How much did the OPPO self-developed chip burn in three years？ Why give up？ It’s not bad money

On May 12th, OPPO announced that it would completely terminate the business of its chip design company ZEKU, which also triggered a huge shock in the industry.

There are also different opinions about why Zheku Technology was suddenly dissolved without warning.

The official reason given by OPPO for dissolving Zheku is "the uncertainty of global economy and mobile phone market".

Liu Jun, CEO of Zheku, also said at the last general meeting: "The global economy and mobile phone industry are extremely pessimistic now, and the company’s entire revenue is far from expectations. So in this case,Such a huge investment in chips will be beyond the company’s affordability.So I regret to make an announcement here. After careful discussion, the company decided to shut down Zheku and terminate the chip self-research business. As CEO of Zheku, I couldn’t take this business to the place we wanted to go, and it’s a pity to tell you in this way. At this time, I can only say, I’m sorry, thank all Zheku colleagues, and thank them for their hard work in Zheku over the past four years. "

Indeed, since last year, the global economic situation has declined and the smartphone market has continued to shrink, which has also put tremendous pressure on OPPO.

According to IDC data, in 2022, global smartphone shipments fell by 11.3% year-on-year, and OPPO shipments were 103.3 million units, down by 22.7% year-on-year. Moreover, the smartphone market is still in a downward trend, and the recovery may have to wait until the second half of the year.

From the current point of view,OPPO has been mass-produced and shipped MariSilicon X. Although it has been adopted by the high-end versions of Find X5, X6 and Reno9 series, the shipment volume is still relatively limited, which may not cover its research and development costs.

This also makes the outside world think that it is because Zheku burned too much money (it is rumored that it burned 50 billion yuan in three years, but it is not so much), and the continuous decline of the global economy and smartphone market since last year has brought greater pressure to OPPO. OPPO finally decided to give up.

However, this explanation seems reasonable, but it is puzzling. becauseIn fact, Zheku has spent less than 10 billion yuan in more than three years since its establishment, and OPPO is not short of money now. Even if you think that self-developed chips burn money, it is entirely possible to reduce Zheku’s product line and focus on some areas you need (such as power management chips).

Just in February this year, Liu Zuohu, senior vice president and chief product officer of OPPO, also publicly disclosed the SUPERVOOC S full-link power management chip developed by OPPO, and said that in the future, OPPO and all models with charging power above 100W will be equipped with Supervooc S.

The compensation scheme is very kind and OPPO is not short of money.

Judging from Zheku’s compensation for layoffs, it can be said that it is very generous. The compensation standard for regular employees in China is "N+3", and the base is the total annual salary+bonus+all other income divided by 12. And in May, salary will be paid according to one month, and social security will be paid for employees in May.

Even fresh graduates who fail to report for duty can get compensation of (offer’s monthly salary+bonus /12) *3. It can be said that the whole compensation scheme is very kind.

According to the data, Zheku was established in August 2019, covering product lines including: core application processor, short-range communication, 5G Modem, RF, ISP and power management chip. At present, the team totals about 3000 people.

According to reports, since its establishment, Zheku Technology has always been a big and high-paying poacher, which also makes the average salary of Zheku Technology significantly higher than the industry average.

According to the statistics of the Staff Friends Group, the average salary of Zheku Technology is 44,504 yuan/month, of which 2.3% is 20,000-30,000 yuan, 45.6% is 30,000-50,000 yuan, and 51.1% is above 50,000 yuan.

If calculated according to the average monthly salary of about 45,000, the "N+3" compensation for 3,000 people will exceed 405 million yuan. If you want to calculate the year-end bonus and other income equally in the compensation base, I’m afraid it will be about 500 million yuan.

OPPO said thatAll these compensations will be paid within 5 working days after signing the resignation agreement before May 19th.This also shows that OPPO is not short of money at this stage.

On May 13th, Shen Yiren, former vice president of OPPO, said in the Weibo, "What money can solve is actually not a big problem … … The problem that money cannot solve is the real problem. "

Therefore, the real reason why OPPO suddenly disbanded Zheku Technology is not simply the problem of "money".

How much did Zheku "burn"? Maybe less than 10 billion

As early as the Future Science and Technology Conference in 2019, Chen Mingyong, founder and CEO of OPPO, announced that "50 billion yuan will be invested in R&D to build a technical moat in the next three years", and then OPPO officially launched the Mariana Plan for self-developed chips. This also shows that OPPO has made plans for a protracted war before opening the self-developed chip, and has given sufficient funds.

Although there are many rumors on the Internet that "Zheku burned 50 billion yuan in three years", in fact Zheku may only spend about 10 billion yuan.

Even according to the current scale of 3,000 people, the annual salary consumption is about 2 billion yuan (calculated according to the previous estimate of 500 million yuan for three months).

Although Zheku was established in August 2019, it has been more than three years since it really started to develop chips. The annual salary costs 2 billion yuan, which is about 6 billion yuan in total.

Moreover, the team of 3,000 people has gradually grown up in more than three years. There were not many people at the beginning of the first year, so in fact, the total expenditure on personnel salaries was not 6 billion yuan.

In addition, EDA tools and semiconductor IP needed for chip research and development, as well as chip streaming and mass production are also very expensive.

"The EDA cost of Zheku is about 30 million to 50 million dollars a year."An insider of an American EDA factory revealed to Xinzhixun.

That is to say, in three years, the EDA cost required by Zheku is about 90 million-150 million, which is about 120 million US dollars, or about 835 million RMB.

In terms of streaming cost, the image NPU chip MariSilicon X released by Zheku is based on TSMC’s 6nm process, and the Bluetooth audio SoC chip MariSilicon X is based on TSMC’s N6RF process. In addition, there is a mobile phone AP chip that was previously under development, which is rumored to be based on TSMC’s 4nm process.

According to Xin Zhixun, an insider of a wafer factory knows that the cost of chip streamer is mainly the cost of MASK, which is mainly related to the complexity of chip design. The more metal layers are used, the more mask layers will be, and the higher the cost will be.

Generally speaking, the cost of making a 6nm MASK is about 10 million dollars, and the cost of making a 4nm MASK is about 2,000 dollars.

Because MariSilicon X is a dedicated NPU chip, MariSilicon is an audio SoC, but its complexity is far less than that of mobile phone AP. Therefore, the actual mask cost required for these two chips is expected to be lower.

Even if the conventional cost is estimated, the total cost of the three chips (calculated according to the success of one tape) is about 40 million dollars, or about 278 million yuan.

As for the IP licensing fee required for each chip project, because most of the IP of MariSilicon X and MariSilicon Y are self-developed, the cost of semiconductor IP to be outsourced is not high, which is estimated to be around several million dollars, so let’s calculate 10 million dollars in Dali, which is about 70 million yuan.

The rumored mobile phone AP is a eight nuclear CPU+10-core GPU, which uses Arm’s Cortex-X2+Cortex-A710+Cortex-A510 CPU IP, and the GPU IP should also belong to Arm, which will make the IP cost of this mobile phone AP soar.

According to insiders, the Arm IP cost for such a 4nm AP chip may need 30 to 50 million dollars, and other IP types may also need 30 to 50 million dollars. According to the median calculation, it is about $80 million.

Therefore, the total IP licensing fee for the three chips may be about 90 million dollars, or about 626 million yuan.

Taken together, Zheku’s three-year staff salary, EDA tools needed for chip research and development, the purchase of semiconductor IP, and the cost of chip streaming are probably less than 7.8 billion yuan.

Even if other expenses such as office rent, all kinds of office equipment, test equipment, servers, water and electricity network fees, and supporting employee benefits are included, how to calculate 10 billion yuan should be enough.

Obviously, the expenditure of 10 billion yuan is far from Chen Mingyong’s psychological budget of "investing 50 billion yuan in research and development in three years".

4nm AP slide failed?

For the reason why OPPO gave up Zheku, there are rumors that the 4nm mobile phone AP is too difficult, and the streaming failed. In the future, more money may be needed to succeed, and even if it succeeds, it may not be recognized by the market, so it is decided to give up.

However, an internal employee of Zheku confirmed to Xinzhixun that,This AP has not failed, "bing up and all kinds of follow-up work are being prepared internally". According to the previous forecast, the film will come back in mid-June, and now no film has come back for testing. How do you know it has failed?

Liu Jun, CEO of Zheku, also stressed at the last general meeting:"This decision has nothing to do with the quality of your work."

Obviously, the sudden dissolution of Zheku is not due to the "4nm AP film failure".

The supporting MediaTek 5G baseband was stopped

Although Zheku’s mobile phone AP doesn’t have its own baseband chip, it can realize the 5G communication function by plugging in a third-party 5G baseband chip, just like Apple A series processors.

According to Xin Zhixun’s understanding,This mobile phone AP was originally planned to plug in a 5G baseband chip supplied by MediaTek.

According to an internal employee of Zheku, Xin Zhixun revealed that,Last week, MediaTek was still solving the problems related to Zheku Baseband, and Zheku suddenly announced its dissolution, which also caught the other side off guard.

Because the existing 5G baseband chips in MediaTek cannot be directly used, they need to be customized according to the AP design and needs of Zheku.

People in the semiconductor industry @ 中中中中中中 also broke the news yesterday.Affected by the closure of Zheku, the 5G baseband plan matched with MediaTek also stopped, and the 6nm/4nm RF/AP WIP (work in process) on TSMC production line was also stopped.

As Zheku suddenly announced its closure, the cooperation with MediaTek has been unilaterally terminated, and it is expected that it may also need to pay a large amount of "liquidated damages".

Summary:

Based on the above analysis,The sudden closure of OPPO without warning seems to be not because Zheku’s "burning money" exceeded expectations, nor because OPPO has no money, nor is there a problem with Zheku’s product development.

So, what caused OPPO to suddenly give up developing its own chips and disband the 3,000-person Zheku team at any cost, so that all the efforts of this group of excellent chip designers in China in the past four years were wasted? I am afraid that most of the existing research and development results will also be abandoned.

Duan Yongping, the founder of BBK brand, left a meaningful comment when evaluating the news of Zheku’s closure on snowball:"Correct mistakes as soon as possible, no matter how much it costs."

Duan Yongping’s implication seems to be that the OPPO self-developed chip was a mistake from the beginning, but if it was a mistake from the beginning, why did it take nearly four years to point it out?

In the past two days, many media and analysts have given such views "with hindsight", but why did these people go early?

Generally speaking, there are some "puzzling" places in OPPO’s sudden dissolution of Zheku, especially in the context of the continuous suppression of the domestic semiconductor industry in recent years. It is no wonder that many netizens believe that the main reason is OPPO’s deep "fear" of that "mysterious force".

After all, the mobile phone business is only one of its three major businesses, compared with another company that has been repeatedly hit by "mysterious forces" but has not fallen. OPPO’s business is more single. Once the mobile phone business is affected, there will be no other business to transfuse blood. The "spare tire" is still under development, and of course there is no chance of "turning positive".

However, regarding this view, a Zheku executive told Core Intelligence:"Conspiracy theories cannot be falsified, so people always like to listen."

Finally, I borrow a passage from Wang Zhuo, the head of Zheku baseband and RF department, at the general meeting as the end of this article, and wish my friends who have worked in Zheku a new job in the future and continue to fight for the rise of China Core!

"Zheku no longer exists, so Zheku may be meaningless in itself, but the journey we have traveled together is meaningful. … … As long as we have made efforts, God will surely see it. I believe that all our efforts will not be in vain, and you will definitely see his help to you at some point. "