Oppo, China’s biggest domestic smartphone maker, is closing its chip design business as the global smartphone market extends a prolonged decline.

The Dongguan-based phone maker becomes one of the first major Chinese tech firms to retreat from the chip sector, after a wave of investment in past years by electronics players wary of tightening US export curbs. The company is ceasing operations of the unit, named Zeku, due to uncertainty around the global economy and the mobile industry, a spokesperson said on Friday.

Set up in 2019, Zeku was intended to work along similar lines to Apple Inc.’s in-house Silicon division, which develops the main processors in iPhones, iPads and Mac computers. The Oppo group was tasked with designing applications processors, modems and other connectivity solutions like Wi-Fi and Bluetooth parts. It had locations in Shanghai, Xi’an, Beijing and Chengdu, according to its website. Its Shanghai unit had almost 200 patents, many of which are semiconductor-related, according Tianyancha, a company registration data platform.

Zeku developed the MariSilicon X image-processing chip unveiled in late 2021, which has been a fixture in Oppo flagship devices since. Oppo has suffered double-digit shipment drops over the past year and, like other handset manufacturers, is facing a glut of inventory.

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China’s smartphone market, the world’s biggest, has led a sharp drop in demand that’s lasted for over a year. The country’s reopening following stringent Covid Zero restrictions has been slow to translate into a rebound in consumer demand so far. Oppo took the worst hit among major brands over the course of 2022, according to IDC data.

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