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Chinese Smartphone Maker Closes Chip Design Business, Affecting 3,000 Employees

A OPPO logo is displayed at the MWC (Mobile World Congress) in Barcelona on March 2, 2022. (Photo by Josep Lago/AFP via Getty Images)

OPPO, a major Chinese smartphone maker, announced the closure of its chip design company ZEKU Technology (ZEKU).

ZEKU’s 3,000-plus employees were caught by surprise.

An employee revealed that the company issued a notice after work, announcing a day off for the next day due to a major system upgrade, but a mandatory monthly online meeting. That’s when the announcement was made, reported Chinese media.

ZEKU, established in 2019 with the mission to develop self-reliant chips, is a 100 percent wholly owned chip design subsidiary of OPPO.

Headquartered in Shanghai, ZEKU developed branches in Chengdu, Xi’an, as well as the United States and Japan.

Market Uncertainties

In February 2020, OPPO announced a three-year investment of 50 billion yuan ($7.19 billion) in its R&D, including chip design and production.

In December 2021, OPPO unveiled MariSilicon X product, ZEKU’s first self-designed imaging neural processing unit built on 6-nm process technology; in December 2022, OPPO introduced MariSilicon Y, also ZEKU’s first-ever custom Bluetooth audio system-on-chip.

ZEKU’s productivity didn’t seem to stop it from disbanding. Chinese media reported that it was due to rising uncertainties in the global economy and the smartphone market, said the company.

In a report by IDC (International Data Corporation), China’s mobile phone sales endured a record fall in 2022 when the country’s economy was hit severely by the extreme lockdown measures. The total number of devices shipped was 286 million, down from 329 million in 2022, a 13 percent drop to their lowest level in a decade, according to Reuters.

On May 11, China’s largest chip manufacturer SMIC (Semiconductor Manufacturing International Corporation) revealed its 2023 Q1 operating income of 10.209 billion yuan ($1.47 billion), a year-on-year decrease of 13.9 percent; net profit attributable to the parent company was 1.591 billion yuan ($230 million), a year-on-year decrease of 44 percent.

Epoch Times Photo An employee makes chips at a factory of Jiejie Semiconductor Company in Nantong, in eastern China’s Jiangsu Province on March 17, 2021. (STR/AFP via Getty Images)Chinese Chip Industry Fell Short

China engaged in self-reliant chip R&D with a national plan in 2014, with an initial fund of 130 billion yuan ($18.64 billion).

Public records showed at least 45,300 Chinese companies dedicated to chip production or design as of July 20, 2020, when several high-profile semiconductor projects were either halted or officially terminated.

The state media also reported a loss of hundreds of billions of yuan in state funds due to the failure of chip-related startups.

Consequently, the Chinese chip national plan won itself a new name, the Great Leap Forward chip development. Chinese officials once criticized the chip mania, suffering from a lack of technique, talent, and experience when six major semiconductor projects at the scale of tens of billions of yuan were halted one after another.

Chinese official data showed that between January and October 2020 alone, there were 58,000 new semiconductor companies in China, with an average daily growth rate of 200. However, most semiconductor companies have no relevant experience or technology.

With ZEKU’s 3,000 employees released to the current sluggish market, a Chinese headhunter doubted that they’ll be able to find a position up to their qualification, reported Chinese media.

Li Jing contributed to this report.