China's electronic security industry sprouted in the 1980s, until around 2000, China's electronic security is officially into the fast lane of development, has been with the help of H.264, H.265 two technological upgrade opportunities, to achieve the catch-up of international enterprises, and formed a number of global influence of security enterprises, especially Hikvision, since its establishment in 2001 20 years, the last 9 years have been ranked in the global security TOP 1, Dahua shares also long-term domination of the global security TOP 2.
Today, China's security market is still developing rapidly, is in a critical period of high-definition to intelligent evolution, and the demand for AI SoCs is also unprecedentedly urgent.
Security intelligent upgrade shift, AI SoC ushered in a period of rapid development
According to Gartner statistics, global security camera shipments in 2019 were about 430 million units, and are expected to grow to 850 million units by 2022; of which Chinese mainland is the world's largest single market, accounting for more than 45% of the world. In terms of market size, according to Omdia statistics, the global intelligent video surveillance market size in 2019 is about 22.1 billion US dollars; of which the Chinese market is 10.6 billion US dollars, accounting for 48% of the global proportion, and by 2024, the Chinese market size will increase to 16.7 billion US dollars.
It should be noted that China is not only the world's largest security market, but also the leader of new technologies and new applications in the world.
Driven by policies such as Safe City and Xueliang Project, the density of surveillance cameras in the mainland has reached a high level, according to IHS statistics, 4.1 people have a camera in 2019, further shortening the gap with developed countries such as the United States (4.6 people/ unit) and the United Kingdom (6.5 people / unit). At the same time, the security industry has entered a period of rapid development of intelligence after four stages of development: analog, digital, networked and high-definition.
IHS data shows that in 2020, the global network camera shipments will be 143 million units, and by 2023, it will increase to 200 million units, with a compound annual growth rate of 21.82%. According to Omdia analysis, the proportion of global AI cameras in network cameras is expected to increase to 64% in 2025; while China will become the fastest growing market for AI cameras in the world, with penetration increasing from 10% in 2019 to 63% in 2024.
According to IDC forecasts, in 2017, the shipment of AI cameras in mainland China was 550,000 units, and it is expected to be close to 35 million units in 2022, with a compound annual growth rate of 128.92%. An AI camera corresponds to an AI SoC chip, that is, by 2022, the market needs close to 35 million AI SoC chips.
In addition to the front-end IPC, the end-side NVR and AI Box will also be important application areas for AI SoC chips. An NVR can access 1-256 channels of video, under normal circumstances, an NVR AI SoC chip can process 1-14 channels of video, according to industry statistics, an NVR AI SoC chip corresponds to 5 cameras, that is, the ratio of IPC AI SoC chip and NVR AI SoC chip is about 5:1, and in the field of professional security, with the acceleration of networking and intelligent penetration, this proportion will continue to increase.
In fact, some security systems adopt a back-end intelligent solution, and the front-end follows the conventional camera, which will also accelerate the penetration rate of NVR AI SoC chips.
In addition, security equipment such as face access control and mobile terminals also have a huge demand for AI SoC chips. Omdia data shows that the acceleration of security intelligence is driving the rapid growth of global AI SoC chip revenue, which is expected to increase from $400 million in 2020 to $2.8 billion in 2025; at the same time, the proportion of security AI chips in end-side chips will increase from 2% in 2020 to 10% in 2025.
JW Insights believes that under the wave of intelligence, security, as the power point of AI landing, is leading a new round of scientific and technological revolution, and the huge chip demand behind it will also bring new opportunities and challenges to various chip companies. How to seize the opportunity of the core and become the base of intelligent security and even end-side AI is becoming a new focus of various AI SoC chip providers.
The market is now vacuum, and the smoke of security AI SoC chips has risen again
In the analog era, Ambar and TI are the undisputed kings of security chips, covering almost the global ISP market. However, with the advent of the two technological revolutions of digitalization and networking, security chips have ushered in a new group of players.
Among them, HiSchia is one of the best. When the security codec format was shifted from M-JPEG and MPEG-4 to H.264, Hikvision, Dahua and other security equipment manufacturers launched a wave of domestic substitution, and HiSilicon immediately launched a video codec chip Hi3510 that supported H.264, and began to be adopted by Dahua in 2007, and then obtained the support of Hikvision, and China's security "core" has since moved to the road of domestic substitution.
In 2013, with the help of the upgrade of the codec format from H.264 to H.265 with higher compression efficiency, HiSilicon took the lead in launching the Hi3516A chip, which accelerated the autonomy process of the security chip. Public information shows that HiSilicon once occupied 70% of the chip market share in the front-end IPC, and the market share of back-end storage was as high as 90%. Its products not only occupy a very high market share among local security companies, but also obtain large-scale shipments in overseas markets, such as Hanwha (formerly Samsung Security) and other well-known security companies are also its customers, HiSilicon has become the world's largest security chip supplier.
At present, China's security is in a critical period of evolution from high-definition to intelligent, but under the influence of geopolitics, HiSilicon has lost the source of chips, which directly leads to the "core" disease of Chinese security. In this context, overseas security companies re-select the original chip suppliers, and the domestic market, affected by chip supply, local security equipment manufacturers have a serious lack of cores, especially high-computing power AI SoC chips, which are still in a state of shortage.
In fact, as early as the time when HiSilicon galloped the security market, Xingchen Technology, Guoke Micro, Beijing Junzheng, Fuhan Micro and other manufacturers have launched corresponding chip products based on the H.265 new generation standard, but compared with hiSilicon's more complete product line and better performance product layout, local chip companies focus on cost-effective routes, and the market share obtained is relatively limited.
After the sharp decline in HiSilicon shipments, local chip suppliers began to fill the local chip market, but compared with the market vacancy share left by HiSilicon, the shipments of local chip suppliers in 2021 could not meet the market demand. In the face of the still expanding demand for AI, the industry has opened a new round of security "core" opportunity battle, Rockchip, Quanzhi Technology, Jingchen shares, Yuntian Lifei and other enterprises with security chip research and development and supply capabilities to accelerate the expansion of market share; at the same time, Cool Core Micro, Yizhi Electronics, etc. have also stepped into the security field, and launched corresponding AI SoC chip products for the high-end market.
Among them, Xingchen Technology, which is backed by MediaTek, took the lead in seizing a large amount of market share left by HiSilicon, and obtained the support of a number of powerful equipment manufacturers such as Dahua Shares; Fuhan Micro successfully cut into the field of high-end digital chips from analog chip suppliers, launched a series of high-end AI SoC chips for cameras such as 8858, and its eye core technology is the main provider of domestic NVR AI SoC chips, achieving a full-stack layout, and is also the foundation for Hikvision to expand its territory.
Beijing Junzheng broke through the low-end market in one fell swoop, following the launch of the T series AI SoC chip for the camera, and also launched the A series products for NVR in 2021, realizing the complete layout of the front and back end. Among other enterprises, Rockchip has launched a new generation of security front-end solutions RV1106 and RV1103, a back-end NVR solution RK3568; Kuxin has launched a new generation of AR93 series high-performance vision AI chips; and Echiels has launched SV826/SV823 AI SoC chips.
According to the data disclosed by Fuhan Micro, as of the end of 2020, HiSilicon still occupies the largest market share of IPC SoC, about 30%; after Xingchen Technology fills some markets, its market share has increased to 25%, Fuhan Micro also has 17%, Beijing Junzheng has increased to 12%, and the total market share of other companies is about 15%.
Compete for 2022! Domestic and foreign enterprises compete on the same stage
After the market layout from 2020 to 2021, many local enterprises already have the potential to replace HiSilicon and will collectively exert their strength in 2022, the original advantageous enterprises hope to expand market share, and the new entrants expect to gain a firm foothold.
In the low-end market, SSC339G/SSC338G launched by Xingchen Technology in 2019, FH8856 launched by Fuhan Micro in 2019 can replace HiSilicon's Hi3516DV300 chip, E-Wisdom Electronics' SV826/SV823 released in 2021, Rockchip's RV1109/RV1126 can also replace HiSilicon's Hi3516DV300/Hi3516AV100 and other products; in terms of high-end products, Rockchip Micro RK1808, Beijing Junzheng T30/T31, and Kuxin Micro AR93 Series are all powerful alternatives.
Some domestic alternatives to HiSilicon SoC chips (Source: CSDN, Everbright Securities)
However, in the high-end field, the current alternative products are still few, mainly Beijing Junzheng's T30, T40 and other small number of models of products, and some products have not yet been shipped, is expected to achieve large-scale supply to the market in 2022.
In the short term, local chip companies are still difficult to replace hiSilicon's original market, especially in the high-end field, but also let TI, Amba, NXP and other previously suppressed international companies see the opportunity to re-increase the security market.
Among these three companies, NXP and TI have a weak willingness to return to the security king, of which NXP's representative product is ASC8850, TI's representative products are DM365, DM368, DMVA2, etc. It should be pointed out that these chips are more traditional, focusing on image processing, and cannot meet the needs of high-end AI computing. The focus of these two companies has shifted to the field of automotive and autonomous driving, and support for security is limited.
Only Amba has the strongest willingness to participate in the competition for a new generation of AI SoCs in the post-HiSilicon era, and has launched the first generation of CV5/CV52 series 5nm chips on the basis of the two traditional series representative chips of A5S and CV2S2S, and laid out two 10nm low-power chips, CV28S22MEX and CV28S26MEX. Ambarco's next-generation product features 8K ultra-high resolution video encoding and decoding capabilities, and a single chip can support up to 14 channels of video processing.
In terms of performance, the performance of Amba's new generation of chips is better than the new generation of AI SoC launched by local enterprises in this round, only in the process process, local companies mainly use 22nm, 28nm, 12nm process products are still being optimized, Ambarco's leading edge is obvious, focusing on the industry's high-end market, and the benchmark is high-end chips such as HiSilicon Hi3559.
However, it should be pointed out that after the acquisition of 4D imaging radar algorithm company Aoku, Amba's intention is not limited to security, intending to open up the auxiliary autonomous driving market based on vision technology, and its plan is to integrate millimeter wave video and lidar into AI SoC chips, and COMPETE with TI and NXP in the field of millimeter wave radar, while the security market is only a return in passing.
JW Insights believes that in the post-HiSilicon era, local chip companies and international giants have their own advantages, local companies focus on meeting the mainstream needs of the market, and in the future, on the basis of stabilizing the low-end market, we will exert efforts on the high-end market and gradually replace the market left by HiSilicon. International enterprises, although they have more advanced technology, but in the low-end market field has lost the cost-effective advantage, the future mainly deep ploughing high-end market, the market share obtained will be relatively limited, this advantage or will gradually lose the advantage with the product iteration of local enterprises. In the next few years, it will be a situation in which local companies and international companies will jointly maintain the market.
Local enterprises are accelerating their layout and want to cut off the way back of HiSilicon's return
After the above analysis, it is found that in the post-HiSilicon era, after tasting the sweetness in 2021, local chip companies have placed the power point of competition in 2022, not only many new products, but also a large leap in production capacity, giving priority to meeting the domestic security market demand for AI SoC chips.
However, compared with HiSilicon's high-end products, the performance of local enterprise products is still not as good. In fact, at present, when various chip companies launch new products, they still use HiSilicon products as a benchmark, whether it is image processing, AI computing, chip power consumption, or still catching up with hiSilicon.
In terms of the market, in 2021, HiSilicon still maintains shipments, whether local companies have caught up with HiSilicon in terms of shipments, the industry still maintains a cautious prejudgment, once HiSilicon resumes the supply chain, it will regain the market with a rapid momentum, which is also the concern of other local companies and international companies that continue to develop more advanced security chips.
In order to consolidate and continue to expand the substitution of HiSilicon, local companies mainly adopt two major strategies.
First of all, accelerate the iteration of technology, so that product performance catches up with HiSilicon's high-end series products. From the development history of HiSilicon, we found that the change of H.264 compression format has made HiSilicon rise; seizing the opportunity of the introduction of the H.265 standard has enabled HiSilicon to successfully catch up with international giants and become the leading supplier of global security chips.
The threshold of suppressing Huawei in the United States coincides with the launch time of the H.266 standard. If all goes well, HiSilicon's new generation of chips for the H.266 standard or launched in 2021-2022, HiSilicon will once again lead the industry and become a pioneer in the field of security.
However, after HiSilicon was grounded, as of now, the chip products for the H.266 standard in the security industry are still planned. In the future, when chip companies continue to develop higher performance AI SoCs, the codec compression chip for the H.266 standard will also become an important weight in the stable market in the post-HiSilicon era. At present, some enterprises are planning, such as Beijing Junzheng, which plans to launch the IPC chip T50 and NVR chip A2 in 2023, and the IPC chip T51 and NVR chip A3 launched in 2024, all of which have taken the H.266 standard as the development direction.
Secondly, in order to compete for the market, a new round of competition is mainly cost-effective, under the same performance, some chip prices are only 1/2 of the benchmark HiSilicon products, or even lower, in order to accelerate market share. In addition, accelerating the layout of product lines is also an important strategy for enterprises to meet the one-stop procurement needs of more enterprises for AI SoC chips.
JW Insights believes that a series of operations by local enterprises aim to enhance market competitiveness and expand market share, while also sniping at international companies to seize the opportunity to occupy the market and reduce the competitive pressure after HiSilicon resumes supply chain in the future. However, under the low-price strategy, the company's net profit will decline, which is not conducive to the subsequent continuous investment in research and development, especially for new players who have just entered the industry, they will face greater competitive pressure. (Proofreader/James)