Oppo closes chip design division

Oppo, one of China's best-selling smartphone makers, said it will shut down Zeku, a chip design division it founded in 2019. Zeku's products include MariSilicon X, a neural processing unit (NPU) that improves the quality of photos and videos taken on smartphones.

“Due to the uncertainties of the global economy and the smartphone industry, we have to make difficult adjustments for the purpose of long-term development,” an Oppo representative shared.

Oppo suddenly closed its Zeku chip design department, surprising employees. (Photo: Reuters)

China – the world’s largest smartphone market – is struggling to recover from the worst shock after consumers continued to forgo big-ticket purchases, even as the country eased Covid-19 restrictions.

Smartphone sales are expected to fall 14% in 2022, with total shipments falling below 300 million units for the first time in a decade. In the first quarter, smartphone shipments fell 11% from a year earlier to 67.2 million units, the lowest level since 2013, according to research firm Canalys .

Oppo and Xiaomi set up chip design divisions to pursue self-sufficiency, to avoid the fate of Huawei when it was hit by US sanctions. From a direct rival of Apple and Samsung, Huawei's smartphone division almost collapsed because it could not buy important components and access the Android operating system.

Oppo is owned by BBK Electronics, which also owns Vivo. Zeku’s demise came as a surprise to employees. Last month, the division was still recruiting for more than 100 positions, according to LinkedIn profiles. It’s unclear what will happen to the more than 2,000 Zeku employees. Oppo has been tight-lipped about the matter, only saying it will be reorganised.

A Zeku employee told SCMP that they were given less than a day’s notice that the department would be shut down. On May 11, they were told not to come to the office the next day. The employee was not even allowed to return to the office to retrieve his laptop.

Oppo’s move comes as Chinese chip designers are facing challenges. Chip purchases have been hit by escalating US export controls on advanced semiconductors. Of the 3,243 chip companies last year, only 566 had revenues exceeding 100 million yuan, according to Wei Shaojun, chairman of the China Semiconductor Industry Association (CSIA).

Amid the wave of sanctions, chip design companies are finding it increasingly difficult to find manufacturing partners. TSMC – the world’s largest chip contractor – stopped accepting orders for HiSilicon chips after the US sanctioned Huawei. Although Washington has not targeted Oppo, it has banned the export of chips and advanced chip manufacturing equipment to China without a license since October 2022.

In December 2021, Oppo introduced its first self-developed imaging chip, MariSilicon X, which debuted in the Find X series. TSMC is the chip manufacturer using 6nm technology. 6nm technology is now under the US embargo.

Oppo introduced a second chip in late 2022 that improved Bluetooth audio. The company never disclosed how much it invested in Zeku before shutting it down.

(According to Reuters, SCMP)

South Korean memory chip giant reports record loss South Korean memory chip giant SK Hynix has just announced its latest quarterly business results of a loss of 3.4 trillion won (equivalent to 2.54 billion USD).

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