Chinas Phone Giant Oppo Disbands Chip Design Unit As Shipments Slump

Chinas Phone Giant Oppo Disbands Chip Design Unit As Shipments Slump

Chinese smartphone giant Oppo is winding down its new chip design arm Zeku as weak global demand forces the major smartphone maker to cut costs and restructure.

The decision came as a surprise to those who believe the phone maker is ramping up its chip development as rising geopolitical tensions with the US threaten to cut off major suppliers from Chinese firms. Oppo will have to turn to third-party chipset partners in the near future.

While Oppo managed to finish the first quarter of 2023 as the world's fourth-largest smartphone seller, its shipments fell 8%, according to research firm Canalys. With the exception of Apple, all of the five largest smartphone makers have seen shipments decline. Overall, the global smartphone market shrank by 13% during the quarter.

Oppo explained its decision to cut its own chipset in a statement today: “Due to the uncertainty of the global economy and the smartphone industry, we have to make difficult adjustments for long-term development. Therefore, the company has decided to discontinue the Zico operation.”

In December 2021, Zeku released its first in-house developed chipset, MariSilicon X, a neural processor designed to improve photo and video performance through machine learning, continuing Apple's in-house chip development. Zeku has also set up a research base in Palo Alto.

According to his LinkedIn page, Zeku abruptly closed a month ago when Zeku was still working over 100 jobs.

It's unclear how the move will affect Zeku's more than 2,000 employees, who are paid competitively to recruit talent from other major chip companies. Oppo has remained silent about the group's stance for now, saying that "the company will handle relevant issues appropriately and continue to provide excellent products and services to users around the world."

The abandonment of Oppo chips marks another battle for Chinese phone companies to tighten control of the semiconductor supply chain. Huawei has lost access to the latest US chips due to Trump-era sanctions, and its attempt to develop high-performance chips with HiSilicon failed after cutting base factories in the US. The company has moved to push its Honor brand of budget phones, seen as a way to avoid penalties that have hurt Huawei's consumer business.

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