Meta to Farm Out Design for Mixed Reality Devices, Shift Some Production From China
The Takeaway
•Meta has started outsourcing some design for mixed reality devices to its manufacturer Goertek in China
•Previously, Meta handled design of its devices and Goertek handled manufacturing
•Meta is working with Goertek to move half of the Quest manufacturing to Vietnam from China
Meta Platforms is changing how it designs and where it builds its mixed reality devices to stem deep financial losses and skirt a possible trade war between the U.S. and China.
Meta is shifting part of the development and design of its mixed reality headsets to Chinese contract manufacturer Goertek, according to an employee at Goertek and two employees at Meta. The Facebook-owner is also working with Goertek to move up to half the manufacturing of Quest headsets to Vietnam from China over the next several years, the Meta employees said.
Previously, Meta designed the Quest headsets, and Goertek made and tested them. As the Quest’s only manufacturer, Goertek’s deeper involvement in developing Meta’s products could help the Chinese company improve its hardware design capabilities. That could be politically sensitive for Meta, though, because it could involve transferring technology and design expertise to a Chinese company amid increasing tensions between the U.S. and China.
Over time, Meta wants to shift more of the design of components such as lenses and displays to Goertek, as the technology for mixed reality devices becomes more widely available. By 2030, Meta hopes Goertek and other potential manufacturers will fully develop its mixed reality headsets as original design manufacturers, according to one of the Meta employees.
This would allow Meta to reduce its role in developing mixed reality hardware and focus on the more profitable software business, according to the Goertek and Meta employees. For example, Meta would promote the use of its Horizon OS operating system on these devices, similar to how many smartphone makers use Google’s Android operating system for their devices.
“We work with [Goertek], of course, but we design our headsets as we always have,” a Meta spokesperson wrote in an email, without commenting on Meta’s plan to shift half of Quest manufacturing to Vietnam. Goertek didn’t respond to an emailed request for comment.
President-elect Donald Trump has said he plans to increase tariffs on goods coming to the U.S. from China. But even before the election, Goertek had already been planning to move some production of Quest headsets to Vietnam, as U.S.-China tensions escalated, the Goertek employee said.
The move could help Meta dampen the impact of a potential trade war between the U.S. and China. The government of Vietnam announced in October that Meta’s cheaper Quest 3S headset will be manufactured in the country beginning next year. Goertek already assembles many of Apple's AirPods and HomePods in Vietnam.
Until now, Meta has designed its Quest headsets to showcase what’s possible with the technology and to kick-start sales of the devices. It has been selling the headsets at a loss and burning billions of dollars on product development. Meta’s Reality Labs unit, which includes its virtual and augmented reality devices, has cumulatively lost nearly $64 billion since 2019, according to company statements.
As the metaverse has lost favor within the company and among investors, Reality Labs’ hardware teams have been asked to cut spending by almost 20% between this year and 2026, and the unit earlier this year laid off some directors and vice presidents working on hardware, The Information previously reported.
Meta’s plan for building consumer hardware was initially similar to that of Apple, which tightly controls the design of its products and outsources their assembly to companies mostly located in China. Like Apple, Meta sought to own the technologies inside the headset and differentiate itself from competitors by funding teams responsible for designing key components such as chips.
However, Meta has gradually reversed course and cut its spending on Reality Labs, laying off thousands of employees in the unit over the past two years and reducing the scope of some teams. Last year, it laid off most of its chip team and turned to Qualcomm and Mediatek to supply chips for its future products.
Joint Design
The Meta-Goertek relationship is now akin to joint design manufacturing, where Meta tells Goertek its goals and requirements for its devices, Goertek proposes multiple options and Meta chooses from them, the Goertek employee said.
In a sign of their deepening partnership, Meta has started sharing more information with Goertek about prototypes, including a successor to augmented reality glasses Meta demonstrated in September, the Goertek employee said. If it all goes well, Goertek could one day take over the design of the AR glasses, the same employee said.
In the new relationship, Goertek handles more of the electrical engineering for Meta’s devices, including tasks such as how to connect chips with sensors within a device, according to the Goertek employee. Goertek has also started designing the outer shell for future versions of Meta’s mixed reality headsets, according to one of the Meta employees.
Goertek is also playing a larger role in research and development for other Meta devices such as the Ray-Ban smart glasses, according to one of the Meta employees. Meta has met with R&D staff at Goertek to understand their capabilities, a Goertek employee said. Carmine Arabia, Reality Labs’ vice president of devices, visited Goertek’s R&D headquarters in Qingdao, eastern China earlier this year, according to the same employee.
In recent months, Goertek has substantially grown its team dedicated to Meta, the Meta and Goertek employees said. Meta recently laid off some employees working on hardware in Shanghai and Shenzhen, and Goertek is recruiting some of them, the Goertek employee said. Some Meta contractors are also shifting to Goertek, including those involved in testing and manufacturing, according to one of the Meta employees.