Snapchat operator Snap Inc. is spending more than $500 million to acquire Wave Optics Ltd., better known as WaveOptics, a U.K.-based maker of displays and other optical components for augmented reality glasses.

The deal was reported by The Verge this morning. According to the publication’s sources, Snap will pay half the acquisition price upfront and the rest two years from now in either cash or stock. The acquisition was confirmed by a company spokesperson.

WaveOptics makes waveguides, thin pieces of glass that function as the display of AR glasses. Snap uses WaveOptics-designed displays in the new generation of its Spectacles AR glasses that debuted this week. With a battery life of 30 minutes, the fourth-generation Spectacles can overlay virtual objects onto indoor and outdoor environments in the user’s field of view.

The light beams that form the three-dimensional content in front of the user’s eyes emerge from a compact component of AR glasses known as a projector. The projector transmits the light onto a corner of the waveguide that functions as the glasses’ display. From that corner, photons travel through the display until they reach a rectangular area at the center of the user’s field of view, which is where the AR content appears.

WaveOptics’ newest waveguide, debuted last year, weighs about a quarter of an ounce and takes up less than half the space of its previous-generation products. The waveguide is made from RealView glass wafers, made by German firm Schott AG, that are specifically designed for AR devices. Schott makes the flexible glass in some of Samsung Electronics Co. Ltd.’s foldable handsets.

The RealView glass in WaveOptics’ AR displays has a refractive index of 1.8, which means that light travels much more slowly through the material than through the air. Slowing down light changes its properties in ways that make it possible to increase the quality of AR graphics. For added measure, WaveOptics coats the displays with specialized optical materials after carving them from Schott-supplied glass wafers to further improve graphics quality. 

Acquiring the company will buy Snap not only the waveguide technology powering its Spectacles but also a lineup of projectors, the components that generate light for an AR display. WaveOptics offers two types of projectors. The first series harnesses arrays of microscopic, moving mirrors to generate light, while the other uses so-called liquid crystal on silicon technology, which works with reflective metal electrodes instead of mirrors. The main difference is that the latter technology enables AR content to cover a bigger portion of AR glasses’ display.

The over $500 million Snap is reportedly spending on WaveOptics shows that the company, which is best known for its social networking app, sees AR hardware as a major strategic priority. The price tag represents about a fifth of Snap’s total 2020 revenues.

By absorbing WaveOptics, Snap will gain the ability to align the British firm’s waveguide and projector development roadmap more closely with its AR device plans. The deal also removes the chance of a competitor buying WaveOptics. Another waveguide maker, Akonia Holographics LLC, was purchased by Apple Inc. in 2018.

Snap’s plans for the deal may also involve targeting the upstream AR optical components market. The company told The Verge today that WaveOptics will continue to supply waveguides for other companies. If, as Snap hopes, AR glasses will become a mass market product in the future, that part of WaveOptics’ business could have the  potential to turn into a major revenue source.

The tech giants competing in the AR segment and adjacent virtual reality market have also taken some optical component development in-house. Facebook Inc., for  instance, last year detailed a prototype headset that uses homegrown holographic technology to display VR content. The company hopes the technology could provide a more compact alternative to the relatively bulky lens traditionally used for the task. 

Image: Unsplash