The parent company of Facebook and augmented-reality start-up Magic Leap are in talks for a multiyear agreement, as the ambition for an avatar-filled online world continues.

Meta is reportedly currently exploring ways Magic Leap can provide intellectual property licensing and contract manufacturing to help build mainstream AR (augmented reality) products.

Magic Leap are known for creating custom components key to building a metaverse.

Former employees said Magic Leap’s “biggest asset” is the sophistication of its “waveguides.” This is technology allowing thin glass in front of users’ eyes to showcase realistic images at different depths.

Neither Meta or Magic Leap have confirmed the talks, but agreed partnerships were becoming a “significant line of business and growing opportunity for Magic Leap”.

Facebook parent company’s interest in AR comes as Apple is preparing the unveil of its “mixed reality” device next month.

Meta has a market capitalisation of $612bn, and has faced rising investor frustration due to Mark Zuckerberg’s $10bn a year investment.

Magic Leap is among the top-funded AR start-ups.

Chief executive Peggy Johnson, who oversaw the release of Magic Leap 2 last September, said recently that the company “received an incredible amount of interest from across the industry to license our IP and utilise our patented manufacturing process to produce optics for others seeking to launch their own mixed-reality technology”.

Magic Leap are able to assemble tens of thousands of headset a year, while working with contract manufacturer Jabil.

“Given the complexities of developing true augmented reality technologies and the intricacies involved with manufacturing these optics, as well as the issues many companies experience with overseas supply chain dependencies, we have entered into several non-exclusive IP licensing and manufacturing partnerships with companies looking to enter the AR market or expand their current position.”

Meta sells almost 80 per cent of all VR/AR headsets, however, the market itself is small, fewer than 9mn units sold last year.