Nvidia hosted its fall GTC (GPU Technology Conference) in early November, during which the company shared details regarding the progress that it had made on products and services such as AI software, data centers, automotive applications, and healthcare. In particular, Nvidia’s foray into virtual worlds and digital twins, both of which are closely tied to the metaverse, garnered significant attention from the public. By leveraging diverse simulation tools that reflect real-life circumstances, Nvidia has extended the application of virtual worlds from the local scale to the planetary scale, thereby reflecting the metaverse’s pioneering qualities and developmental progress.

Along with the ongoing metaverse craze, Nvidia also released its Omniverse Avatar technology platform as well as its Omniverse Replicator, which is a “synthetic data-generation engine” according to the company. Both of these releases are based on the Nvidia Omniverse, a platform that specializes in virtual collaboration. Whereas the Omniverse Avatar platform enables the creation of interactive virtual characters through synergies among voice AI technology, machine vision, and NLP (natural language processing), the Omniverse Replicator constructs more realistic, lifelike virtual worlds by training DNN (deep neural networks) using such synthetic data as velocity, depth, and weather conditions.

Digital twin-based virtual factories are starting to show the first hints of the metaverse

The metaverse value chain primarily revolves around commonly seen infrastructural backbones formed by telecommunications and cloud/edge computing. The virtual space that is then built on top of this infrastructure comprises HMI (human machine interface), decentralization, application creation, and user experiences. More specifically, HMI produces an AI-empowered immersive experience by combining multiple interactive technologies with an AR/VR base layer. At the moment, companies such as Nvida, Meta (formerly known as Facebook), Microsoft (including Xbox), and Vive are heavily invested in HMI development. Application creation, on the other hand, refers to mechanisms that make the metaverse more lively, reliable, diverse, and attractive. Some examples include graphical tools and cryptocurrency technologies. Representative groups focusing on this field include Roblox, IBM, Google AI, Epic, and Unity.

Regarding the content of Nvidia’s presentation during GTC apart from the Omniverse Avatar and Replicator, the company also released CloudXR, Showroom, and other Omniverse-based tools used for optimizing immersive experiences. As well, Nvidia also released the Modulus neural network model, which is accelerates the build-out of digital twins. These releases, in turn, demonstrates Nvidia’s competency and leadership in creating AI-driven software tools for the metaverse value chain. With regards to real-life use cases, digital twins currently represent most of Nvidia’s applications. For instance, BMW and Nvidia have partnered to construct a digital twin-based factory via the Omniverse platform capable of connecting ERP (enterprise resource management), shipment volume simulation, remote-controlled robots, production line simulation, etc. This partnership is indicative of promising early-stage growth of the metaverse.

Nvidia is extending its simulation application from factories to planets

While smart city development has remained one of the main use cases of simulation in recent years, Nvidia has further extended its simulation applications from use cases previously limited to singular offices or factory facilities. For instance, BIM (building information modeling) specialist Bentley Systems has teamed up with Nvidia to apply digital twins to public property management and maintenance. Ericsson, on the other hand, is utilizing Nvidia’s technology to construct a digital replica of an entire city for the purpose of checking 5G signal coverages, optimizing base station placement, and improving antenna designs. During the GTC, Nvidia unveiled the Earth-2 system, which is a supercomputer that generates a digital twin of planet earth for weather forecasts.

As a matter of fact, most products and services announced by Nvidia during GTC represent either a partial or entry-level application of the metaverse. However, as the post-pandemic new normal continues to drive up the demand for contactless and digital transformation applications, strengthening CPS (cyber physical systems) will remain one of the most significant trends in the market. As real-world environments become increasingly complex due to interactions among an increasing number of tools and use cases, Nvidia will aim to create a comprehensive framework for metaverse development through products/services based on more intelligent, comprehensive, and instant virtual worlds. Hence, TrendForce believes that Nvidia will need to address certain major challenges going forward, including lowering its tools’ usage barriers, strengthening its ecosystem, and attracting new users.

（Image credit: NVIDIA）

Microsoft announced in early November that it will release the preview of Mesh for Microsoft Teams (henceforth referred to as simply “Mesh”) in 1H22 as a chat and collaborative platform for the metaverse. By providing a virtual meeting space, in which Teams users can conduct meetings, chat, work collaboratively, and share documents, Mesh is set to become an entrance to the metaverse.

Community interactions will serve as a starting point for metaverse development

Microsoft first unveiled Microsoft Mesh during its Ignite 2021 event in March. This platform supports applications including HoloLens Mesh and Altspace VR, with more Microsoft Teams services to be released in the future. By announcing ahead of time that the preview version of Mesh will be released in 2022, Microsoft is hoping to leverage the recent emergence of topics related to the metaverse in order to increase its customers’ engagement with the new functionalities of Mesh. Hence, the company is positioning Mesh as an entrance into the metaverse by first attracting users through functions such as teleconferencing, collaboration, and chat. Microsoft will then gradually add to the number of applications and services in the virtual reality, thereby eventually constructing a complete virtual world.

Judging from the current progress of development, TrendForce believes that social communities, teleconferencing, and virtual meetings will become AR/VR applications most attractive to consumers. That is also why companies currently developing AR/VR solutions regard these applications as the starting point of metaverse development. These applications’ trending importance can primarily be attributed to the two reasons of demand and supply. Regarding the demand side, not only has the emergence of the COVID-19 pandemic brought about significant growths in teleconferencing and remote interaction usages, but there has also been a gradual change in how people interact in internet-based communities. More specifically, this change refers to a shift in interactions from texts, images, and videos to virtual avatars. As a result, the consumer market is expected to have a relatively high acceptance for AR/VR-driven community interactions and teleconferences. Regarding the supply side, on the other hand, service providers that operate social media and teleconference platforms drastically differ from the typical hardware brands in terms of product strategy, since these providers generally aim to first create a massive user base rather than deriving profits from a single product. As such, these providers are comparatively more willing to invest massive resources into expanding their presence in the market during the initial phase even though doing so may potentially incur financial losses.

R&D and release of device hardware will become the most significant challenge for platform service providers

For Microsoft, Mesh represents a starting point, not only towards the development of the metaverse, but also one that requires investment in more areas, since the metaverse requires the realization of a virtual world that is more immersive and lifelike. Apart from Microsoft’s existing competencies in cloud services and OS software, the company still needs to achieve a sense of realism in the virtual avatars and interactions that it creates, and these creations need to reflect changes made by the user. For instance, the mouth and facial expressions of virtual avatars need to be able to instantly adapt as their users speak, and this process involves not only software adjustments, but also the integration of sensors and other hardware devices. As long as hardware brands require that their individual products remain profitable, Microsoft will find it difficult to hand over the responsibility of hardware-related technological R&D and product releases to the hardware brands. Unless Microsoft is willing to provide sufficiently high subsidies and absorb all financial losses, it will inevitably release its self-designed consumer AR/VR devices – for the same reason that Meta (also known as Facebook) acquired Oculus, and ByteDance acquired Pico. On the other hand, crossing over to the hardware market represents entering an industry that is yet to mature and that requires investment into multiple technologies. Platform service providers will therefore need to invest more resources into hardware development, and this remains one of the challenges Microsoft faces after entering the metaverse.

（Image credit: Pixabay）

The growth of the metaverse will drive an increasing number of companies to participate in the build-out of the virtual world, with use cases such as social communities, gaming/entertainment, content creation, virtual economy, and industrial applications all becoming important points of focus in the coming years, according to TrendForce’s latest investigations. Apart from increases in both computing power of semiconductors and coverage of low-latency, high-speed networks, the metavere’s development will also depend on the adoption of AR/VR devices by end users. TrendForce expects global AR/VR device shipment for 2022 to reach 12.02 million units, a 26.4% YoY increase, with Oculus and Microsoft each taking leadership position in the consumer and commercial markets, respectively.

TrendForce further indicates that the success of AR/VR devices in the consumer and commercial markets will be determined by their retail prices and degree of system integration, respectively, while these two factors are also responsible for leading companies’ continued competitive advantages. However, gross and net profit considerations regarding AR/VR hardware have made it difficult to not only price these devices competitively, but also increase the volume of AR/VR device shipment.

Even so, the growing popularity of the metaverse will drive more and more hardware brands to enter the AR/VR market and push online service platform providers to either directly or indirectly propel the growth of the hardware market in 2022. Regarding the consumer market, AR/VR device suppliers may look to expand their user base and increase their market penetration via low-priced yet high-spec devices, while compensating for their reduced hardware profitability through software sales. Oculus, for instance, has adopted such a strategy to maintain its advantage in the market, thereby raising the market share of the Oculus Quest products to a forecasted 66% next year.

Regarding the commercial market, there has been a growth in applications ranging from remote interactions and virtual collaborations to digital twins; hence, enterprises have become increasingly willing to adopt AR/VR devices. Compared to the consumer market, which is mainly driven by products with low prices and high specs, the commercial market is comprised of enterprises that are more willing to choose high-priced and high-performance products, although such products must be paired with a full system integration solution or customized services. Possessing substantial competency in the industrial ecosystem, Microsoft enjoys a relatively large competitive advantage in the commercial market, as the company’s HoloLens 2 became one of the few commercial AR devices with an annual shipment exceeding 200,000 units this year.

It should also be pointed out that, given the rapid advancements in high-speed 5G networks, video-based remote assistance applications enabled by low-priced AR glasses and 5G smartphones’ computing and networking functions will become yet another commercial AR/VR use case. TrendForce believes that these applications can serve as a low-cost, easily deployable early trial that will not only raise enterprises’ willingness to adopt more AR/VR commercial applications going forward, but also accelerate the development of commercial services related to the metaverse.

By leveraging advantages such as lifelike interaction and virtual simulation, the metaverse will enable the growth of various applications ranging from virtual meetings, digital modeling and analysis, to virtual communities, gaming, and content creation, in the infancy of its development. According to TrendForce’s latest investigations, constructing the metaverse, which is more complex than the existing internet world, requires more powerful data processing cores, networking environments capable of transferring enormous data, and user-side AR/VR devices with improved display performances. These requirements will further drive forward the development of memory products, advanced process technologies, 5G telecommunications, and display technologies.

Regarding memory products, the conceptual framework of the metaverse is heavily contingent on the support provided by compute nodes. The data center industry will therefore experience more catalysts brought about by the metaverse, and there will be a corresponding growth in micro-servers and edge processing applications. The metaverse will also require an increase in the performance of storage devices. This means that SSDs, which are substantially faster than HDDs in writing data, will become an indispensable storage solution. On the DRAM front, take VR devices as an example; most existing devices are equipped with 4GB LPDRAM, which has the dual advantage of low power consumption and high performance. In the short run, manufacturers will not plan to massively upgrade the applications processors in these devices, which also operate in relatively simple processing environments. Hence, the growth in VR devices’ DRAM density will remain relatively stable. In terms of storage, on the other hand, because most AR/VR devices are equipped with Qualcomm chips whose specifications closely resemble those of flagship smartphone SoCs, AR/VR devices will also feature UFS 3.1 solutions.

Regarding advanced process technologies, the integration of AI and the increase in demand for computing power have resulted in a corresponding demand for high-performance chips, which enable improved graphics rendering and computation of massive amounts of data. Advanced process technologies allow the production of high-performance chips that deliver enhancements in performance, power consumption, and chip size. The realization of the metaverse requires high-performance chips for data and graphics processing, so high-performance CPUs and GPUs will assume key roles in this regard. TrendForce’s investigations indicate that, with respect to CPUs, the current mainstream products from Intel and AMD are manufactured at the Intel 7 node (equivalent to the 10nm node) and TSMC’s 7nm node, respectively, and the two companies will migrate to TSMC’s 3nm and 5nm nodes in 2022. With regards to GPUs, AMD’s wafer input plans for GPUs are basically in lockstep with its plans for CPUs, whereas Nvidia has been inputting wafers at TSMC’s 7nm node and Samsung’s 8nm node. Nvidia is currently planning to input wafers at the 5nm node, and the resultant GPUs will likely be released to market in early 2023.

Regarding networking and telecommunications, due to the metaverse’s demand for virtual interactions that are instant, lifelike, and stable, greater attention will be paid to the bandwidth and latency of data transmissions. 5G communication is able to meet this demand as it features high bandwidth, low latency, and support for a greater number of connected devices. Hence, the arrival of the metaverse will likely bring about the commercialization of 5G-related technologies at an increasingly rapid pace. Notably, some of these 5G technologies that are set to become the backbone of network environments powering the metaverse include SA (standalone) 5G networks, which delivers greater flexibility via network slicing; MEC (multi-access edge computing), which increases the computing capabilities of the cloud; and TSN (time sensitive networking), which improves the reliability of data transmissions. In addition, 5G networks will also be combined with Wi-Fi 6 in order to extend the range of indoor wireless connections. In light of their importance in enabling the metaverse, all of these aforementioned technologies have become major drivers of network service development in recent years.

Regarding display technologies, the immersive experiences of VR/AR devices depend on the integration of higher resolutions and refresh rates. In particular, an increase in resolution will receive much more attention in the market now that Micro LED and Micro OLED technologies have gained gradual adoption as display technologies shrink in terms of physical dimensions. As well, the traditional 60Hz refresh rate can no longer satisfy the visual demands of advanced display applications, meaning display solutions with higher than 120Hz refresh rates will become the mainstream going forward. In addition, the metaverse’s emphasis on interactivity demands display technologies that are not limited by traditional physical designs. The market for flexible display panels, which allow for free form factors, is expected to benefit as a result. At the same time, the metaverse is also expected to generate some demand for transparent displays, which serve as an important interface between the virtual world and real life.

（Image credit: Ready Player One）

Apple’s latest AirPods 3 still feature an optical in-ear detection mechanism, according to TrendForce’s 2021 Infrared Sensing Market Trend – 3D Sensing, LiDAR, SWIR LED report. Through the integration of PPG (photoplethysmography) technology, the AirPods 3 contain an improved in-ear detection mechanism based on skin-detect sensors that are equipped with four SWIR (short-wave infrared) LED chips that have two different wavelengths, as well as two InGaAs photodiodes. Industry insiders indicate that the AirPods 3’s skin-detect sensors may potentially detect the water content in the wearer’s skin, giving them the ability to differentiate between human skin and other surfaces. TrendForce expects annual AirPods shipment for 2022 to reach 85 million sets, a 3.7% YoY increase.

While the demand for these end-products rises, the relevant suppliers will stand to benefit as a result. Such companies include SWIR LED chip suppliers Epistar and DOWA; InGaAs photodiode suppliers DOWA and II-VI/Finisar; and module assembler USI.

SWIR wavelengths range from 1,050-2,500 nm, which encompasses the optical properties of compounds such as water, sugar, and alcohol. While SWIR technologies gradually mature, and prices begin to reach feasible levels, wearables manufacturers are expected to officially integrate SWIR technologies into their products in 2H21. With improvements in their algorithm, wearables are increasingly likely to feature PPG-based biosensing functions, which can measure not only heart rate and blood oxygen levels, but also other variables including body hydration as well as blood glucose, blood lipid, and blood alcohol levels in the future.

For more information on reports and market data from TrendForce’s Department of Optoelectronics Research, please click here, or email Ms. Grace Li from the Sales Department at graceli@trendforce.com