OPPO hastily disbanded the chip team, and TSMC was unaware of the underlying reasons and cruel truth

Tech 2023-05-15 12:43:51 Source: Network

OPPO has shut down its chip design company, ZEKU, and will no longer develop and manufacture chips. The news that thousands of chip teams will be disbanded is very sudden and continues to spark discussions

OPPO has shut down its chip design company, ZEKU, and will no longer develop and manufacture chips. The news that thousands of chip teams will be disbanded is very sudden and continues to spark discussions. Perhaps we can see the cruel truth of the domestic chip industry from it.

Recently, even the person in charge of TSMC stated that it was only after reading the news that they realized that the reason behind this may not be simple.

As early as 2019, OPPO established the Technical Management Group (TMG) for chips. Since then, OPPO has started to recruit R&D talents at various large factories with high salaries, including Qualcomm, Huawei Hisense, and Uni Vision. In December 2021, OPPO successfully launched its first self-developed chip, Mariana MariSiliconX. In December 2022, OPPO also launched its second self-developed chip, MariSiliconY. The former is an imaging NPU chip, and the latter is a flagship Bluetooth audio SoC chip. Currently, OPPOThe self-developed application chip has already been shipped in March and can be mass-produced in the third quarter.

At present, the total number of employees of Zheku Technology has reached over 3000, with branches in Chengdu, Xi'an, the United States, and Japan in addition to the Shanghai headquarters.But suddenly, OPPO announced that it would give up on self-developed chips and quickly disbanded the team, appearing very hasty.

Behind abandoning self-developed chips

There may be multiple reasons behind this:

Firstly, the chip industry is hot and crazy, but it is actually a low profit industry that needs to continue burning money,Although we all know about technology oriented fragrance, the enterprise itself is still profit oriented.The investment of tens of billions is just the beginning, and OPPO still overlooks the difficulty of making chips and the magnitude of burning money. Currently, it can no longer afford to burn money.

As industry insiders have pointed out, who dares to face the curse of users in this era to install processors like K3V1 and K3V2 on their flagship machines? Moreover, with static power consumption control, leakage control, and high-speed signal competition and adventure, the combination of functional modules alone has a bunch of problems to solve. After being solved, it is necessary to use genuine chips to solve bugs on the real machine. Even if it is a single stream, it is also a bottomless pit that burns money, and TSMC's current costs tens of millions of yuan at a time.

The mobile phone industry is now experiencing a decline in overall industry demand and a decline in profits. Unlike Huawei and Xiaomi, OPPO also has other cash flow businesses such as PC, TV, and AIOT in addition to mobile phones. OPPO's other AIOT product lines are relatively weak, making it difficult to form a closed-loop ecosystem. Previously, OPPO stopped its television business, and this time, it is clearly a proactive strategy to shrink in response to the increasingly severe environment in the mobile phone industry.

From an internal perspective, it is said thatOPPO's internal shareholders have significant disagreements,To put it bluntly, the process of burning money cannot see long-term benefits, which will greatly drag on OPPO's cash flow in the long run, ultimately leaving the market and stopping losses in a timely manner.

Secondly, OPPO is a manufacturer with technical expertise and hastily decided to abandon its self-developed chips, which may be related to the risk of sanctions.

In fact, it is one of the few domestic mobile phone manufacturers with technical background, as well as a deep accumulation of upstream and downstream technologies, such as image and audio processing algorithms, mobile phone SoC tuning, consumer electronics shipment assurance, etc. Abandoning is also related to the risk of sanctions.

In the first quarter of 2023, OPPO regained the top spot in the domestic mobile phone market with a share of 19.6%. The dual flagship high-end strategy has also begun to bear fruit. The release of the FindN2 and Flip series has made OPPO the largest domestic manufacturer of foldable screens in the first quarter, and the newly released FindX6 series has also made OPPO one of the top three in the $600 market.

Referring to Huawei's past sanctions, it is also after Huawei has won the first place in the domestic market share. From the current progress of OPPO, it is time to witness the results - SP chips, power chips, followed by CPU chips. OPPO may have felt some pressure to give up at this time.

Especially in the absence of domestic lithography machines, when chips are made, there are only recipes without pots,R&D is research and development, production is production, and OPPO does not want to become the second Huawei.

Of course, there are signs. Recently, there was news that ARM suddenly announced that it would not allow other companies to modify or modify the extended instruction set,This means that even if Zheku chips are manufactured, they cannot be added to the self-developed Mariana chips, making it difficult for Zheku to compete with Qualcomm and Apple chips, and even if the baseband needs to be bought by MediaTekMoreover, with the size of OPPO, it is difficult to even out the high research and development costs.

After OPPO disbanded Zheku, Duan Yongping, the founder of Bubugao, made a sharp comment on Snowball: correcting mistakes should be done as soon as possible, and the cost is the smallest.

And former Vice President of OPPO, Shen Yiren, also vaguely pointed out that the problems that money can solve are not big problems, while the problems that money cannot solve are often the real problems.

The words of these big shots undoubtedly imply the risk factors of "sanctions".

Especially the trend of global mobile phone sales decline will not change in the short term. Mobile phones cannot make money, so there is naturally no funds to invest in burning chips. This is a wise move to protect the market.

Another possible reason is that there have been rumors before that Huawei 5GSoC is about to return as the king. OPPO's NPU chips are just icing on the cake for smartphones, with a low input-output ratio. Once Huawei 5GSoc returns, OPPO's current chip business will appear bleak, and chips are an industry where the stronger the stronger,Once Huawei returns its 5G chips, it may take control of the entire chip industry chain, and other manufacturers' investment is meaninglessIt's better to purchase ready-made ones and give up stop loss as soon as possible. Of course, this is a direction that can be guessed, but it is unlikely because the prerequisite for the return of Huawei 5Gsoc King is that the lithography machine is in place.

What cruel truths do we see when OPPO abandons self-developed chips?

From OPPO abandoning self-developed chips, we can see that mobile phone processor chips are definitely a high threshold activity, and the lack of lithography machines is still a key link that hinders manufacturers. Chips, especially high-end chips, cannot be achieved through great efforts. Success is only possible if all funds, talents, technology, strategies, and closed-loop industrial chains are in place,The lack of lithography machines for manufacturing chips remains the core link that constrains chips.

Secondly, the current dominance of overseas Soc companies is still too strong, not only in terms of products, but also in terms of their future main business continuity.From this perspective, giving up on OPPO at this time was also a pragmatic move, but in the past, not realizing the long-term principles and risks of core making was undoubtedly a strategic misjudgment.

Thirdly, a single mobile phone business cannot support the consumption of chip research and development, and requires a strong cash cow formed by other businesses to continue blood transfusion.Both Apple and Huawei do not rely on a single mobile phone business for blood transfusion.

Huawei's original terminal business relied on multiple product lines such as communication and enterprise business for blood transfusion. On the other hand, it also relied on the continuous support of consumers since the K3 era, allowing HiSilicon to iterate step by step to barely compete with Qualcomm. The development of mobile phone processors has undergone several twists and turns, and it has taken a long time to develop true vertical integration capabilities.

Apple's business is a software services business centered around iPhone, iPad, Mac, and iOS, but the core is primarily focused on the iPhone. And Apple is a special case because its profits are outrageously high. With the revenue and volume of Apple's mobile phone business, there is no problem with chip research and development. However, for domestic phones that have not established a foothold in the high-end market, it is difficult to support the research and development and continuous investment of the chip business with the profits and revenue volume of the mid to low end mobile phone market.

At present, the overall cycle of changing phones has become longer, and domestic manufacturers have low overall profits, making it difficult to support the continuous development of chips. Playing with charging chips, computing imaging chips, etc. is not enough. If playing with SoC, AP, or even baseband, the sales of these chips are not enough to burn for a few years. For mobile phone manufacturers, if they want to invest in chip self-development for a long time, they must have other powerful cash cows for blood transfusion.

Thirdly, making chips is a long-term approach, and Soc cannot afford to be fat at once. Using chips as a marketing gimmick is a damage to the brand's trust and value.From some of the marketing directions of OPPO's chip making last year, we even have an intention to confuse SOC chips with imaging chips. OPPO even mentioned before that the current Mariana X only performs 30%, and the Mariana X will continue to be optimized to achieve the effect of "better use".

From the original intention of OPPO's strategy of making chips in the past, there is actually a suspicion of chip marketing. Due to Huawei's sanctions, domestic consumers have high expectations for domestic mobile phone chip making. Due to the lack of self-developed chips, domestic mobile phones have been unable to do so in the high-end market, and chip making can increase the technology brand premium. However, the current promises of OPPO Mariana X to continue optimizing have all come to naught, It may also cause some harm to its own brand.

The collapse of Zeku was due to internal strategic misjudgment and short-sighted factors such as long-term investment without output.In the past, I vowed to independently develop SOC and invest tens of billions in technology research and development. If there are no significant results in the past two to three years, it will be difficult for the capital and shareholders behind it to play with you.

OPPO gave up, but there are always manufacturers insisting

From the perspective of the domestic market, the abandonment of OPPO does not mean that the industry's core manufacturing has completely failed. The three leading manufacturers, Xiaomi, vivo, and Huawei, are still persisting. vivo is still making some low difficulty and low threshold small chips such as NPUs and ISPs, as well as customized chips with chip manufacturers. The investment is smaller than OPPO, and the possibility of continuous promotion is high.

In terms of the progress of Xiaomi chips, the Pengpai P series, G series, and C series are still iteratively updating, and Huawei's chip business is also continuously investing. The dissolution of the OPPO chip team has had a certain impact on the industry, but there are still manufacturers in China who are persevering.

Many netizens exclaim, and looking back at Huawei Hisense, it has to be said that it is indeed commendable.

From OPPO's perspective, it can be understood that not making chips is too expensive, butThe self-developed chip is one size fits all, and Mariana has also stopped developing it. The previous promises made to consumers cannot be fulfilled, which makes the industry a bit incomprehensible At present, the development progress of Mariana is less than 30%. Does OPPO's promise to consumers still count? You should know that Huawei has been sanctioned for 4 years, and HiSilicon has not disbanded until now.

On the path of chips, Huawei is still continuously advancing, and the failure of OPPO indirectly proves the twists and difficulties of the path of chip manufacturing. However, based on the progress of the domestic industrial chain and the persistence of some domestic manufacturers, there will always be a bright day.

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