Huawei spin-off Horror steps up chip development

Chinese smartphone brand Honor, a former sub-brand under Huawei Technologies, 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 in Shanghai’s coastal Lingang Free Trade Zone with a registered capital of CNY100 million. The company is wholly owned by Honor Terminal Co and its business scope includes chip design, sales and related services, and development of artificial intelligence (AI) application software. Honor said the subsidiary will become one of its five research centers in China, focusing on research and development (R&D) of core software, graphics algorithms, communications and photography. The four other facilities are located in Beijing, Shenzhen, Xian and Nanjing.

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 dissolution of 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 U.S.-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, 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 that the firm’s chip strategy will be formulated based on needs. “We will neither be blindly optimistic nor overly modest,” Zhao was quoted as saying by the South China Morning Post.