China’s Oppo to shut down chip design unit as smartphone sales slump

SHANGHAI (Reuters) – Chinese smartphone maker Oppo said it will 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 will cease operations of its Zeku unit, which it set up in 2019. Its products include the MariSilicon X chip, which is a neural processing unit (NPU) that improves images for video and photography taken on smartphones.

“Due to the uncertainties in the global economy and the smartphone industry, we have to make difficult adjustments for long-term development,” a company representative said.

China’s smartphone market, the world’s biggest, is struggling to recover from one of its worst ever slumps as cost-conscious consumers continue to shy away from big-ticket purchases even after the country’s lifting of zero-COVID curbs.

In 2022, smartphone shipments fell 14%, and total unit shipments fell below 300 million for the first time in a decade. In the first quarter, total smartphone shipments dropped 11% year-on-year to 67.2 million units, the lowest quarterly total since 2013, research firm Canalys said last month.

Oppo and its Chinese rivals such as Xiaomi (OTC:) set up in-house chip design units in pursuit of self-reliance after the U.S. crippled Huawei Technologies’ smartphone division with sanctions that prevented it from sourcing key components.

Oppo is owned by BBK Electronics, which also owns Vivo, another top-selling Chinese smartphone brand.