Now, cameras are everywhere. Hikvision is the world leader, and one of its suppliers of camera chips is fuhanwei.
The video monitoring system includes front-end and back-end equipment and intermediate transmission system. The realization of each function is inseparable from the support of the corresponding chip. 1) The front-end equipment completes the acquisition of video signals, including one or more cameras and their supporting equipment, and completes the acquisition of image, voice, alarm and status information. The camera will capture the scene situation into analog / digital video signal and transmit it to the monitoring system. 2) The signal transmission part completes the transmission of front-end audio and video, control and status signals. According to the type of transmission signal, it can be divided into digital and analog. 3) Back end devices include control, display, storage, etc. The control end completes the display switching of video signal, the control of cloud mirror and the allocation of resources to realize the function of scheduling management; The display end completes the output to the video signal terminal equipment; The video storage end mainly completes the storage and playback of digital video signals, including DVR, NVR, etc.
According to IDC China data, cameras are the largest expenditure in China’s video surveillance market, accounting for 64.8% of the market expenditure in 2018. Assuming that the proportion remains unchanged, multiplied by the scale of China’s video surveillance market from 2019 to 2025 calculated above, it is estimated that the scale of China’s video surveillance cameras will reach US $16.82 billion in 2025. According to the market price of mainstream video surveillance cameras and the chip market price adopted by well-known domestic security enterprises, the price of mainstream cameras is about 300 yuan, and the chip price is about US $7. It is calculated that the chip cost of available cameras accounts for about 15%. Assuming that the chip accounts for 15% of the camera expenditure, multiplied by the estimated market scale of China’s camera from 2019 to 2025, the market scale of China’s video surveillance camera chip is expected to reach US $2.5 billion and RMB 17.7 billion in 2025.
The development of video surveillance system has experienced four stages: simulation, digitization, networking and AI.
The analog camera converts the analog signal into digital signal for output. The interlaced scanner is used to convert the optical signal into analog electrical signal. Then the DSP performs a/d conversion and color processing, and then performs d/a conversion. Finally, it is modulated into pal/ntsc standard television video (CCTV) signal for output. In the late 1970s, the first generation of analog camera monitoring system adopted the form of analog camera + video cassette recorder (VCR). After 2000, the embedded hard disk video recorder (DVR) appeared, which is used for the coding and storage of front-end analog signals. The mode of analog camera + DVR is mature and stable, and is still used in some scenes.
The front-end chip of analog camera is ISP (image signal processing) chip, which mainly processes the output signal of image sensor. Analog camera + DVR (digital hard disk video recorder) is the core of analog video monitoring system. The main functions of DVR include digital coding, compression and storage.
ISP chip is an important component of video surveillance camera. The main function of ISP chip is to process the original image signal collected by the image sensor in front of the video surveillance camera to restore and enhance the image. The output image processed by ISP chip can be directly displayed on the display or compressed and stored by digital hard disk video recorder (DVR). The performance of ISP chip directly determines the imaging quality of video surveillance camera.
ISP chip integrates functional modules including CFA interpolation, white balance correction, gamma correction, 3D noise reduction, edge enhancement, pseudo color suppression, wide dynamic processing, and integrates a microcontroller that can be used for user programming. While obtaining high performance, it also greatly optimizes the chip power consumption and physical area, making the video surveillance camera have the remarkable characteristics of high definition, good low light performance, small volume and low power consumption.
DVR SOC codec chip is the main chip of embedded video monitoring DVR equipment. The video and audio data collected by the front-end camera is transmitted to the DVR through the cable. The DVR first digitizes the video and audio signal, and then inputs the digital video signal into the DVR SOC chip. The DVR SOC chip compresses the video and audio data and stores it in the hard disk and other devices. When it is necessary to trace back later, the stored video and audio data can be called out for retrieval and playback.
DVR SOC chip integrates the central processing unit (CPU), graphics processor, video codec, display controller, bus controller, memory subsystem, audio processor and other functional modules. While obtaining high performance, it also specially strengthens the multimedia processing ability. It has the remarkable characteristics of rich interfaces, low power consumption and high reliability.
When it was launched in 2017, Fuhan micro’s main products were ISP chips, as well as a small number of DVR SOC chips and IPC chips for webcam.
The market scale of ISP chip is directly related to the shipment of analog camera, which is expected to stabilize at the level of RMB 300-400 million.
Among them, the analog SD ISP chip continues to decline and gradually marginalizes, while the analog HD camera is the key to the simulation to the network
The use of ISP chips will rise rapidly; The total market volume of the two types of model cameras has remained basically stable in recent years.
It is expected that with the maturity of ISP technology, its price will gradually decline slightly. Therefore, it is estimated that the scale of domestic ISP chip market is about 300-400 million yuan, which is basically stable.
Fuhanwei’s security ISP chip is a global leader and the largest ISP chip supplier of Hikvision, the world’s largest security giant. The main market participants of analog camera ISP chip are domestic integrated circuit design enterprises represented by Fuhan micro and Korean enterprises represented by South Korea nextchip and South Korea pixelplus. According to IHS, China’s analog camera manufacturing market totaled 62.2903 million in 2013, and the company sold 15.2673 million ISP chips in 2013. According to this calculation, Fuhan micro’s ISP chip market accounted for 24.51% in 2013.
From 2014 to 2016, ISP chips accounted for 70% of the total revenue of Fuhan micro.
It can be seen that although Fuhan micro has the largest market share in the field of ISP chips, the market is gradually shrinking and the market space is not large.
The digital camera directly outputs digital signals. After the emergence of NVR, the digital video monitoring system of analog camera + DVS + NVR was produced. Under this system, DVS (digital video server, network video server, also known as digital video encoder) only has the function of coding and compression, and has no storage capacity. Instead, the digitized information is transmitted to the back-end NVR through the Internet for storage.
Before 2010, the security industry was dominated by analog cameras. Traditional foreign-funded security manufacturers, such as axis, Honeywell, Sony and Panasonic, had accumulated deep technical advantages in analog products and were cautious about investing in digital products. On the contrary, domestic security manufacturers such as Haikang and Dahua actively invested in digital system research and development. Therefore, in this wave of technological innovation and changes in the industry path, the domestic leader realized overtaking on the curve. The landmark event was that in 2011, Hikvision became the first in the global video surveillance market.
The Internet Protocol camera (IPC) encodes and compresses the digital signal and then outputs it. After 2000, the network video surveillance system based on embedded technology, network and communication technology and characterized by intelligent image analysis has developed rapidly, and the network camera also came into being. On the basis of analog camera, network camera integrates video compression and network transmission processing module (DVS), which has the technical characteristics of analog camera and video server. The network camera usually adopts embedded architecture, which integrates various functions such as video and audio acquisition, signal processing, coding and compression, intelligent analysis, buffer storage and network transmission. Combined with the video recording system and management platform, it can build a large-scale and distributed intelligent network video monitoring system. Compared with the analog camera, the network camera has higher definition and receives less interference when transmitting digital signals through the network. With the emergence of network cameras, video monitoring has developed from local monitoring to remote monitoring. The whole video monitoring system is developing in the direction of intelligence.
According to IHS data, in 2019, the global video surveillance equipment market scale was US $19.9 billion, with a year-on-year increase of 9.3%; The proportion of webcam has increased from 39% in 2014 to 70% in 2018, and has become the mainstream.With the front-end IPC network camera gradually replacing the analog camera and IPC SOC replacing the ISP, IPC gradually realizes the full digitization from video acquisition to coding and compression. At this time, the architecture of digital video monitoring system is simplified to IPC + NVR.
IPC SOC chip is the core of video surveillance network camera. IPC SOC usually includes ISP module and video coding module. The original video data collected by the image sensor at the front end of the camera is processed by ISP module and sent to the video coding module for compression. The compressed video and audio code stream is transmitted to the back-end NVR through network cable or wireless link. The NVR receives, processes and stores the video and audio data. When backtracking is required in the later stage, the stored video and audio data can be called out for retrieval and playback.
IPC SOC usually integrates embedded processor (CPU), image signal processing (ISP) module, video and audio coding module, network interface module, security encryption module and memory subsystem. Some chips also integrate video intelligent processing module. ISP is at the forefront of the processing flow, and the performance of ISP directly affects the image quality and compression efficiency after coding.
In 2014, the IPC SOC chip of Fuhan micro network camera began mass production. In 2016, the company shipped 5.36 million IPC SOCS. In 2017, the company launched intelligent HD webcam SOC chip based on smart264 coding technology.
From 2013 to 2017, the compound growth rate of China’s webcam shipments was 84%, and the total market volume reached 79 million units in 2017.
In 2014, Texas Instruments took the lead in the market pattern of IPC SOC chips, followed by Huawei Hisilicon, anba, Shengmai technology and NXP.
In 2017, the domestic IPC SOC market has been highly concentrated. Several large factories such as Huawei Hisilicon and Texas Instruments account for more than 90% of the domestic market share, of which Hisilicon has 64% of the market share and absolutely leading products.
In 2019, Huawei Hisilicon’s market share was 64%, dominated by one, followed by Texas Instruments 17%, anba, NXP, Shengmai technology, etc.
Fuhan micro has a very low proportion in the largest market of this video surveillance chip.
It can be seen that the IPC SOC field has the typical characteristics of constant strength of the strong. As a latecomer, fuhanwei is difficult to catch up quickly.
This market competition is also very fierce. Guoke micro, Beijing Junzheng, Quanzhi technology, Ruixin micro, Xingchen technology sigmastar, Jingchen shares, etc. are all involved.
Since 2015, the camera has moved towards the road of intelligence and made efforts to “understand”. With the high definition of video surveillance and
With the development of network, the realization of some image analysis and processing technologies becomes easier and easier, and intelligent applications begin to show their strength. Based on high-definition image acquisition, intelligent camera has accurate image recognition ability and brain thinking ability. With the help of video analysis software, it can process massive data that human beings cannot process. At present, the intelligent tracking function, passenger flow statistics function, face bayonet system function, video quality diagnosis technology, real-time video fog penetration, smooth display engine, high-definition video splicing and so on are widely used in the security industry.
Security has entered the AI era. The penetration rate of smart cameras in China is only 1%. AI chips are updated and iterated quickly, and chip manufacturers have great growth opportunities. According to the prospective research institute, China has a demand for 50 million cameras a year, but only 500000 smart cameras are actually used, which is only 1%. China’s intelligent security has just entered the primary stage. AI application in China is still in its early stage, and it will take 5-10 years for AI to occupy the mainstream security market.
Fuhan micro’s IPC SOC products fh8830, fh8630d, fh8630m, fh8632, fh8852 and fh8856 have beenThe integrated intelligent module can implement applications such as motion detection, face detection, human shape detection and abnormal alarm. Including fh8852
And fh8856 meet the h.265/hevc video compression standard. At present, we are independently developing core technologies such as intelligent algorithms and accelerating the landing of AI chips.
In addition to the surveillance camera, fuhanwei is also entering the field of automotive electronics (car camera) and intelligent hardware (home camera), but the scale is still very small.
Because the on-board camera mostly adopts wired connection mode, and the analog camera is the main type, ISP has become the preferred scheme of on-board camera image signal processing chip. At present, there is a strong demand for intelligent driving in the downstream automotive field. Rear view, look around and in cabin monitoring have increasingly become the rigid demand of the market, and the demand for ISP chips has maintained a rapid growth. In August 2018, fuhanwei released its first car front loading chip fh8310 and entered the vehicle front loading market. This product is the first vehicle specification ISP chip with more than one million pixels in China. At present, it has been carried on BYD Tang second generation. On BYD new energy vehicles, fh8310 is mainly used in the interior camera of the interior multimedia system to provide clear interior video images for drivers under different lighting conditions. The interior camera is mainly used to provide functions including interior monitoring, video call, etc. In the future, it is also expected to combine with artificial intelligence to realize high-end functions such as driver fatigue early warning and gesture recognition.
In 2019, the revenue of car camera chips was 66 million, accounting for 12.65% and the gross profit margin was 43.55%.
In addition to the in car camera, Fuhan micro related products have been widely used in the fields of car reversing rear view, tachograph, in car monitoring and so on.
It can be seen that Fuhan micro started from ISP chip for analog camera. Although it has the largest market share, it has little market space in this field and is constantly replaced by webcam. At the critical time point of the transition from analog camera to network camera, Fuhan micro failed to seize the opportunity, missed the opportunity of rapid development of IPC chip, and was crushed by Huawei Hisilicon. This market is highly competitive. Fuhan micro product line is mainly medium and low-end, so it has to compete for the market through low price. As a result, the company’s gross profit margin and net profit margin fell all the way, from 56% in 2016 to 37%.
Roe fell more sharply, from 52% in 2016 to 7.53%, from excellent to mediocre.
Although the company’s revenue is growing, the deduction of non net profit is only 60% of the peak in 2016.
In addition, downstream customers are highly concentrated and are dominated by Hikvision and Dahua shares. The company’s largest customer is Hikvision, accounting for 63%; The second largest customer accounts for 26%. The concentration of customers is very high. Therefore, the company lacks bargaining power when facing customers.In addition, there are great doubts in the company’s M & A projects. Shortly after listing, in May 2018, fuhanwei signed a capital increase agreement with mouxin Technology (Shanghai) Co., Ltd. the company invested RMB 17.06 million to increase the capital of mouxin Technology (Shanghai) Co., Ltd., accounting for 51% of the equity after the capital increase.However, moxin technology was established in March 2018. The forefoot has just been established and invested in only two months? Before long, fuhanwei transferred most of its equity. Then in 2021, fuhanwei announced that it would acquire 32.43% equity of moxin technology with 330 million cash. The proportion of equity of moxin technology held by the company would be changed from 18.57% to 51%, and moxin technology would become the holding subsidiary of the company. If you are optimistic about eye core technology, why did you transfer it at the beginning and not hold it all the time? Now buy at a high price? Will there be something fishy about the transfer of benefits behind this?
When listed in 2017, the company raised more than 500 million funds to invest in ISP chips, IPC SOC chips and other projects. As a result, on March 1, 2019, Fuhan micro announced that “due to the influence of various factors in the actual implementation process, it is unable to reach the predetermined usable state within the planned time”, and will postpone some IPO raised investment projects. The delayed projects belong to the IPC SOC field that the company focused on before, and the main reason for the delay is that the project “continuously improves the requirements for product reliability, performance and cost, and takes a long time for the implementation and verification of product schemes”. Coupled with the financial indicators of the past three years, it is obvious that the funds raised by the company’s IPO have not been well utilized, which has not helped the company enhance its competitiveness and obtain good returns. However, in 2021, the company threw out another 581 million yuan of convertible bond fund-raising plan for high-performance artificial intelligence edge computing series chip project, new generation full HD webcam SOC chip project, vehicle image signal processing and transmission link chipset project. This can’t help worrying: will the embarrassment of raising large sums of money and then falling short of expectations, revenue growth and declining profits be repeated?
Many brokerage research reports said that due to the suppression of Huawei Hisilicon by the United States, a large part of its IPC SOC chip market share will be transferred to Fuhan micro. However, fuhanwei’s third quarterly report did not show a large increase in revenue and profits. In addition, Hisilicon substitutes such as Lianyong technology and Xingchen technology are also eyeing. As most of the business of Fuhan micro is in ISP chips, it is not optimistic how much IPC SOC chips can be replaced.