China's Oppo abruptly closes chip design division

Chinese phone maker Oppo announced the closure of its chip design division due to instability in the smartphone market and global economy.

Oppo's chip design division was established in 2019. However, recently, Oppo said it would discontinue Zeku, including MariSilicon X products, a neural processing unit (NPU) that improves the quality of photos and videos taken on smartphones. The reason given by China's best-selling phone company is due to the instability of the smartphone industry and the global economy.

Oppo của Trung Quốc đột ngột đóng cửa bộ phận thiết kế chip

Oppo's chip design division suddenly closed, leaving more than 2,000 Zeku employees without a place to go. Meanwhile, Oppo remained tight-lipped about the issue, only announcing that it would make reasonable arrangements.

Although China has eased Covid-19 restrictions, consumers are still reluctant to make big purchases. Therefore, the country's smartphone market is facing bad things and trying to recover.

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

The move to close Oppo’s chip design unit comes as chip purchases are hit by US export controls on advanced semiconductors. Of the 3,243 chip companies last year, only 566 had revenue of more than 100 million yuan, according to Wei Shaojun, chairman of the IC design arm of the China Semiconductor Industry Association (CSIA).

Amid the wave of sanctions, chip design companies are facing many difficulties when they cannot find manufacturing partners. Meanwhile, TSMC - the world's largest chip manufacturing contractor - has stopped accepting orders for HiSilicon chips after the US sanctioned Huawei. Since October 2022, Washington has banned the export of chips and advanced chip manufacturing equipment to China without a license.

Oppo followed up with a second chip to improve Bluetooth audio in late 2022. However, the company never disclosed how much it invested in Zeku before shutting it down.

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