Sunny Optical, Goertek forge ‘Optical Alliance’ in bet on AI glasses

The marriage of Sunny Optical’s technology with Goertek’s manufacturing muscle could create a new giant in China’s optical industry

Key Takeaways:

• Goertek Optical and Sunny Optical will form a joint venture, Goertek-OmniLight Optical Technology, with Sunny Optical holding 31%
• The venture will possess China’s only dedicated ASML lithography machine currently used in volume production for optical waveguide technology used in AI glasses

By Lee Shih Ta

Corporate alliances are often a dime a dozen, frequently pairing companies in marketing and technology tie-ups based on the latest industry trends. But they can also sometimes act as much bolder statements of where companies see the future. The latter appears to be the case in a joint venture announcement last week between smart-hardware and optics-module maker Sunny Optical Technology (Group) Co. Ltd. (2382.HK) and contract manufacturer Goertek Inc. (002241.SZ).

Under the deal, Sunny Optical transferred the entire equity interest in its Shanghai OmniLight subsidiary to Goertek for 1.9 billion yuan ($267 million) in exchange for a stake in Goertek’s optical unit. Goertek Optical was then combined with Shanghai OmniLight as a joint venture, Goertek-OmniLight Optical Technology. Both firms will invest an additional 200 million yuan into the new venture, which will be 31.31% owned by Sunny Optical.

The deal centers on a type of technology known as waveguide.

The soul of AI glasses

Optical waveguides represent the core — and most expensive — component of augmented reality (AR) display systems. Simply put, they are transparent optical structures designed to “guide light.” They etch nanostructures onto transparent substrates to allow virtual imagery to appear accurately in front of the user.

The waveguide is the “soul” of AR glasses, determining image clarity, field of view, and energy efficiency performance.

Shanghai OmniLight is a leader in the space. Established in 2019, the Sunny Optical subsidiary now being rolled into the joint venture specializes in silicon carbide waveguides and diffractive optical elements (DOEs) manufacturing at the wafer level. It operates the only dedicated lithography machine in China from Dutch semiconductor equipment giant ASML dedicated to waveguide mass production. Backed by 3.28 billion yuan in total investments, OmniLight also owns a state-of-the-art 12-inch wafer production line in Shanghai’s Lingang New City, viewed as a milestone in the commercialization of Chinese waveguide technology.

Despite its R&D prowess, Shanghai OmniLight faced a “technology island” conundrum, namely, shouldering high costs to develop and produce sophisticated products without many major customers to buy those products. That’s where Goertek comes in. A contract manufacturing specialist, the company possesses extensive volume-production capabilities and highly developed supply-chain expertise cultivated through longstanding contracts to supply virtual reality (VR) and AR modules to multinational clients like Meta and Pico.

For Goertek, folding Shanghai OmniLight into its mix signifies more than just a core technology acquisition – it marks an upgrade from simple contract manufacturer towards becoming a vertically integrated original technology supplier with valuable optical patents — further cementing its foothold in the AI wearable-device value chain. The new joint venture promises operational synergies by integrating Sunny Optical’s specialized processes at the wafer level with Goertek’s high-volume AR and VR module production capabilities.

Data from JD.com’s consumer electronics division shows unit sales for such AR and VR glasses skyrocketed more than eightfold year-over-year during the first half of 2025. E-commerce platforms Tmall and Douyin reported similar explosions, with consumer searches associated with glasses rising more than 600% as sales leapt by a similar multiple. Industry organization Wellsenn anticipates sales of over 90 million AI glasses globally by 2030, potentially positioning the product as the fastest growing in the wearables category.

The production of AR glasses is most constrained by waveguide yield rates and costs, since only a handful of companies worldwide can currently achieve stable mass production. The alliance between Sunny Optical and Goertek looks aimed at filling that void, since the former offers breakthroughs in production processes, while the latter brings capabilities in mass production of complete devices and system integration.

Both companies are entering their new alliance for their own reasons. Goertek has been broadening its non-Apple initiatives for years to reduce its dependence on the global tech giant. Its reliance on Apple decreased from 48.08% of its revenue in 2020 to 31.96% in 2024, as it made a strategic shift toward AI hardware verticals like smart glasses. Its recent acquisitions of Hong Kong-based structural component maker Mega Precision Technology and British microLED company Plessey Semiconductors show its commitment to optical technologies.

An optics titan emerges

Similar logic applies to Sunny Optical. As growth in its mobile phone lens business slows, the company is looking for new engines in high value-added areas. The company’s net profit fell over 20% year-over-year to about HK$720 million ($93 million) in the first half of 2025, while its gross margin dropped to a multiyear low of about 19% due to weak smartphone lens demand and falling prices. The new Goertek joint venture will help to better monetize its R&D while also reducing some of its own long-term capital burdens.

Investors were clearly happy with the deal. After Sunny Optical first announced signing a memorandum of understand in late August, its stock surged over 11%. It has retreated slightly since then, but remains up 23% year-to-date. Sunny Optical now trades at a price-to-earnings (P/E) ratio of about 25 times — higher than Largan Precision’s (3008.TW) 14 times but lower than Q Technology’s (1478.HK) 37 times. That could imply some upside for Sunny Optical’s stock if the new business returns it to profit growth.

The alliance between Goertek and Sunny Optical stands as an important signal for China’s optical industry, placing a major bet on a coming boom in smart glasses. As the era of AI-AR integration arrives, this “Optics Alliance” could be just the start of a new wave of similar global tie-ups to seize on the trend.

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