Chinese surveillance camera maker Hikvision warns of long-term chip shortage

Hikvision president Hu Yangzhong said uncertainties loom in case of an extended chip shortage worldwide
The shortfall has disrupted business for manufacturers of cars, smartphones, game consoles and other electronics products

Semiconductors

Iris Deng

Published: 8:30pm, 18 Apr 2021

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Hangzhou Hikvision Digital Technology, China’s top surveillance camera systems maker under US trade sanctions, is bracing for an extended global chip shortage, even as the company denies any immediate impact on its operations.

Hu Yangzhong, president and general manager of Hikvision, said the current worldwide semiconductor shortfall has not had any impact on the company, but indicated that uncertainties loom on the horizon if the situation persists, according to a report by Chinese media Yicai on Saturday.

“How long will this shortage in the semiconductor supply chain last – one or two years, or even longer?” Hu said in the report. “There are uncertainties in the long-term impact of the shortage.”

Hu described the global chip shortage, which has disrupted production of cars, smartphones, game consoles and other electronics products, as something that has never been seen in the past 30 years.

An array of surveillance cameras from Hangzhou Hikvision Digital Technology are displayed inside a consumer electronics mall in Beijing on May 24, 2019. Photo: Agence France-Presse

The concerns raised by Hikvision come amid a global shortage of integrated circuits (ICs) that has chip makers scrambling to supply manufacturers worldwide, including those in China’s vast home appliances sector. The country produces about two-thirds of the world’s air conditioners, televisions and microwave ovens, and about half of refrigerators and washing machines, according to data from the China Household Electrical Appliances Association.

C C Wei, chief executive of Taiwan Semiconductor Manufacturing Co (TSMC), said in a conference call earlier this week that geopolitical tensions were to blame for the dearth in ICs, which led the firm’s clients to stockpile chips and created “short-term imbalance in the supply chain”. Despite supply constraints, business is booming at TSMC, the world’s largest contract chip maker.

Hikvision’s Hu said the company has managed to cope with disruptions in its supply chain, thanks to a steady build-up of inventory over the years.

Beyond the US trade blacklist, which restricts Hikvision from doing business with American suppliers, Hu said the chip shortage is the company’s major challenge at present and in the near future.

Hikvision did not immediately reply to an emailed request for comment on Sunday.

Here’s what you need to know about Chinese surveillance camera maker Hikvision

Hikvision started to stockpile crucial parts in 2019, when the company reported a more than 90 per cent surge in holdings of components and 30 per cent in finished goods in six months. It said that strategy was meant to ensure “sustained and stable” production.

The Trump administration added China’s top two surveillance camera providers, Hikvision and Dahua Technology, to the US Entity List in October 2019. China is the world’s biggest market for closed-circuit television cameras, access control and intruder detection productions.

Hikvision has grown into the world’s largest surveillance camera supplier amid surging demand for security equipment across the globe and China’s own state-directed efforts to build an “omniscient” surveillance network by 2020. The company’s revenue grew 10 per cent to 63.5 billion yuan (US$9.7 billion) last year, while its net profit rose 7.8 per cent to 13.4 billion yuan.

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