In a significant shift, Meta Platforms Inc. (META), led by Mark Zuckerberg, has reportedly decided to discontinue its custom chip development for its upcoming augmented reality glasses. This decision, according to Fortune, citing sources within the company, was driven by the high cost of the project and its misalignment with Meta’s current business objectives.
Instead of continuing to develop its own chips, Meta will now rely on third-party chipmakers like Qualcomm Inc. (QCOM) for its upcoming AR glasses prototypes and potential future versions. This decision highlights Meta’s strategic focus on cost-efficiency and the company’s willingness to leverage existing technology from established partners.
The chips that Meta was developing were designed to be the core components of its wearable devices, particularly a line of AR glasses codenamed Orion. An “experimental” prototype of the Orion AR glasses is still expected to be unveiled by Meta later this year.
Meta’s decision to abandon the chip development project is part of a broader cost-cutting initiative. Earlier this year, Meta reportedly chose not to renew its lease for seven floors of office space in Singapore, following a series of global layoffs.
However, the company remains committed to its AI technology ambitions. In April, Meta launched its next-generation AI chip, the MTIA, designed to compete with Nvidia Corporation’s AI offerings in the cloud business. The MTIA chip, developed in-house, is designed to optimize Meta’s AI workload, focusing on providing the right balance of compute, memory bandwidth, and memory capacity for serving ranking and recommendation models.
Despite the cost-cutting measures, Meta continues to demonstrate strong financial performance. In July, the company announced second-quarter revenue of $39.07 billion, exceeding analyst expectations of $38.31 billion. The company also reported adjusted earnings of $5.16 per share for the second quarter, surpassing the analyst estimate of $4.73 per share.
While Meta’s decision to abandon its custom chip development for AR glasses might seem like a setback, it reflects the company’s strategic agility and its commitment to prioritizing its core business objectives. The move allows Meta to focus its resources on key areas, such as AI, while still delivering innovative AR experiences to its users.
