According to insiders, the controversial Chinese company Huawei wants to recapture lost shares in the market for surveillance camera chips.

The telecom equipment and electronics provider has already started delivering a new generation of these processors, several people familiar with the matter said on Wednesday. "These surveillance chips are relatively easy to manufacture compared to smartphone processors," one of them added. Huawei declined to comment on the matter.

Huawei is on a US blacklist due to possible espionage for the Chinese government. Other Western countries are also critical of the use of the company's components in mobile networks. For example, the federal government wants to partially ban their use from January 1, 2026.

Before Huawei came under pressure from Western countries, the HiSilicon division was the global market leader for surveillance camera chips. Brokerage firm Southwest Securities estimated its global share at 60 percent in 2018. According to the consulting firm Frost & Sullivan, the share fell to just under four percent in 2021. HiSilicon's customers included the surveillance system specialists Hikvision and Dahua. In the meantime, Novatek from Taiwan has taken the place of Huawei's division as a supplier of modern chips for the industry, insiders said.

As Huawei has only had limited access to Western technology in recent years due to various embargoes, the company has apparently stepped up its own development work. At the beginning of August, it attracted attention with the presentation of its new generation of the "Mate 60" smartphone. According to experts, the Chinese-manufactured processors installed in the device are on a par with Western models.

According to the industry service TechInsights, the semiconductors manufactured by the Chinese contract manufacturer SMIC were designed with modern special software "that they shouldn't actually have". "We don't know whether the Chinese obtained these illegally or - more likely - developed their own tools," said TechInsights analyst Dan Hutcheson. The world's leading providers of these programs are the US companies Cadence and Synopsys as well as the Siemens subsidiary Mentor Graphics.

(Report from the Reuters Beijing and Shanghai offices and by Hakan Ersen; edited by Sabine Wollrab. If you have any questions, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and the economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).