After a $20 million funding round fell through, augmented reality headset maker Meta Company has been forced to furlough (or place on temporary leave of absence) approximately 65% of its workforce for 30 days.
On Monday, Meta CEO Meron Gribetz told Bloomberg that the funding round has been put on hold by lead investors from China, which placed remaining committed funding from other investors at risk as well.
"The Chinese government sent an official request to our lead investor to re-evaluate the deal based on the recent actions from the Trump administration," Gribetz told Bloomberg. "This was a big shock to us."
A company spokesperson confirmed that the furloughs began on Sept. 3. Impacted employees will be fully on leave for 30 days.
With previous funding from the likes of Tencent Holdings Ltd. and Lenovo Group Ltd., China is critical to Meta's operations. As a result, Meta plans to establish a China-based subsidiary to facilitate Chinese investment and sidestep tariffs, as many of Meta's suppliers are also based in China.
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"The Chinese government understands that augmented reality and virtual reality are the future of computing," Gribetz said. "Any company that needs to raise significant amounts of capital and manufacture goods in a cost-effective way and conquer markets hungry for early adoption must have a presence in China."
While attributing Meta's troubles to the trade war between the US and China, the timing of the news of furloughs falls curiously close to the long-awaited release of the Magic Leap One about a month ago. Next Reality asked Meta exactly when the furloughs began but, as of this writing, we have yet to receive a response.
The news also follows promotional offers sent to select subscribers of email communications in July, which temporarily cut the price of the Meta 2 headset to $949 for US and Canada customers and $1,100 for Europe with a promo code for a limited time (the normal price is $1,495).
It's not good news for Meta or for the augmented reality headset industry as a whole, but it's not a damning development. After layoffs and executive turnover earlier this year, AR display maker Avegant dug out of its own financial hole with a new round of funding and a pivot to a focus on next-generation consumer products.