Both ZTE and Oppo say they have drastically improved the under-display front camera quality by using better light-transmissive materials and dedicated display chips, as well as rearranging the pixel matrix itself.
Oppo uses AI to compensate for any remaining diffractions, it says, and the whole display is able to seem uninterrupted by the UDC area no matter the content shown, due to proprietary per-pixel chromaticity and brightness management. The result? well, selfies like the one you see below that is very close in quality to one from a regular exposed selfie camera.
Second-gen under-display selfie camera quality"
Samsung's ability to laser-cut an OLED display are unsurpassed resulting in the elegant punch holes that house the selfie cameras of phones like the Galaxy S21 Ultra, so we have little doubt that the company will have employed them on the Z Fold 3 as well to minimize refractions and allow for the maximum amount of light to pass through without compromising the display quality on top of it all.
Moreover, ZTE says that it uses a 16MP camera with tiny pixels and 4-in-1 pixel binning to achieve 2.2 micron "equivalent" pixel size. Given that the Galaxy Z Fold 3 is said to arrive with a 4MP under-panel camera (that's Samsung's term for it) we can't help but think that it swapped a relatively unimpressive resolution for a sensor with a big non-virtual pixel size.
Remember that time when HTC used a 4MP selfie camera and everyone laughed, then it turned out it is an UltraPixel unit with giant 2 micron pixel size so it laughed last, as each individual pixel was able to collect 3x more light than higher-res cameras with smaller pixels?
Yeah, something like that may be happening on the Galaxy Z Fold 3 as well, so we keep our hopes high that the selfie camera sensor under the main display will be able to collect much more light with huge pixel buckets to at least match the quality of Oppo's UDC selfies you see here.