Over the past month, Goertek has taken two notable steps to move up the augmented reality (AR) value chain. First, it agreed to acquire two relevant companies in Hong Kong for HKD 10.4 billion (USD 1.3 billion). Soon after, it arranged a USD 100 million interest-bearing loan through a Hong Kong subsidiary to support Haylo’s cross-border acquisition of UK-based micro LED specialist Plessey.
Public records show that Mega Precision Technology and Channel Well Industrial, both subsidiaries of Luen Fung, previously supplied structural phone components to Apple. As Apple expanded into wearables, both companies became key providers of metal midframes for the Apple Watch. Plessey, meanwhile, has been a recognized micro LED supplier to Meta for several years.
Following a pivot to virtual reality that fell short of expectations, Goertek now appears to be refocusing on AR. The company is consolidating upstream capabilities and using targeted investments to deepen relationships with tier-one clients.
AR as a strategic reset
In announcing the acquisitions, Goertek stated that the move aims to strengthen competitiveness in precision structural components, deepen vertical integration, and reinforce relationships with leading clients.
The goal is to close capability gaps in precision metal processing. These components are critical for AR glasses, where weight and light control directly affect usability. Micro LED technology, which Plessey specializes in, is widely seen as a key display solution for next-generation wearables. Both areas represent technical bottlenecks for broader AR adoption.
To scale its AR capabilities, Goertek intends to use the acquisitions to cement its position in high-barrier, high-value segments. The newly acquired assets are expected to complement its existing capabilities, creating both synergy and scale advantages as the market develops.
Goertek already manufactures components for advanced eyewear integrating AR and artificial intelligence. These include acoustic parts, optical modules, and diffractive waveguides. Its optical engine and waveguide technologies are particularly advanced and high-margin areas in which the company holds a competitive edge. At this year’s CES, it unveiled two lightweight AR reference designs: Mulan 2 and Wood 2.
Mulan 2 features a holographic waveguide lens and a micro LED optical engine in a thin, low-leakage format. Wood 2 highlights lightweight frame materials and a compact SiP module that supports full-color displays and multimodal AI interaction.
Goertek has already secured some AR orders. According to 21st Century Business Herald, it supplies optical and acoustic modules and provides contract manufacturing for AI glasses and related products for Huawei, Samsung, Xiaomi, Meta, and Amazon.
Luke Lin, an internationally registered innovation manager, told 36Kr that Goertek’s bundled pricing—offering full device, enclosure, and antenna—allows it to undercut competitors by 3–5%, enhancing its position in procurement bids.
“If global smartwatch shipments reach 220 million units in 2025 and AR glasses hit 9 million units, and Goertek captures 15% and 20% of those markets respectively, incremental revenue could reach RMB 22–26 billion (USD 3.1–3.6 billion),” Lin said. “After acquiring the metal parts business, the average selling price per unit could rise by USD 8–10, further increasing profit leverage.”
Using an industry-average net margin of 10–13%, Haitong International Securities projects that the acquisitions could raise Goertek’s profit by 25–30%.
Currently, Goertek’s business is anchored in three segments: smart hardware, smart acoustic finished products, and precision components. Smart hardware remains the largest, accounting for about 54% of revenue in its interim 2025 report. Smart acoustics contributed 22%, with both segments maintaining gross margins around 10%.
“Industry average gross margins for smart hardware and acoustic products are 15–20%. Goertek is clearly below top-tier margins,” Lin noted, attributing the shortfall to a volume-based pricing model.
In contrast, the precision components segment—while smaller—has demonstrated stronger growth and profitability. In the first half of 2025, it generated RMB 7.6 billion (USD 1.1 billion) in revenue, up 21% year-on-year (YoY). The segment accounted for 20% of total revenue, a five-point increase from the end of 2024. Gross margin improved to 24%, up two percentage points over the previous year-end figure.
This performance suggests precision components are already a high-value contributor to Goertek’s profitability and are becoming increasingly central to its strategy.
Midterm upside
AI and AR glasses are now Goertek’s core strategic focus. Its 2024 annual report indicated that at least four of nine major R&D projects centered on such eyewear. Betting on AR also offers a path to reduce dependence on Apple, a concentration risk flagged by investors.
Goertek’s move to support Plessey’s acquisition aligns with this approach. In 2020, Meta signed an exclusive licensing agreement with Plessey for its AR display technology and committed to purchasing all its AR panels.
Rather than acquiring Plessey directly, Goertek extended a loan of up to USD 100 million to Haylo, the acquiring entity, through a Hong Kong-based subsidiary. The loan is interest-bearing and includes equity-linked terms. If Haylo or Plessey is acquired or goes public within five years, Goertek will receive 25% of the acquisition value or IPO market cap after recouping principal and interest.
This deal structure offers downside protection while preserving upside potential—an approach consistent with Goertek’s cautious, capital-efficient acquisition strategy.
The company has publicly stated that micro LED displays could become widely used in future AR glasses and related products. Supporting the Plessey deal is expected to accelerate Goertek’s capabilities in this area, with long-term strategic benefits.
This is not Goertek’s first move into optics. In 2018, it invested in UK-based waveguide maker WaveOptics and acquired a 10% stake in US microdisplay firm Kopin. In 2023, it purchased domestic optics company UPhoton for RMB 1.1 billion (USD 154 million), and it also holds a 5.4% stake in micro OLED specialist Seeya Technology.
Optics plays a central role in AR hardware economics. iResearch estimates that display components account for up to 43% of an AR headset’s bill of materials. Strengthening its optics supply chain not only bolsters Goertek’s technical position but also expands its addressable profit pool in AR assemblies.
Financial gains may already be emerging. Reports indicate that Xiaomi’s first consumer AR glasses, launched in June, use optical modules exclusively supplied by Goertek. According to Wind data, Goertek’s 2025 revenue is projected at RMB 102.36 billion (USD 14.3 billion), a 1.4% increase from 2024.
Revenue growth has slowed in recent years due to maturing product cycles among major customers, and this trend is expected to continue through the rest of the year. However, AR may help reverse that. If Xiaomi ships 500,000 units of its AI glasses in 2025, Goertek could generate RMB 200–250 million (USD 28–35 million) in revenue. That would represent about one-seventh of its expected YoY revenue growth. Including additional AR and optics manufacturing contracts, the segment’s contribution becomes even more significant.
AR may not only sustain Goertek’s growth during this transitional phase but also lift its margin profile over time. As the industry approaches an inflection point, Goertek appears well positioned to benefit.
KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Geng Chenfei for 36Kr.