It seems like everyone relies on artificial intelligence these days – whether it’s for work projects or deciding what to make for dinner. But future AI models will only be as good as the real-world data they’re trained on, and much of that data will come from new hardware. This is where the United States truly leads today: spatial computing, extended reality (XR) hardware, and on-device AI. These devices won’t just gather data; they will actively shape how AI will interact with the physical world.
In this moment to tech acceleration and convergence, the seamless connection between XR and AI is crucial. In that connection, data is gathered by XR devices and spatial computers to train smarter, context-aware AI. As Marc Benioff aptly put it, “AI’s true gold isn’t in the UI or model—they’re both commodities. What breathes life into AI is the data and metadata that describes the data to the model—just like oxygen for us.” If the U.S. doesn’t prioritize XR and spatial computing innovation, we risk losing our ability to define the development of the digital world and expansion of AI into the physical world.
This moment in AI, with breakthroughs like DeepSeek, a new Chinese large language model (LLM) app, and other new AI architectures shows how important it is for the U.S. to lead in this space. DeepSeek’s capabilities showcase the immense potential of LLMs. However, it is the high-quality, real-world data from XR systems and spatial devices that will fuel the development of new AI architectures and applications in robotics, spatial intelligence, physical AI and beyond. Meta’s chief AI scientist, Yann LeCun recently predicted in Davos that within five years, we will likely see entirely new AI architectures.
Open-source and closed-source software have repeatedly evolved together, bringing immense benefits to both sides. The competition between these approaches fosters innovation, discovery, and collaboration. Beyond operational efficiencies, AI has the potential to unlock unprecedented avenues for discovery and innovation. The wealth of advancements and breakthroughs in AI and AI-powered discovery could transform industries, creating vast opportunities for economic growth. These possibilities highlight the critical importance of U.S. leadership in both XR and AI as the foundation for such future advancements.
AI that understands physical places and things depends on the right data. Fei-Fei Li, often called the “Godmother of AI,” has been instrumental in advancing the intersection of AI and spatial intelligence. Her work on large world models and the development of AI systems capable of understanding complex physical environments lays the groundwork for the future of physical AI. These advancements, powered by data from XR and spatial systems, will enable AI to navigate, interpret, and interact with the physical world more effectively. This vision aligns perfectly with the potential of spatial computing to create AI that can analyze and participate in our lived environments.
The United States has led the way in XR hardware since its earliest conceptions. The “Grandfather of VR,” Tom Furness; Jaron Lanier, who coined the term “virtual reality”; and the “Godmother of VR,” Nonny de la Peña, are all American. We don’t just design XR experiences; we build the technology. Ivan Sutherland invented the first functioning VR headset in 1968 named, the Sword of Damocles. Google released Google Glass in 2012. Facebook acquired Oculus in 2014. Magic Leap launched its first device in 2018, Apple released the Apple Vision Pro in 2024, and Meta announced its Orion AR Holographic prototype just last September. Additionally, hundreds of U.S.-based startups advance spatial and XR technologies.
Spatial computing and XR are American-born. We are the current leaders in this part of emerging tech; no one comes close. However, as Elizabeth Hyman, CEO of the XR Association wrote in Morning Consult, “Absent R&D investment as part of a coordinated national strategy on advanced technologies, we risk jeopardizing American leadership in XR and creating a pathway for other nations who do not share our values to control its future.” While Congress has pushed funding for R&D in artificial intelligence, quantum computing, and robotics, XR is conspicuously missing from the list. Yet, XR is essential for continued innovation leadership. AI advancements are increasingly intertwined with XR’s ability to gather high-fidelity, contextual data about the real world. Technologies like 5G, AI, and the Internet of Things converge through spatial and XR interfaces to become our new gateway to the world. This technological transformation isn’t just for tech enthusiasts. The numbers support the need for XR leadership.
The XR market is expected to reach $96.32 billion by 2029. In 2020, demand for XR talent surged by 1,400 percent. Facebook, Apple, Google, Microsoft, Snap and Amazon collectively have over 4,000 jobs with “XR” in the title. According to a 2024 report, the industry employs over 1.3 million workers.
Global players like Taiwan’s HTC VIVE, which recently sold a part of its company to Google, Finland’s Varjo, headquartered in DC, and others contribute to the global XR ecosystem, which creates healthy competition and collaboration. Over 2,000 XR-related patents have been registered in the United States since 2020. The innovation happening in the U.S., combined with global contributions, is shaping a robust future for XR and AI.
The United States must recognize that maintaining leadership in XR and spatial devices and technology is essential to preserving a competitive edge in AI development. There has been some progress. The Leadership in Immersive Technology Act of 2024 was introduced to “establish the Immersive Technology Advisory Panel to promote the use of immersive technology in the United States and for other purposes.” Similarly, the XRA Association introduced the Immersive Technology for the American Workforce Act (H.R.3211) to “establish a grant program for community colleges and technical centers to develop workforce education and training programs using XR.” Organizations like the World Bank already use XR for policy assessment and evaluating social outcomes, illustrating the potential for broader adoption.
The United States can and must continue to lead the way in spatial computing and XR technologies. These tools are not just interfaces or virtual experiences. They’re the bedrock for training AI that interacts seamlessly with our physical and digital worlds. XR hardware will likely have an even bigger impact on how society interacts with the physical world than AI alone. The Internet and mobile phones transformed our engagement with information. Spatial computing and XR will redefine how we engage with the physical world, how we engage with each other, as well as human-computer interaction. It will expand computing into the physical world via AI.
For example, OpenXR is one possible path towards this goal. OpenXR is a protocol, that led by the U.S. would be the standard for XR devices, regardless of where the hardware is manufactured. Let’s ensure the United States remains at the forefront of this exciting new chapter in technological evolution.
While the conversation right now is centered around DeepSeek and its impact on US technology stocks, one cannot forget that the race to replace the mobile phone is afoot. Just like the iPhone was viewed as a catalyst for innovation that changed the world, new hardware could be as impactful on the world economy and business as a whole as the creation of mobile devices and the software to power the mobile web has been. This new era could spur a new economic boom and create the pathway toward new AI models, AI architectures and physical AI. Large Language Models will evolve and Large Action Models, Large Vision Models, and Large World Models will mature in the years to come.
It’s time for the US government to prioritize this innately American technology to stay competitive in the next frontier – a fundamentally spatial, immersive, 3D and AI-driven era rooted in American innovation in a highly complex geopolitical context. The US should collaborate with other world leaders in this new evolution of computing, data and hardware (AI glasses, XR devices, robotics, autonoumous vehicles, neural interface devices, holographic screens, wearables, and beyond). By leading with intention, we can shape the future of XR, AI, spatial computing and how these technologies influence daily life, industries, and global values. It’s time for the US to double down on American XR as we enter a new era of tech convergence and tech acceleration.
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