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The security chip market has experienced rapid growth in recent years, especially as China's security industry continues to expand. This has created new opportunities for innovation and profit, positioning the security chip sector as a key area of development alongside industrial automation and consumer electronics. However, despite this progress, the industry still faces challenges due to the lack of self-owned core chip technologies.
For many years, the reliance on foreign chips has been a major bottleneck for China’s electronics industry. To address this, numerous efforts have been made over the past three decades to develop indigenous chip capabilities. Today, the Chinese chip industry is experiencing a boom, with over 1,188 registered companies on platforms like "China Manufacturing Network." The pace of new company registrations has been impressive, with up to four new firms launching daily, signaling a growing interest 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 also increased significantly, rising from 70.21 billion yuan to 144.02 billion yuan, reflecting strong market demand. Within the chip manufacturing industry, output rose from 23.29 billion yuan to 44.71 billion yuan, showing consistent growth.
Experts highlight that the IC design industry is concentrated in three main regions: the Yangtze River Delta, Pearl River Delta, and Beijing-Tianjin area. Each region has its own strengths, with the Yangtze River Delta leading in production chains and the Pearl River Delta excelling in application and market trends. Meanwhile, the Beijing-Tianjin region benefits from a wealth of research talent and advanced design capabilities. Pudong has emerged as a key player in the chip industry, driving improvements in manufacturing and enabling domestic companies to compete globally.
Despite these advancements, the security chip market remains dominated by foreign brands. However, the State Council has recognized the importance of the chip industry as a strategic basic sector, and the "Twelfth Five-Year Plan" emphasizes the need for technological innovation, core technology development, and product quality improvement.
Currently, the security chip industry is at the top of the security value chain, with foreign companies holding significant control. Middle-tier hardware manufacturers have developed their own R&D capabilities, while the downstream system integration sector is still in early stages. Most security chips and key devices are imported, creating a bottleneck for further growth.
Over time, Chinese security companies have improved their product quality and gained competitive advantages in both domestic and international low-end markets. With increasing demand, security chips are becoming a promising area for IC design firms. Major international players such as TI, NXP, ADI, Techwell, and Nextchip have entered the Chinese market, tailoring products 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 market. Subsequent chips like DM644x, DM3xx, DM646x, and DM648 helped establish TI’s dominance in the security sector.
From a technical perspective, the security industry has evolved into a complex ecosystem, with front-end devices, management platforms, communications, storage, and more. Experts predict that future development will focus on networking, intelligence, IT integration, and broader applications. As domestic chip technology improves, full localization of the security industry chain may become a reality.
User demands are shifting toward clearer images, easier access, and expanded applications. Security systems are moving from isolated islands to interconnected networks, with increased system capacity and a shift toward digital, networked, and intelligent solutions. Those who can independently develop and master core technologies will lead the transformation.
With the continuous maturation of digital video systems, audio and video coding standards have also evolved. While China previously lacked its own security video surveillance standard, the introduction of SVAC (Simplified Video Coding) has changed this. As the first independent audio and video codec standard for security, SVAC addresses practical issues and aligns with national requirements. It enables high coding efficiency and supports flexible, extensible architectures.
SVAC is expected to play a key role in the development of digital, high-definition, and intelligent security systems. It not only meets real-world surveillance needs but also ensures high-quality audio and video transmission. By prioritizing domestic intellectual property, it strengthens China’s position in global security standards.
Chen Chaowu, deputy director of the Ministry of Public Security, emphasized that SVAC will support the construction of urban public security systems. It helps resolve compatibility issues between different video surveillance systems and provides tailored solutions for security applications.
The digital video surveillance market is opening new opportunities for chip suppliers. Companies like TI, ADI, and others are investing in R&D to develop better products. As compression technologies mature, the cost of HD cameras has dropped significantly, making high-resolution video more accessible. With 1080p resolution now widely used, the market is expanding beyond traditional sectors like banks and transportation into the civilian space.
In conclusion, the rapid advancement of security technologies and products is driving broader adoption and creating new market opportunities. As costs decrease and accessibility increases, video surveillance is becoming more widespread, fueling the growth of the security chip industry. The future looks bright for this dynamic and evolving sector.