U.S. parts account for 34% of the total component costs of Facebook owner Meta's latest virtual reality (VR) device, up 4 percentage points from the previous model, according to a Nikkei Asia teardown of the Meta Quest Pro. Core information processing components, such as semiconductors, storage devices and communications are mostly made by U.S. companies.
Nikkei Asia disassembled and analyzed a Meta Quest Pro, which went on sale in October, with the help of Fomalhaut Techno Solutions, a Tokyo-based researcher of electronic devices. The price at launch was $1,499.99, more than three times what its predecessor, the Meta Quest 2, cost.
With the Washington-Beijing conflict over high technology deepening, our teardown reveals a procurement strategy of avoiding geopolitical risk in regard to semiconductors while using low-cost Chinese products for displays and substrates.
Component costs have gone up by 2.4 times
According to Fomalhaut's estimates, a Meta Quest Pro has about $440 worth of components, about 2.4 times that of a Quest 2, excluding assembly costs. Fomalhaut says the assembler is likely to be Foxconn of Taiwan.
China's share in total component costs rises
The share of Chinese components was 18% of the total cost, up 14 points from the Quest 2. China now ranks second after the U.S. (34%, up 4 points), moving up two places. Fomalhaut CEO Minatake Kashio noted that Chinese products are used for displays and housing. In contrast, key components such as main semiconductors come mostly from the U.S. "This means that displays, VR devices' main component, were not particularly affected by the U.S.-China trade friction. Meta avoided drawing the attention of U.S. authorities by using U.S. products in control parts such as processes and memory."
He pointed out that using U.S.-made components likely raised the product's price. "The same kinds of parts can be procured from China," he said, "and the prices are about 30% of those made by U.S. companies."
Not easy to eliminate Chinese parts
Most semiconductors in the Quest Pro come from U.S. makers. As such, it is possible that Meta has avoided using Chinese parts for storing and processing data. On the other hand, the displays were made in China, and the advanced housing units with embedded antennas were also made in China. Other advances, such as the quantum dot technology, show that Chinese companies are not only price-competitive but also technologically advanced. Thus it is no longer possible to ignore Chinese companies when making high-quality devices. Kashio believes Meta might be betting that buying Chinese components would not violate any trade bans if these parts are relegated to displaying information. The Meta Quest Pro "uses Chinese parts to the extent allowed while avoiding the impact of the U.S.-China conflict," he said.
Even as trade friction intensifies in the high-tech sector, China appears to be gaining more of a presence when it comes to supplying parts for cutting-edge VR equipment, smartphones and other devices.