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China’s Oppo joins race to develop own smartphone chips

TAIPEI — China’s leading smartphone maker Oppo is developing high-end mobile chips for its premium…

TAIPEI — China’s leading smartphone maker Oppo is developing high-end mobile chips for its premium handsets in a bid to gain control over core components and reduce its reliance on foreign semiconductor suppliers Qualcomm and MediaTek.

The world’s fourth-largest smartphone maker by shipments plans to use its own mobile systems-on-a-chip (SoC) in phones due out in 2023 or 2024, depending on the speed of development, two people briefed on the matter told Nikkei Asia.

Oppo thus joins a race of smartphone makers — including Apple, Samsung and Xiaomi — that are developing their own processors. Google on Tuesday unveiled the Pixel 6, its first smartphone using its Tenor mobile processor.

Developing key chips in-house could also enhance supply chain control and possibly soften widespread shortages and disruptions.

Oppo is looking to use the 3-nanometer chip production technology offered by Taiwan Semiconductor Manufacturing Co., the world’s biggest contract chipmaker, sources said. This would make it part of a second wave of TSMC clients, following Apple and Intel, to use the cutting-edge tech.

Sources said this is a sign of Oppo’s commitment to developing high-end mobile chips capable of competing with the globe’s top semiconductor developers.

In-house designed processors have become a hallmark of the world’s leading smartphone brands. Apple began putting its A-series mobile processors in iPhones a decade ago. Huawei Technologies, once the world’s largest smartphone maker, made its mark with its Kirin processor before a U.S. clampdown on the company derailed its consumer electronics business.

Oppo has been ramping up its chip investments since the U.S. crackdown hit Huawei. It has hired top chip developers and artificial intelligence experts from MediaTek, Qualcomm and Huawei, and is continuing its recruiting efforts in the U.S., Taiwan and Japan, according to industry executives and job postings.

It is also working on its own AI algorithms as well as its own customized image signal processors for its handset cameras. Domestic rivals Xiaomi and Vivo have come out with their own image signal processing units as more smartphone buyers base their purchases on advanced photo and video features.

Image signal processors are also less challenging to develop than systems-on-a-chip, which require combining central processing and graphic processing capabilities, security and connectivity, as well as integration to work with a given operating system.

Xiaomi, one of the first Chinese smartphone makers to set up a semiconductor design team, back in 2014, currently does not use any in-house processors for its smartphones. Most Oppo and Xiaomi flagship smartphones use Qualcomm’s high-end Snapdragon chipsets.

Eric Tseng, lead analyst with Isaiah Research, told Nikkei Asia that smartphone makers’ race to deploy their own processors comes with certain risks, namely that the chips might not perform as reliably as standardized offerings from established suppliers.

“That’s why we don’t see a lot of players boldly use their own mobile processors, and why most of them started from developing image signal processing chips first.”

For most smartphone makers, having their own mobile processors brings two main benefits, differentiation and better supply chain control, Brady Wang, an analyst with Counterpoint, told Nikkei Asia. “If everyone is using Qualcomm’s chipsets for flagship phones, then it’s very hard to claim that you have unique performance and products,” he said. “Meanwhile, you have to compete for allocations of chips and resources with your competitors during a time of shortage, and do not have direct visibility of your chip supply chain.”

But few in-house chip efforts have paid off so far, Wang added.

“We still don’t see very successful cases following Apple, Huawei and Samsung,” he said. “After all, there are entry barriers, and the continuous effort of a large team is needed, as are complicated system integrations. Costs are also increasing as chip manufacturing technology advances.”

Oppo declined to comment on its specific chip development progress but said the company’s core strategy is to make good products.

“Any R&D investment is to enhance product competitiveness and user experience,” Oppo told Nikkei Asia.

TSMC declined to comment.