In response to weak global demand and the need to cut costs, Oppo, the Chinese smartphone giant, has disbanded its chip design unit Zeku. This comes as a surprise to many who believed the company was bolstering its in-house chip development as rising geopolitical tensions threatened to cut Chinese firms off from key suppliers. However, Oppo’s recent shipment figures show a decline of 8%, and the global smartphone market shrank by 13% in Q1 2023, according to market research firm Canalys, leading the company to make difficult adjustments for long-term development.
Oppo’s decision to cut its chip team has led to uncertainty surrounding the fate of over 2,000 employees at Zeku, many of whom were recently hired. Oppo has not disclosed the whereabouts of the team, stating only that “the company will properly arrange related matters and continue to deliver great products and service to users worldwide.”
Zeku had set up a research base in Palo Alto and had revealed its first self-developed chipset, MariSilicon X, in December 2021. However, Oppo’s retreat from chips suggests a struggle among Chinese phone companies to strengthen their control over the semiconductor supply chain, with Huawei having lost access to advanced chips from the U.S. due to Trump-era sanctions. Huawei’s attempt to design its own high-end chips through HiSilicon also floundered after the U.S. cut it off from major foundries, leading the company to spin out its budget handset brand Honor as a way to circumvent the sanctions.
In a statement explaining the decision to disband Zeku, Oppo cited “uncertainties in the global economy and the smartphone industry.” While Oppo was able to finish Q1 2023 as the world’s fourth-largest smartphone vendor, the declining shipments have forced the company to rely on third-party chip partners once again.
