Chinas Oppo To Shut Down Chip Design Unit As Smartphone Sales Slump

Chinese smartphone giant Oppo has confirmed it will close its in-house chip design division, a high-profile retreat from chip ambitions that underscores mounting pressure from a prolonged slump in global and domestic smartphone demand and rising costs in semiconductor development. The move highlights key challenges facing major handset makers as the industry navigates slower sales, shifting competitive dynamics and strategic recalibrations. Reuters

The End of an In-House Chip Dream

Oppo said it will shut down Zeku, the chip design unit it launched in 2019 with the goal of building proprietary processors — including the high-performance MariSilicon X neural processing unit (NPU) used for advanced imaging tasks in mobile photography. The company cited “uncertainties in the global economy and the smartphone industry”as the driving force behind the decision. ReutersZeku’s closure marks a key shift in Oppo’s strategy. Despite ambitious plans to reduce reliance on third-party silicon suppliers and emulate rivals such as Apple and Samsung, Oppo’s chip division had struggled to achieve the scale and performance needed to justify continued investment. As a result, the company will now rely more heavily on external partners for key semiconductor components. The Verge

Slumping Smartphone Sales Put Pressure on Margins

Industry data show that smartphone shipments have been under pressure for several years, with global demand slowingand many consumers choosing to extend the life of existing devices. A recent report projects that smartphone shipments could decline further in 2026, impacted in part by rising chip costs and supply-chain constraints. Chinese brands, including Oppo, are among the most vulnerable, particularly in lower-margin entry and mid-range segments. Investing.com AustraliaIn China, a bellwether market for mobile devices, even leading brands have felt headwinds. Oppo’s mainland market share has been challenged by competitors like Huawei and Vivo, while Apple’s quarterly shipments in China dipped in certain periods amid broader market softness. PhoneArena

Strategic Calculus: Chips and Survival

Oppo’s retreat from in-house chip design is significant on several fronts. Chip development requires enormous capital outlays, advanced fabrication partnerships and long lead times to yield competitive silicon — hurdles that have become more daunting as the smartphone market matures and profit margins shrink.The global trend toward higher-cost components, especially as manufacturers race to integrate AI-oriented features, further squeezes profitability for firms without strong economies of scale in semiconductor design. Analysts at Counterpoint Research warn that rising chip costs may particularly impact brands like Oppo in coming years, weakening their competitive position in price-sensitive segments. GuruFocusOppo’s decision also comes against the backdrop of wider industry realignment in China, where some competitors like Huawei have doubled down on AI-capable processors amid shifting market dynamics and supply-chain constraints caused by export curbs. Business Standard

Impact on Workforce and Broader Ecosystem

The closure of Zeku has significant implications for staff and China’s broader semiconductor ambitions. Reports indicate that thousands of engineers and designers were employed by the unit and now face layoffs or must seek absorption by other firms. While some industry insiders suggest larger Chinese chip makers may absorb this talent, the sudden move has rattled segments of the local tech community. Global TimesBeijing has placed strategic emphasis on semiconductor self-sufficiency, encouraging domestic design and production to reduce dependence on foreign technology. Oppo’s retreat, along with similar pivots by other smartphone makers, illustrates how commercial realities sometimes diverge from national industrial policy goals. Global Times

What Comes Next for Oppo?

With Zeku’s closure, Oppo is expected to lean into partnerships with established silicon suppliers such as Qualcomm, MediaTek and others to source processors for future devices. The company has also indicated that it will continue innovating in other product areas, including expanding AI features across its phone lineup and focusing on markets where demand remains more resilient. DIGITIMES AsiaMarket observers say Oppo’s strategic pivot underscores a broader recalibration across the smartphone industry. As brands confront slower unit sales, higher component costs and intensifying competition, many are prioritizing cost efficiency, platform partnerships and software-driven differentiation over costly in-house hardware ventures. Investing.com Australia

A Reflection of Broader Industry Challenges

Oppo’s decision to shutter its chip design unit is not an isolated event — it reflects larger structural shifts in the global mobile market. As consumer demand stabilizes at lower levels and technological complexity rises, even major brands face tough choices about where to allocate finite resources and how to remain competitive without eroding margins.For now, Oppo’s pivot highlights the reality that chipmaking remains a high-stakes game, one that may be beyond the reach of all but the largest and most vertically integrated players in the industry.For continued coverage of global technology and smartphone industry developments, stay with More24News.