Oppo disbands chip design unit as shipments drop

As weak global demand forces major handset manufacturers to cut costs and restructure, Oppo is disbanding its young chip design unit Zeku.

The decision surprises those who believe the phone maker is bolstering its in-house chip development as rising geopolitical tensions with the U.S. threaten to cut Chinese firms off key suppliers. Oppo will likely return to third-party chip partners.

According to Canalys, Oppo finished Q1 2023 as the fourth-largest smartphone vendor, but its shipment dropped 8%. All five top phone makers except Apple saw shipments drop. Global smartphone sales fell 13% in the quarter.

Today, Oppo explained its decision to cut its promising chip team: “Due to the uncertainties in the global economy and the smartphone industry, we have to make difficult adjustments for long-term development. Thus, the company has discontinued Zeku.”

Zeku introduced MariSilicon X, a neural processing unit that uses machine learning to improve photo and video performance, in December 2021. Zeku established a Palo Alto research base.

According to its LinkedIn page, Zeku was hiring over 100 positions a month before its abrupt end.

Zeku’s over 2,000 employees are uncertain how the move will affect them. “The company will properly arrange related matters and continue to deliver great products and service to users worldwide,” Oppo says of the team’s location.

Oppo’s withdrawal from chips indicates another Chinese phone company effort to control the semiconductor supply chain. After Trump-era sanctions cut Huawei off from major foundries, its HiSilicon chip design failed. Huawei spun out its budget handset brand Honor to avoid sanctions that have crippled its consumer business.