Oppo is closing its chip design business, Zeku, according to a Bloomberg report. The decision was taken by the Chinese company due to a weakening global economy and mobile industry. Oppo only created Zeku in 2019 and intended that it would design various phone components such as the MariSilicon X image-processing chip that’s included in its flagships.
With Zeku, Oppo wanted to design its own hardware to separate its phones from the competition. With Zeku’s closure, Oppo will now have to rely on more generic hardware. Its closure will affect employees who worked in various locations including Shanghai, Xi’an, Beijing, and Chengdu but it’s not clear how many exactly.
According to IDC data, Oppo has been struggling year-over-year in terms of phone shipments. In the first quarter, it managed to ship 27.4 million devices compared to 29.3 million for the same period the year before. Smartphone inventories are piling up because people are cutting back on luxury spending (if you can still call a smartphone that) to focus on covering higher mortgage costs, rents, and food bills.
Similar to the wave of layoffs we’ve seen at various tech companies, the closure of Zeku will allow Oppo to lean up its operations. Cheap credit in recent years has seen businesses spend frivolously, now they need to be more careful with the higher borrowing costs.