OPPO has not yet decided to terminate semiconductor manufacturing. In the cold winter of semiconductors, "ZEKUs" experience a "critical autumn"

Reporter: Chen Pengli Editor: Liang Xiao

At noon today (May 12th), OPPO confirmed to the Daily Economic News reporter that in the face of uncertainty in the global economy and mobile phone market, after careful consideration, the company has decided to terminate ZEKU (Zheku) business. This is a difficult decision, and we will handle the relevant matters properly. We will continue to do a good job in the product and continue to create value. Thank you for your concern and support, "OPPO said.

The reporter learned that Zheku is a company under OPPO that involves chip business. According to enterprise investigation information, Zheku Technology (Shanghai) Co., Ltd. (hereinafter referred to as Zheku Technology) was established in August 2019, with Liu Jun as the legal representative and a registered capital of 100 million yuan. As early as 2019, OPPO founder and CEO Chen Mingyong announced that he would invest 50 billion yuan in the next three years to explore cutting-edge and deep-water technologies. In December 2021, OPPO's first self-developed chip, Mariana MariSiliconX, was officially released.

The news of the termination of Zheku Technology's business came quite suddenly. The reporter learned that at the end of April, Zheku Technology also released social recruitment information for multiple positions such as system architecture, digital design, software development, and chip verification. As of the end of February 2023, ZEKU has applied for over 2400 global patents.

OPPO Announces Termination of ZEKU (Zheku) Business

According to enterprise investigation, when Zheku Technology was established in 2019, its registered capital was 50 million yuan and it was 100% controlled by OPPO Guangdong Mobile Communication Co., Ltd. The initial company name was "Shoupu Technology (Shanghai) Co., Ltd. In July 2020, the registered capital of the company increased to 100 million yuan, and the company was renamed Zheku Technology. In October 2020, the investor of Zheku Technology changed to Guangdong Oujia Holdings Co., Ltd., which is the parent company of OPPO, Yijia, and Realme.

Zheku Technology is mainly engaged in technology development, technology transfer, technology consulting, and technical services in the fields of electronic technology, network technology, and information technology, as well as the design, development, and sales of electronic products, communication products, and semiconductors, as well as the sales of chips and semiconductor components.

In 2019, Zheku Technology also invested 15 million yuan to establish its subsidiary Zheku Technology (Beijing) Co., Ltd. in Beijing. According to the annual report information independently filled out by enterprises in the industrial and commercial system, the number of insured individuals of Zheku Technology from 2019 to 2021 was 22, 602, and 1261, respectively.

According to public information, OPPO's "core making" was also initiated in 2019. At that time, some media revealed that OPPO may have been developing its own chips. OPPO applied for a trademark called "OPPOM1" in the European Intellectual Property Office, involving the chip field. According to China Economic Weekly, at the OPPO Future Technology Conference in December 2019, OPPO Vice President and Research Institute President Liu Chang stated in a media interview that OPPO already has chip level capabilities, such as VOOC flash charging chips that are independently developed by OPPO. The M1 chip rumored online is indeed planned and may be commercially available on OPPO products in the future. OPPO founder and CEO Chen Mingyong also announced: "In the next three years, OPPO will invest 50 billion yuan in research and development budget and more resources to build the most core underlying hardware technology as well as software engineering and system architecture capabilities

Image source: Photographed by journalist Zhang Jian (source image)

In February 2020, OPPO officially announced to all employees that it would develop its own chip and named it the "Mariana Project". In December 2021, OPPO's first self-developed chip, Mariana MariSiliconX, was officially released. The chip product claims to set a new industry benchmark for low power consumption and high computing power with innovative architecture design.

In December 2022, the globally leading Bluetooth audio SoC chip MariSiliconY with integrated dedicated NPU units was commercially released. Jiang Bo, Senior Director of OPPO Chip Products, said to the public at the time, "Mariana MariSiliconY is OPPO's second self-developed chip, marking another step forward in OPPO's self-developed chip capabilities

According to Zheku Technology, the Bluetooth audio SoC chip is the first to apply advanced N6RF RF RF process technology, achieving wireless Bluetooth transmission of 192kHz/24bit lossless audio at a 12Mbps Bluetooth speed for the first time. While achieving a flagship range experience, it can unleash unprecedented high performance.

A reporter from Daily Economic News noticed that between 2020 and 2021, Zheku Technology has been recruiting a large number of talents. According to the "ZEKU Recruitment" official account, in September 2021, ZEKU will start the 2022 campus recruitment. The company has conducted recruitment presentations in 8 cities and 13 colleges and universities, and has received a total of 578 resumes from domestic colleges and universities.

From January to April 2023, Zheku Technology is still releasing a social recruitment album, recruiting a large number of positions in system architecture, simulation/RF, algorithms, chip validation, and other areas.

According to the Science and Technology Innovation Board Daily, Zheku Technology recently sent an internal letter stating that the company has made a shareholder decision to dissolve Zheku Technology and its wholly-owned subsidiaries and branches from May 12, 2023, and terminate all labor contracts. The letter pointed out that for fresh students who have not yet joined and reported, they can choose to join other departments of OPPO or accept "N+3" compensation. In response, reporters from the Daily Economic News also attempted to verify with OPPO, but could not receive a response.

According to "ZEKU Recruitment", ZEKU has a global layout of 7 research and development centers, with multiple sites collaborating to provide employees with global platform resources and diversified technology fields. As of the end of February 2023, ZEKU has applied for over 2400 global patents.

The cold winter of semiconductors is still ongoing, and some in the industry point out that Zheku's core making investment is "too large"

The reporter learned that the news of OPPO announcing the termination of Zheku's business came quite suddenly. It is reported that Zheku products cover hundreds of technical fields in chip design and processor development, including Hardware, SoftwareCPU, GPU, AI, etc., providing system solutions for flagship smartphones.

Zheku Technology previously stated that it aims to create great products, adhere to self-developed core technologies, and strive for comprehensive development in the field. At the same time, Zheku Technology also stated that it must adhere to long-term principles, continuously invest in research and development funds, and make cores with firm determination. "Self research of high-end chips is the only way to promote the product differentiation of flagship mobile phones. Stable end customers and continuous investment guarantee not only enable ZEKU to have unique vertical integration advantages and scale effects, but also demonstrate ZEKU's firm determination to make cores, and lay a solid foundation for ZEKU's long-term development."

Regarding the termination of "core making" by OPPO, a senior industry insider commented that although they are not familiar with the situation, they understand that Zheku uses the most advanced technology, and to achieve true business collaboration, the investment is too large, and termination requires courage. The person also mentioned that this year, semiconductor companies are facing difficulties, and the industry is in the off-season. The secondary market is not popular, and the primary market is even less popular. After baptism, all that survive are faucets

A former chief analyst of a securities firm also sent a cartoon to reporters, vaguely stating that OPPO's termination of chip business may be mainly related to the excessive investment required for "chip making".

Image source: Visual China - VCG211288429073

The Daily Economic News reporter noticed that as of now, in addition to Zheku Technology, which is responsible for the main task of chip self-development, OPPO has also invested in Shanghai Jinsheng Communication Technology Co., Ltd., and holds shares in Nanxin Technology (SH688484, stock price of 40.13 yuan, market value of 17 billion yuan), Vijie Chuangxin (SH688153, stock price of 59.25 yuan, market value of 24.25 billion yuan), Ruishi Chuangxin (Shenzhen) Technology Co., Ltd Several chip companies, including Beijing Hanwei Chuangxin Electronic Technology Co., Ltd., hold a small amount of shares.

From the official reasons provided by OPPO, the termination of chip business is mainly related to the uncertainty of the global economy and mobile phone market. In terms of mobile phone market demand, in March this year, International Data Corporation (IDC) released a report stating that in 2023, the global smartphone market shipment volume will be less than 1.2 billion units, a year-on-year decrease of 1.1%; The expected shipment volume in the Chinese market is only 283 million units, a year-on-year decrease of 1.1%. The latest data released by market research firm Canalys shows that in the first quarter of this year, domestic mobile phone sales reached 67.6 million units, the lowest since 2013.

From the perspective of the semiconductor industry, market demand has also remained sluggish this year. On May 1st, the Semiconductor Industry Association (SIA) announced that global semiconductor sales for the first quarter of 2023 totaled $119.5 billion, a decrease of 8.7% compared to the fourth quarter of 2022 and a decrease of 21.3% compared to the first quarter of 2022.

On May 4th, the website of the Ministry of Industry and Information Technology released the operation status of the electronic information manufacturing industry in the first quarter of 2023. Data shows that among the main products, the production of mobile phones reached 331 million units, a year-on-year decrease of 7%; The production of integrated circuits reached 72.2 billion pieces, a year-on-year decrease of 14.8%.

According to the latest research report by Dongguan Securities on May 7th, due to the downward trend of the industry cycle, the performance of the electronics industry in the first quarter of 2023 is under pressure, with revenue and net profit attributable to the parent company declining year-on-year, and gross profit margin and net profit margin decreasing. According to TSMC's first quarter financial report and public exchange information, revenue in the first quarter of 2023 decreased by 18.7% month on month, mainly due to the macroeconomic downturn, the slowdown in terminal innovation leading to weak downstream demand, and the continuous adjustment of customer inventory.

According to Securities Times, on May 12th, at the 2023 Songshan Lake China IC Innovation Summit Forum, Dai Weimin, Chairman and President of Xinyuan Co., Ltd. (SH688521, stock price 78.83 yuan, market value 39.3 billion yuan), stated that considering the difficulties in financing in the semiconductor industry, the increase in the threshold for the Science and Technology Innovation Board, and the development of key industry leading enterprises supported by the state, it is expected that there will be a wave of mergers and acquisitions in the semiconductor industry in the second half of this year and next year.

Image source: Photographed by journalist Zhang Jian (source image)

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