ByteDance, the TikTok owner, is set to desert its VR division, Pico, a source close to the matter told Chinese investment research provider EqualOcean (in Chinese) on Friday.

The source detailed that Zhang Yiming, the firm’s CEO, told the head of Pico they would gradually phase out the VR business due to its lackluster performance and the firm’s short ability in hardware development.

A representative of ByteDance told PingWest on Monday that “The report that we are shutting down PICO is not true. PICO is under normal operation and the company will continue to invest in the XR business long term.”

Worldwide augmented reality (AR) and virtual reality (VR) headset shipments declined for the fourth quarter as volumes fell 44.6% year over year during the second quarter of 2023. ByteDance took 9.6% of the global AR and VR market, the third largest vendor after Meta and Sony, while the figure was 6.1% in the first quarter by shipments, according to IDC.

Note: The article has been updated with ByteDance's statement.