The Oculus Rift virtual reality (VR) headset sports a complex mechanical design with semiconductor content supplied by a wide array of manufacturers, and the headset accounts for the single biggest part of its overall manufacturing cost. The Rift is intended for use with game consoles—distinct from a friendly product also made by Oculus in partnership with Samsung called Gear, which plugs into a smartphone, is more portable than the Rift, but also delivers less compelling VR on the whole.
According to analysis performed by the Teardowns & Cost Benchmarking team of IHS Markit Technology, the most expensive component of the Rift is its headset, comprising elements such as the display panel, processor integrated circuits (IC), memory, user interface ICs, power management ICs, sensors, and miscellaneous electronics. At an estimated cost of nearly $140, the headset represents close to 70% of the Rift’s direct materials or components cost of approximately $200.
The headset’s biggest cost element is the active-matrix organic light-emitting diode (AMOLED) screen from Samsung Display, measuring 3.51 inches in size and featuring 1200 x 1080 resolution. AMOLED is regarded in the virtual reality industry as the panel technology of choice because of its low persistence, or the minimizing of noticeable blur in motion when VR participants move their heads quickly during VR play.
Also taking up a significant portion of the Rift’s headset cost are its electromechanical components, which include printed circuit boards, connectors, and loudspeakers. Because of the Rift’s complex design requirements, many individual printed circuit boards and interconnects are used—in contrast to, say, a mobile handset, which often makes use of just a single board.
A second big component of the Rift’s total materials cost is the sensor. Here the most expensive element is the optical sensor camera, which can detect the headset’s position in space. This means that when users lean their upper body forward in the real world, they lean in the virtual world as well.
While products often have a dominant semiconductor supplier, this is not the case with the Rift. For the headset, the many component suppliers aside from Samsung Display include Dallas-based Texas Instruments, French-Italian giant STMicroelectronics, Norwegian maker Nordic Semiconductor, and Japan’s Toshiba Semiconductor. For the Rift’s sensor component, Ricoh from Japan and Taiwan’s Etron Technology are among the chip suppliers involved.
The Rift’s total bill-of-materials (BOM) cost comes to a little over $206, or about 35% of the Rift’s suggested retail selling price of $599.
Oculus, founded in 2012 in Irvine, Calif., was acquired by Facebook in 2014 for $2 billion. Oculus is among just a handful of VR headset makers today - a slim field that includes HTC, Valve, Samsung, Sony, and Google - all vying for a space expected to be heavily monetized in the future.