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In recent years, the rapid growth of China's security market has driven significant development in the security chip industry. As the needs of the security sector have become more defined, chip manufacturers have started to actively engage and promote security solutions, recognizing a market full of potential. The security industry has attracted increasing attention from chip companies, becoming a new area for profit after industrial automation and consumer electronics.
However, despite this growth, China still faces challenges due to its limited ownership of core chip technologies. This lack of self-reliant technology has constrained Chinese security companies from fully capitalizing on technological advancements. For many years, the chip industry was a major bottleneck for China’s electronics development. Over decades, efforts have been made to break free from foreign dependency, and finally, the national chip industry is beginning to show promising signs of progress.
According to statistics, over 1,188 chip companies are registered on "China Manufacturing Network," with an alarming rate of new startups—four per day. This surge indicates a booming chip business in China. Many of these companies specialize in chip design, employing small teams of 20 to 50 people. This reflects a growing ecosystem of innovation and entrepreneurship in the sector.
During the "Eleventh Five-Year Plan" period, China's integrated circuit production grew from 26.11 billion to 65.3 billion units, with an average annual growth rate of 20.1%. Sales revenue increased from 70.21 billion yuan to 144.02 billion yuan, averaging 15.4% growth. The chip manufacturing industry also saw steady growth, rising from 23.29 billion to 44.71 billion yuan, at an average of 14% annually.
Experts like Wang Qinsheng from the China Semiconductor Industry Association highlight that the IC design industry is concentrated in three key regions: the Yangtze River Delta, Pearl River Delta, and Beijing-Tianjin. Each region has its own strengths, with the Yangtze River Delta being the most developed and complete in terms of supply chain. The Pearl River Delta leads in application and market standards, while the Beijing-Tianjin area excels in research and design capabilities.
Pudong has emerged as a key player in mainland China's chip industry, driving manufacturing improvements and enabling domestic companies to compete globally. The State Council has recognized the importance of the chip industry, designating it as a core basic industry in its strategic emerging industries plan. With the start of the "Twelfth Five-Year Plan," the focus is on promoting technological innovation, mastering core technologies, and developing competitive products to build international enterprises.
Currently, the security chip market is dominated by foreign brands, with Chinese companies struggling to gain control of the upstream segment. While mid-tier hardware manufacturers have some R&D capabilities and hold significant market shares, the downstream system integration sector remains fragmented. Security chips and key devices are largely imported, limiting the industry’s growth. Due to the lack of core technologies, many Chinese companies only earn low profits through processing or assembly.
Despite these challenges, China’s security companies have improved their product quality and technological content, gaining a competitive edge in the low-end markets. Strong demand supports further development, and security chips are emerging as a new area of interest for IC design firms. International players such as TI, NXP, ADI, Techwell, and Nextchip are increasingly targeting the Chinese security market, tailoring chips to meet local needs and boosting the industry’s growth.
In 1999, NXP introduced the PNX1300 chip, marking the first dedicated security chip in China. In 2003, TI launched the TMS320DM642, entering the digital video surveillance field. Subsequent chips like DM644x, DM3xx, DM646x, and DM648 solidified TI’s dominance in security video surveillance.
From a technical perspective, the security industry is divided into front-end, management platforms, communications, storage, and more. Prof. Chen Long from the Chinese Academy of Sciences notes that the industry is in a transitional phase, with unclear leadership roles. However, the future direction lies in networking, intelligence, IT integration, and security applications.
As chip technology improves, full localization in the security industry becomes possible. Users now demand clearer images, easier access, and broader networked systems. Security systems are evolving toward digital, networked, and intelligent solutions. Companies with strong R&D capabilities and core technologies will lead the transformation.
With abundant domestic resources and growing standardization, the chip design industry can enter the market quickly, accelerating localization and industrialization. Facing high-definition demands, China’s “security core†must evolve accordingly. The SVAC standard, China’s first independent audio-video codec standard, has brought new vitality to the industry, enhancing national brand competitiveness.
SVAC addresses practical issues in surveillance coding, aligns with China’s security needs, and offers high coding efficiency. It ensures faithful reproduction of audio-visual scenes while maintaining quality. Its flexible architecture allows for future expansion and adaptation.
Chen Chaowu of the Ministry of Public Security emphasized that SVAC will support the construction of urban public safety systems by solving interoperability issues and meeting specific security requirements. The digital video surveillance market is creating new opportunities for chip suppliers, with declining costs and improved clarity making HD cameras more accessible.
In conclusion, the continuous introduction of new technologies and services in the security industry is accelerating adoption and expanding market opportunities. As costs drop, video surveillance equipment will move beyond traditional sectors like banking and transportation into the civilian market, driving the industry to grow even larger with promising prospects.