Huawei spin-off Honor steps up chip development with new design unit in Shanghai

The subsidiary’s business scope includes chip design and AI software development, public information shows
The move comes fresh on the heels of the closure of rival Oppo’s chip design team, which laid off 3,000 people last month

Huawei

Lilian Zhang

Published: 6:30am, 2 Jun 2023

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Chinese smartphone brand Honor, a former sub-brand under Huawei Technologies Co, has set up a subsidiary involved in chip design, after rival Oppo shut down its in-house chip unit last month and laid off hundreds of employees.

The subsidiary, named Shanghai Honor Intelligent Technology Development Co, was founded on Wednesday in Shanghai’s coastal Lingang Free Trade Zone with a registered capital of 100 million yuan (US$14 million), according to business data provider Qichacha. The company is wholly owned by Honor Terminal Co.

The new unit’s business scope includes chip design, sales and related services, and development of artificial intelligence (AI) application software, public information shows.

In a statement, Honor said the subsidiary will become one of its five research centres in China, focusing on research and development of core software, graphics algorithms, communications and photography. The four other facilities are located in Beijing, Shenzhen, Xian and Nanjing, according to the company’s website.

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While Honor did not confirm whether the new unit will work on chip development, the move has caught wide media attention in China, as it came on the heels of the abrupt disbandment of smartphone maker Oppo’s chip design team Zeku, which led to the dismissal of nearly 3,000 engineers.

Oppo said the “difficult decision’ stemmed from “uncertainties in the global economy and smartphone market”, but it sparked speculation that non-financial factors may have contributed to Zeku’s demise, such as US-China geopolitical tensions. It also led to questions on whether Chinese smartphone manufacturers are capable of developing their own chips.

Xiaomi, China’s fifth-largest smartphone vendor, last week reaffirmed its commitment to chip development, saying that the effort “plays a crucial role” in the firm’s core business, but requires long-term investments.

Honor CEO Zhao Ming said at a product launch event last week that the firm’s chip strategy will be formulated based on needs, according to several Chinese media outlets.

“We will neither be blindly optimistic nor overly modest,” Zhao was quoted as saying. The choice of whether to pursue in-house development or rely on outside partners would be decided by product requirements, he said.

In March, Honor announced its first self-developed radio frequency communication chip, Honor C1, which is designed to strengthen 5G signals. To develop more complicated system-on-chips, however, Honor will need to establish long-term collaborations with suppliers like US semiconductor giant Qualcomm and Taiwan’s MediaTek, Zhao reportedly said.

Founded in 2013 by Huawei, Honor has quickly become one of China’s most popular smartphone brands and has expanded to 20 overseas markets across Southeast Asia, Europe, the Middle East and Latin America.

In November 2020, the brand was sold to a consortium led by the government of its home city of Shenzhen. The move was seen as a way to avoid US trade sanctions that have encumbered Huawei.

Last year, Honor managed to grow its smartphone shipments in China by 30 per cent to 52.2 million units, even as total shipments in the country declined 14 per cent amid an economic downturn, according to industry research firm Canalys. Its market share jumped to 18 per cent from 12 per cent during the same period, trailing only Vivo, a sibling brand of Oppo.

The company said in a statement that its Shanghai subsidiary is one of its five research and development centres in China, focusing on software development and solutions for consumer devices.