Chinese smartphone manufacturer Oppo has decided to shut down its chip design business, Zeku, according to a Bloomberg report. The company founded Zeku in 2019 to design various smartphone components, such as the MariSilicon X image processing chip found in its flagship phones. However, declining demand for smartphones has forced Oppo to rely on more commodity hardware going forward.
The shutdown of Zeku will lead to downsizing at Oppo and affect employees who have worked in locations as diverse as Shanghai, Xi’ an Beijing and Chengdu. The exact number of job cuts has not been disclosed.
Oppo’s decision to close Zeku comes amid a challenging period for the global economy and the mobile industry. According to IDC data, Oppo appears to be struggling year-over-year in smartphone shipments. In the first quarter, only 27.4 million units were shipped, compared to 29.3 million units in the same period last year. Smartphone inventories are piling up as people refrain from spending extravagantly to cover rising mortgages, rent, and food costs.
Oppo’s intention with Zeku was to design its own hardware to separate its smartphones from the competition. However, with the current market scenario, the company must rely on more common components to manufacture its devices. This move could significantly impact the company’s future product strategy.
The shutdown of Zeku highlights the challenges that even established companies such as Oppo are facing in a volatile market. The ongoing pandemic has hit the mobile industry hard, and the demand for high-end smartphones has slowed down. Companies such as Oppo are facing rising borrowing costs and must closely monitor their expenses.
While the company’s downsizing is unfortunate for its employees, it is a necessary step for Oppo to stay competitive and adapt to the changing market conditions.