about Thunderbird Innovation preparing for an IPO.
For the &#34;Four Little Dragons,&#34; whoever can first prove their irreplaceability in this brutal race of capital, technology, and market will be able to navigate through the smoke of the &#34;Hundred Glasses Battle.&#34;
(Author | Yang Shier, Editor | Yang Yi, Image Source | Visual China, this content is from Caijing Tianxia WEEKLY)

XREAL has become the first AR glasses company to submit a prospectus to the Hong Kong Stock Exchange, aiming to become the "first stock of smart glasses." Since its establishment in 2017, XREAL has held a leading position in the global AR glasses market, with a sales share of 27% and a volume share of 24.8%. Despite facing fierce competition, XREAL's revenue is expected to increase from 390 million yuan to 516 million yuan, and its gross margin is projected to rise from 18.8% to 35.2%

Three Zhejiang University alumni are racing to become the "first stock of AR glasses."