Chinese smartphone manufacturer, OPPO, has shut down its chip design subsidiary called Zeku, citing the ongoing slump in the semiconductor market as the reason behind the difficult decision. The closure of Zeku was announced in a brief statement, with employees reportedly given less than a day’s notice about the unit’s shutdown.
Zeku was established in 2019 to design chips for use in OPPO’s devices. Other smartphone makers, such as Xiaomi, have also set up their own chip design verticals. However, escalating US export restrictions targeting advanced semiconductors have impacted chip manufacturing in China.
The decline in global semiconductor revenue predicted
According to the South China Morning Post, out of 3,243 fabless chip firms in China last year, only 566 had sales above 100 million yuan ($14.4 million), says Wei Shaojun, President of Integrated Circuit Design at the China Semiconductor Industry Association (CSIA).
The global semiconductor market is expected to decline 11.2% to reach $532 billion in 2023, according to reports. Moreover, the short-term outlook for the semiconductor market has deteriorated further. The combined PC, tablet, and smartphone semiconductor markets are stagnating, representing 31% of semiconductor revenue in 2023 and totaling $167.6 billion.
Uncertainties in the global economy and smartphone market
OPPO’s decision to close Zeku comes as the market for semiconductors has been severely affected in China. The report by the South China Morning Post notes that OPPO’s announcement cited uncertainties in the global economy and smartphone market as reasons behind the decision.
This closure indicates the extent of the impact that the current semiconductor market slump has on the Chinese smartphone industry and raises questions about the future of the smartphone industry.
Impact on the semiconductor industry
As semiconductor revenue declines, there will be impacts on the industry as a whole. The stagnation in the combined PC, tablet, and smartphone semiconductor markets highlights the challenges that the industry is currently facing. While major players like Intel and TSMC are working to increase chip production, the shortage is still expected to continue for a while. The move by OPPO highlights the challenges that smaller players are currently facing.
