Global AR & VR in Manufacturing Market Size, Share and Trends Analysis, By Component (Hardware, Software, Services), By Technology (Augmented Reality, Virtual Reality), By Application, By End-Use (Automotive), and By Region Forecast to 2031

Global AR & VR in Manufacturing Market Overview and Key Insights:

The global AR & VR in manufacturing market size reached USD 9.86 billion in 2023 and is expected to register a revenue CAGR of 27.4% during the forecast period. Rising trends of enhanced productivity and manufacturing efficiency, growing awareness of improved worker safety, increasing adoption of Industry 4.0, and rising focus on quality control are expected to drive revenue growth of the market.  

Market Drivers:

Rising trends of enhanced productivity and manufacturing efficiency are the major factors driving revenue growth of the global AR & VR in manufacturing market. Augmented Reality (AR) and Virtual Reality (VR) technologies are transforming traditional manufacturing processes by streamlining workflows, reducing downtime, and minimizing errors. AR enables real-time visualization of complex instructions and assembly processes. It allows workers to complete tasks faster and with greater accuracy. Different organizations in the manufacturing sector are integrating augmented reality and virtual reality in their operations to increase productivity, quality, and safety. For instance, BMW has introduced AR glasses at its Munich plant for workers to facilitate their process of inventory identification and minimize errors. The integration of AR technology delivered remarkable outcomes, showcasing its potential to revolutionize manufacturing workflows.

Furthermore, AR and VR technologies improve product design and prototyping by allow engineers to visualize, test, and refine designs in a virtual space before physical production begins. In August 2024, for instance, Jeh Aerospace joined forces with GridRaster to incorporate Spatial AI and AR/VR technologies. They aim to transform training, inspection, and productivity within aerospace manufacturing. This innovative partnership seeks to revolutionize the industry by leveraging advanced Spatial AI along with augmented reality (AR) and virtual reality (VR) solutions. The collaboration is designed to enhance training programs, improve inspection accuracy, and support work-assistant applications It represents a major step forward in adopting futuristic manufacturing practices.

Market Opportunity:

Advancements in AR and VR hardware create ample opportunities for the global AR & VR in manufacturing market. Advance AR glasses and VR headsets now offer higher resolutions, wider fields of view, improved tracking systems, and greater computing power. They provide more precise and immersive interactions with virtual and augmented environments. Recent innovations such as haptic feedback, eye tracking, and advanced gesture recognition further enhance the functionality of these devices allowing for more intuitive and interactive applications in design, prototyping, training, and maintenance.

Various companies are now launching advanced AR and VR hardware in the market. On September 2024. For instance, Meta introduced updates to its virtual reality headset and Ray-Ban smart glasses, showcasing its efforts to highlight advancements in artificial intelligence and next-generation computing platforms beyond traditional smartphones and computers. Meta aims to make the future accessible to everyone with its headsets, smart glasses, and AI systems.

Recent Trends:

One recent trend in the AR & VR in manufacturing market is the rising adoption of this technology in logistics and supply chain management. Managing extensive inventories in large enterprises is highly complex and time-consuming. The logistics professionals often spend up to 50% of their time locating the correct items for delivery. This inefficiency leads to reduced productivity and operational delays. To address these challenges, AR-enabled Head-Mounted Device (HMDs) are being increasingly deployed. It offers advanced solutions for real-time product detection, improved inventory management, and guided navigation. These devices provide logistics and warehouse specialists with immediate access to information, streamlining processes and enhancing overall efficiency.

AR and VR technologies are also revolutionizing logistics training by offering innovative solutions to enhance workforce efficiency and skill development. Through the use of AR headsets, workers are guided through picking and packing processes. It significantly reduces errors and boosts productivity by over 40%. Companies like Walmart have embraced VR for employee training, utilizing simulated real-world scenarios such as Black Friday sales to better prepare staff for peak operational periods. Research indicates that VR training improves knowledge retention and enhances performance. It is established as a critical tool for logistics companies aiming to optimize their training programs and overall operational effectiveness.

Restraints & Challenges:

Data security & privacy concerns pose a significant challenge to the revenue growth of AR and VR in the manufacturing market. The integration of AR and VR technologies involves the collection and processing of vast amounts of sensitive data. That includes proprietary designs, operational workflows, and employee information. The potential for data breaches or unauthorized access to this critical information raises concerns for manufacturers. Additionally, the lack of standardized security protocols for AR and VR systems heightens vulnerabilities. It makes businesses hesitant to fully adopt these technologies and restraints the revenue growth of the market.

The U.S. National Institute of Standards and Technology (NIST) is continuing its research, initiated earlier in 2024, into the cybersecurity and privacy challenges associated with immersive technologies. These technologies encompass virtual reality (VR), augmented reality (AR), and mixed reality (MR), collectively referred to as extended reality (XR) technologies.

Component Segment Insights and Analysis:

Based on the component, the AR & VR in manufacturing market is segmented into hardware, software and services. Hardware segment is further sub-segmented into head-mounted display, head-up display, handheld devices, smart glasses, VR gloves, sensors and others. Software segment is further sub-segmented into AR Software Development Kits (SDKs), VR content management software, design and simulation tools and others. Services segment is further sub-segmented into consulting and integration and maintenance and support.

Hardware segment contributed largest share in 2023 due to the increasing demand for more advanced and specialized devices that increase operational efficiency and productivity. There is a growing need for high-performance AR and VR hardware as manufacturers seek to optimize processes like design, training, maintenance, and quality control. Devices such as AR glasses, VR headsets, and motion sensors are becoming more sophisticated. They are offering higher resolution, improved ergonomics, and better tracking capabilities, which contribute to more immersive and accurate experiences. Furthermore, advancements in wireless connectivity, battery life, and computing power are making AR and VR hardware more cost-effective and accessible which boosts revenue growth of this segment.

Software segment is expected to have the fastest CAGR throughout the forecasted period due to the increasing need for customized and scalable solutions that enhance operational efficiency, training, and product design. These software solutions enable real-time data visualization, remote collaboration, and immersive training, which are crucial for improving productivity, reducing errors, and speeding up decision-making processes.

Various investing firms are now funding the AR VR software provides in recent years. In April 2024, for instance, Basemark, a company specializing in automotive augmented reality (AR) software announced that it had successfully secured Euro 22 million (USD 23.1 million) in Series B funding, bringing its total funding to Euro 34 million (USD 35.8). The funding round, which included a mix of equity, grants, and loans, was led by ETF Partners, with additional contributions from Finnish Industry Investment (Tesi), Constructor Capital, Business Finland, the European Innovation Council, and private investors.

Technology Segment Insights and Analysis:

Based on technology, the AR & VR in manufacturing market is segmented into Augmented Reality (AR) and Virtual Reality (VR).

Augmented Reality (AR) segment contributed largest share in 2023 due to the high demand for AR in manufacturing sector owing to its ability to enhance operational efficiency, improve training processes, and optimize production workflows. Augmented reality saves time on extensive manual processes by providing critical data at the fingertips of workers as they view assembly instructions, preventive maintenance procedures, and design specifications. AR technology also enables hands-free, real-time access to critical information while reducing manual time spent on many complex manufacturing processes. In addition, AR applications in remote collaboration allow experts to assist on-site workers from anywhere in the world. It improves problem-solving capabilities and reduces downtime.

For example, Lockheed Martin has incorporated digital manuals and standard operating procedures (SOPs) into the assembly of F-35 fighter jets, achieving a 30% boost in speed and an impressive 96% improvement in accuracy. By utilizing augmented reality, Lockheed Martin has optimized its assembly processes, driving substantial improvements in both efficiency and precision in the production of F-35s. Technicians now have access to the latest instructions, offering step-by-step guidance for assembling the intricate components of the F-35 fighter jets.

Application Segment Insights and Analysis:

Based on the application, the AR & VR in manufacturing market is segmented into product design and development, maintenance and repair, quality control and inspection, training and simulation, logistics and supply chain management, assembly and production and others.

Product design and development segment contributed largest share in 2023 due to the high demand for AR and VR technologies in this application owing to their ability to significantly enhance the design process, reduce time-to-market, and improve product quality. AR and VR technologies enable manufacturers to visualize and interact with 3D models in a virtual environment. It allows designers and engineers to make real-time modifications and identify potential design flaws before physical prototypes are created. It also improves collaboration among teams, communication of design ideas, and ease in making decisions.

Training and simulation segment is expected to have the fastest CAGR throughout the forecasted period due to the rising adoption for AR and VR technologies for training and simulation purposes owing to their ability to provide immersive, hands-on learning experiences without the risks or costs associated with traditional training methods. AR and VR technologies allow workers to simulate real-world manufacturing tasks, such as equipment operation, assembly processes, and safety protocols, in a virtual environment. In September 2024, Varjo, a company specializing in industrial virtual and mixed reality (VR/MR) solutions, has recently unveiled a new secure manufacturing facility in the greater Helsinki area, Finland. The company explained that this expansion will help it address the growing demand for its high-resolution extended reality (XR) solutions, particularly in the field of defense training and simulation.

Geographical Outlook:

Market in North America accounted for largest revenue share in 2023 due to the robust technological advancements and high adoption rates of innovative solutions in this region especially in U.S. and Canada. North America is home to various manufacturing giants and tech-savvy organizations. These organizations are increasingly applying AR and VR technologies to increase productivity gains, operational efficiency, and process streamlining. AR and VR technologies are used for training, simulation, quality inspection, and product design, resulting in huge savings in time and expenditure.

In June 2024, the U.S.-based VR and AR technology developer DigiLens entered into a memorandum of understanding with federal contractor Consolidated Nuclear Security. The partnership aimed at the advancement of XR technologies, which comprise typically of VR, AR, and MR as well as waveguides and heads-up displays. DigiLens will work with the Oak Ridge Enhanced Technology and Training Center (ORETTC) to develop innovative solutions that support U.S. government missions.

Asia Pacific is expected to register a fast revenue growth rate during the forecast period due to rapid industrialization, technological advancements, and the increasing adoption of Industry 4.0 practices, especially in China, Japan, South Korea, and India. The rising investments in smart manufacturing initiatives by governments and private players have further boosted the adoption of these technologies. China has initiated smart manufacturing pilot projects. They are establishing 421 national-level demonstration factories and more than 10,000 provincial-level digital workshops and smart factories. This initiative is expected to increase the adoption of AR and VR technologies and boost revenue growth of the market in this country.  

The manufacturing sector of India is also experiencing a significant transformation through the adoption of Artificial Intelligence (AI) and Machine Learning (ML) solutions, ushering in the era of smart factories. By 2025, digital technologies are expected to comprise 40% of total manufacturing expenditure in India, a sharp rise from 20% in 2021. This transformative shift spans the entire scope of factory automation. It covers everything from raw material sourcing in the early manufacturing stages to the efficient dispatch of finished goods, with an increasing focus on integrating AR and VR technologies.

Market in Europe is expected to register a modest revenue growth rate during the forecast period due to the rising industry 4.0 initiatives and the widespread adoption of digital transformation strategies in the region, especially in U.K., Germany, France and Italy. European manufacturers are leveraging AR and VR technologies to increase productivity, improve precision, and reduce operational costs. Moreover, government support through grants and programs promoting technological advancements further boosts the adoption rates of AR and VR technologies in manufacturing sector. The key players in the region are also investing hugely in their research and development to make innovative AR and VR applications especially meant for manufacturing needs.

Competition Analysis:

The global AR & VR in Manufacturing market is characterized by a fragmented structure, with numerous players competing across various segments and regions. List of major players included in the AR & VR in Manufacturing market report are:

• Microsoft Corporation
• Google (Alphabet Inc)
• Apple
• Meta Platforms, Inc
• Magic Leap
• Samsung
• Vuzix Corporation
• SkillReal
• Siemens
• Varjo Technologies
• ESI Group
• Worldviz, Inc
• GridRaster Inc.

Strategic Developments in AR & VR in Manufacturing Market:

• On 08 August 2024, Jeh Aerospace, a U.S.-based company has joined forces with GridRaster to revolutionize aerospace manufacturing through the integration of Spatial AI, augmented reality (AR), and virtual reality (VR) technologies. This collaboration will introduce advanced extended reality (XR) capabilities to enhance training, inspection, and work-assistance applications within aerospace manufacturing. Jeh Aerospace offers a wide range of aerospace manufacturing solutions, focusing on the precision production of aerostructure and aero-engine components, tools, and assemblies for both commercial and defense aerospace sectors.
• On 07 March 2023, ZEISS has acquired full ownership of tooz technologies, a joint venture established in partnership with Deutsche Telekom in 2018. This strategic move reflects ZEISS’s commitment to tapping into the expanding market opportunities in augmented reality (AR) and virtual reality (VR) eyewear. As the AR/VR competence center for the ZEISS Group, tooz will now independently focus on advancing the development and integration of optics for augmented reality products.

Key Advantages for Stakeholders:

Navistrat Analytics’ industry report provides an in-depth quantitative analysis of various market segments, historical and current trends, market forecasts, and dynamics within the global market. The historical years covered in this report are 2021 to 2022, with 2023 serving as the base year for market size calculations. The forecast period extends from 2024 to 2031.

The report includes an executive summary and a comprehensive overview of market drivers, restraints, opportunities, and challenges (DROC), along with insights into regulatory standards. It features detailed analyses such as PORTER’s Five Forces, SWOT, and PESTLE, as well as assessments of technological trends and the competitive landscape.

PORTER’s Five Forces analysis helps stakeholders evaluate the impact of new entrants, competitive rivalry, supplier power, buyer power, and substitution threats, enabling them to assess the level of competition and the attractiveness of the global market. The competitive landscape provides stakeholders with a clear understanding of the current market positions of key players, offering valuable insights into their competitive environment.

Scope And Key Highlights of The AR & VR in Manufacturing Market Report:

The AR & VR in manufacturing market report offers a detailed analysis of market size, including historical revenue (in USD Billion) data for 2021-2022 and revenue forecasts for 2024-2031 across the following segments:

• Component Outlook (Revenue, USD Billion; 2021-2031)
  • Hardware
    • Head-Mounted Display
    • Head-Up Display
    • Handheld Devices
    • Smart Glasses
    • VR Gloves
    • Sensors
    • Others
  • Software
    • AR Software Development Kits (SDKs)
    • VR Content Management Software
    • Design and Simulation Tools
    • Others
  • Services
    • Consulting and Integration
    • Maintenance and Support

• • Technology Outlook (Revenue, USD Billion; 2021-2031)
    • Augmented Reality (AR)
    • Virtual Reality (VR)

• • Application (Revenue, USD Billion; 2021-2031)
    • Product Design and Development
    • Maintenance and Repair
    • Quality Control and Inspection
    • Training and Simulation
    • Logistics and Supply Chain Management
    • Assembly and Production
    • Others

• • End-Use Outlook (Revenue, USD Billion; 2021-2031)
    • Automotive
    • Aerospace and Defense
    • Consumer Electronics
    • Industrial Machinery
    • Others

• • Regional Outlook (Revenue, USD Billion; 2021-2031)
    • North America
      • U.S.
      • Canada
      • Mexico
    • Europe
      • Germany
      • France
      • U.K.
      • Italy
      • Spain
      • Benelux
      • Nordic Countries
      • Rest of Europe
    • Asia Pacific
      • China
      • India
      • Japan
      • South Korea
      • Oceania
      • ASEAN Countries
      • Rest of APAC
    • Latin America
      • Brazil
      • Rest of LATAM
    • Middle East & Africa
      • GCC Countries
      • South Africa
      • Israel
      • Turkey
      • Rest of MEA

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