Oppo to Shut Down Chip Design Unit As Smartphone Sales Slump

Chinese smartphone maker Oppo said it would shut down its chip design unit, citing uncertainties in the global economy and the smartphone industry. The company, one of China’s best-selling domestic smartphone brands, said it would cease operations of its Zeku unit, which it set up in 2019. Zekus products include the MariSilicon X chip, a neural processing unit (NPU) that improves video and smartphone photography images. The NPU is designed to process data more quickly and efficiently than traditional image signal processors or ISPs. “Due to the uncertainty in the smartphone industry and the global economy, we have to make difficult adjustments for long-term development,” a company representative said.

The announcement comes as a growing number of Chinese electronics companies have pulled out of the chip business, a move that is also being made by many of the country’s smaller contract manufacturers. The industry has suffered from weak demand and a lingering slump from last year that started with the coronavirus pandemic. Its also been hampered by rising trade tensions between the U.S. and China, which has added to the cost of US-made chips and made it more difficult for fabless chip designers to sell their products overseas.

Despite the challenges, major smartphone makers have continued investing in product development and marketing, trying to create unique devices to draw in consumers. Some, like Vivo, have even expanded into other consumer electronic categories, such as fitness trackers and home appliances.

But the smartphone market has been slow to recover from its trough since late 2018, and it’s now expected to fall for a third straight quarter as the impact of the US-China trade war and weakening demand takes hold, according to IDC. In addition, China’s most prominent mobile phone vendors have reported a sharp decline in shipments for the quarter, and analysts say they will see lower revenues as well.

While smartphone sales have slumped, the industry remains competitive. As a result, many smaller companies have risen alongside the top players, such as Apple, Samsung, and Huawei, and have a chance to capture a large share of the global market. But they must keep up their innovation and find ways to differentiate their products from the competition.

Earlier this year, Oppo unveiled its first in-house chip for its flagship phones, the X3 Pro and X3 Mini. The custom chip, MariSilicon X, was designed by the company’s Imaging Director, Jun Luo, and manufactured at TSMC. Its primary function is to deliver high-quality images, and it promises 20x faster A.I. processing in 4K videos than its predecessor, the NPU inside the camera of the Find X series of smartphones. The closure of the Zeku division won’t impact phones and devices that already feature the chip, and Oppo will likely continue to rely on the built-in ISP in Qualcomm or MediaTek chips for its smartphones. However, the end of Zeku could be a setback for Oppos and China’s broader aspirations of semiconductor self-reliance.

Violet Martinez

Violet Martinez is a marketing professional and freelance writer based in London. She has a Bachelor's degree in Marketing from the University of Westminster and has worked in the marketing industry for over seven years. Violet Martinez's writing has been published in various online publications, covering topics such as social media marketing, content marketing, and digital advertising. In her free time, Violet enjoys traveling, cooking, and practicing photography.

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