Oppo, one of China's best-selling smartphone manufacturers, has announced it will cease operations of Zeku, its chip design division established 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 had to make difficult adjustments to serve our long-term development goals," an Oppo representative shared.
China – the world's largest smartphone market – is struggling to recover from the severe shock as consumers continue to forgo expensive purchases, even as the country has eased Covid-19 restrictions.
In 2022, smartphone sales declined 14%, with total shipments falling below 300 million units for the first time in a decade. In the first quarter, smartphone shipments decreased 11% year-on-year to 67.2 million units, the lowest level since 2013, according to research firm Canalys .
Oppo and Xiaomi established chip design divisions to pursue self-reliance, aiming to avoid the same fate as Huawei when it was hit by US sanctions. From being a direct competitor to Apple and Samsung, Huawei's smartphone division nearly collapsed due to its inability to procure crucial components and access the Android operating system.
Oppo is managed by BBK Electronics, the same group that owns Vivo. The termination of Zeku came as a surprise to its employees. Last month, the division was still posting over 100 job openings, according to its LinkedIn profile. It is unclear what will happen to the more than 2,000 Zeku employees. Oppo has been tight-lipped about the matter and has only announced that it will make necessary adjustments.
A Zeku employee told the SCMP that they received notification less than a day before the department closed. On May 11, they were told not to come to the office the following day. This employee was even unable to return to the office to retrieve their laptop.
Oppo's move comes as Chinese chip design firms face numerous challenges. Chip purchases have been affected by escalating US export controls targeting advanced semiconductors. Of the 3,243 chip companies last year, only 566 recorded revenues exceeding 100 million yuan, according to Wei Shaojun, chairman of the integrated circuit design division of the China Semiconductor Industry Association (CSIA).
Amidst the wave of sanctions, chip design companies are finding it increasingly difficult to find manufacturing partners. TSMC – the world's largest chip manufacturer – stopped accepting orders for HiSilicon chips after the US sanctioned Huawei. Although Washington hasn't targeted Oppo yet, since October 2022 it has banned the export of chips and advanced chip manufacturing equipment to China without a license.
In December 2021, Oppo introduced its first self-developed imaging chip, MariSilicon X, launched in the Find X series. TSMC manufactures chips using 6nm technology. 6nm technology is now subject to US sanctions.
In late 2022, Oppo unveiled its second chip to improve Bluetooth audio. The company never disclosed how much it invested in Zeku before its closure.
(According to Reuters, SCMP)
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