Beijing: Smartphone maker OPPO has shut down its chip design subsidiary called Zeku, as the semiconductor market goes through a heavy slump, the media reported on Friday.
According to the South China Morning Post, OPPO announced the move in a brief statement, calling it a “difficult decision” and blaming “uncertainties in the global economy and smartphone market”.
Zeku employees received less than a day’s notice about the unit being shut down, the report claimed.
The global technology brand set up Zeku in 2019 to design chips that could be used in its devices.
Other smartphone makers, including Xiaomi, have also set up their own chip-design verticals.
The move came as chip manufacturing has been severely affected in China by escalating US export restrictions targeting advanced semiconductors.
“Out of 3,243 fabless chip firms in China last year, only 566 had sales above 100 million yuan ($14.4 million), according to Wei Shaojun, president of integrated circuit design at the China Semiconductor Industry Association (CSIA),” the report mentioned.
Global semiconductor revenue is projected to decline 11.2 per cent to reach $532 billion in 2023, and the short-term outlook for the semiconductor market has deteriorated further.
In 2022, the market totalled $599.6 billion, which was marginal growth of 0.2 per cent from 2021, according to the latest forecast from Gartner.
The PC, tablet and smartphone semiconductor markets are stagnating. The combined markets will represent 31 per cent of semiconductor revenue in 2023 and total $167.6 billion.