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 the 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 to serve the purpose of long-term development,” an Oppo representative shared.

Oppo suddenly closed its Zeku chip design division, 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 have set up chip design divisions to pursue self-sufficiency, in order to avoid the fate of Huawei when it was hit by US sanctions. From a direct competitor 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. The division had posted more than 100 job openings last month, 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, saying only that it will be reorganizing.

A Zeku employee told SCMP that they were given less than a day’s notice that the department would be closed. 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 the US’s escalation of export controls on advanced semiconductors. Of the 3,243 chip companies last year, only 566 had revenue exceeding 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 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 chipmaking 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 to improve Bluetooth audio in late 2022. The company never disclosed how much it invested in Zeku before it shut 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 with a loss of 3.4 trillion won (equivalent to 2.54 billion USD).

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