Finance
Chinese smartphone maker Oppo in weekly AI talks with Google, Microsoft
Chinese smartphone company Oppo ranks second in mainland China, and fourth worldwide, according to Canalys.
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BEIJING — Chinese smartphone company Oppo is doubling down on artificial intelligence as it holds weekly talks about AI with senior management at Google and Microsoft in the run-up to the launch of its flagship phone overseas.
The collaborations are part of the race to find the next artificial intelligence application. The rise of generative AI — tech that can produce human-like responses when prompted — has companies from Apple to Honeywell rushing to tap its capabilities.
“Google will also come to China to ask us, what needs and pain points do you have with your products? Let’s solve them together,” Billy Zhang, president of Oppo’s overseas market, sales and services, told reporters last week at the company’s office in the southern Chinese city of Shenzhen. That’s according to a CNBC translation of his Mandarin-language remarks.
“We know consumers’ needs, and we will use AI to satisfy [them],” Zhang said. The company is expanding further in Europe, but does not have immediate plans for the U.S., he said.
Oppo, which owns the OnePlus brand too, said it derives around 60% of its revenue from Southeast Asia, Europe and other overseas markets. The company ranked fourth globally in terms of smartphone shipments in the third quarter, making up 9% of all units shipped, according to Canalys. Samsung and Apple were tied for the first spot, followed by Xiaomi.
While the U.S. leads in terms of AI capabilities, experts suggest Chinese companies will have an edge when it comes to consumer applications of the tech. That’s despite U.S. restrictions on exports of high-end chips to China.
Oppo has said its forthcoming flagship smartphone will be equipped with AI writing and recording summary tools from Google’s Gemini, and content generation features from Microsoft. Microsoft employs OpenAI products such as ChatGPT.
It was not immediately clear to what extent existing Oppo models use AI tools from the two tech companies. Oppo has yet to announce when its flagship phone will be available globally.
AI smartphones set for growth
Oppo in June announced it plans to integrate generative AI in 50 million of its devices this year. Its existing AI tools allow touching up photos — such as removing window reflections. Oppo also has a ChatGPT-like bot.
In addition to partnerships, Oppo said it has developed its own AI models since 2020 and opened an AI center in February.
“We are very optimistic about AI and have invested with great determination,” Zhang said. “AI is the most important area for tech in the future. All industries can be transformed by AI.”
Counterpoint Research predicts shipments of generative AI smartphones will skyrocket to 732 million in 2028 from 46 million last year, according to a whitepaper published Wednesday. The report did not specify how complex those generative AI features would be.
Apple next week is due to publicly release its first software update with AI tools. A subsequent update will allow removing unwanted elements in photos, and integration with ChatGPT, the iPhone maker said Wednesday.
Chinese smartphone company Honor on Wednesday revealed the next version of its operating system that can use AI to mimic actions on a touchscreen, such as opening an app to order coffee delivery.
Tech for production efficiency
Oppo plans to integrate AI into its factories, which are increasingly automated, Zhang said. “Today, automation improves quality and stability, lowers production costs and increases unit yield.”
At a production line for an entry-level smartphone in Dongguan, near Shenzhen, Oppo has this year replaced about 8% of the workers with machines, and moved those employees to work on more complex, higher-end phones.
Other companies have announced plans to integrate generative AI with the industrial sector. Honeywell this week announced a deal with Google’s Gemini to create AI assistants for factory workers and systems.
Oppo is rolling out its digital management system to its factories in seven other countries, starting with India and Indonesia. The company also produces phones in Turkey, Pakistan, Bangladesh, Brazil and Egypt.
“Since our manufacturing process is largely digitalized and standardized, growing and expanding to global markets is much easier,” Danny Du, director of manufacturing management at Oppo told CNBC.
Oppo has cut its manufacturing costs by nearly 40% over three years, Du said, adding that technological integration with factory machines and systems has cut production time to six days, from 16. He said that allows Oppo to respond more quickly to market orders, instead of relying on longer-term forecasts that come with the risk of unsold inventory.
— CNBC’s Kif Leswing and Eric Rosenbaum contributed to this report.
Pictured here is a construction site of property developer Hongkong Land, in Shanghai on Nov. 4, 2024.
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BEIJING – China is widely expected to unveil more stimulus on Friday after its parliament ends a five-day meeting.
Authorities here have ramped up stimulus announcements since late September, fueling a stock rally. President Xi Jinping led a meeting on Sept. 26 that called for strengthening fiscal and monetary support, and stopping the real estate market slump.
While the People’s Bank of China has already cut several interest rates, major increases in government debt and spending requires approval by the country’s parliament, called the National People’s Congress.
That approval could be granted at the weeklong meeting of the legislature’s standing committee. During a similar meeting in October of last year, authorities had approved a rare increase in China’s deficit to 3.8%, from 3%, according to state media.
Expectations for the scale of that fiscal support have increased after Donald Trump — who has threatened harsh tariffs on Chinese goods — won the U.S. presidential election this week. But some analysts are still cautious, warning that Beijing may remain conservative and not issue direct support to consumers.
When discussing planned fiscal support at a press conference last month, Minister of Finance Lan Fo’an emphasized the need to address local government debt problems.
At the parliamentary meeting so far, officials have reviewed a plan to increase the limit on how much debt local governments can issue, according to state media. The additional quota would go toward swapping out local governments’ hidden debt.
Nomura estimates that China has 50 trillion yuan to 60 trillion yuan ($7 trillion to $8.4 trillion) in such hidden debt, and expects Beijing could allow local authorities to increase deb issuance by 10 trillion yuan over the next few years.
That could save local governments 300 billion yuan in interest payments a year, Nomura said.
In recent years, the country’s real estate slump has drastically limited a significant source of local government revenues. Regional authorities have also had to spend on Covid-19 controls during the pandemic.
Even before then, local Chinese government debt had grown to 22% of GDP by the end of 2019, far more than the growth in revenue available to pay that debt, according to an International Monetary Fund report.
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