First things first, as you return to see what we’re posting, know this – I am not going to be the only contributor. Yay, for you! That means you won’t have to put up with me too often and that’s a good thing on so many levels.
Today’s post is about supply chain. I know, exciting stuff. But as you may have noticed (or may not have), the chipset availability for many cameras has for all practical purposes “dried up”. The shortage is a combination of a lot of things – the most obvious being COVID-19. The pandemic wreaked havoc on factories all over the globe, and when the production train started back down the tracks, prioritization of resources pushed cameras off to the side (for what reason, I don’t know).
Another factor severely impacting chip set availability was the United States government sanctions against China’s Huawei HiSilicon chip division earlier this year. And as of September 15, 2020, multiple Chinese sources confirm that HiSilicon chips are no longer being manufactured or supplied to HiSilicon by its manufacturing foundry partners.
I don’t have a particular stance on the security status of Huawei as company, but it is important to note because we are in the manufacturing business and must acknowledge it. The Hisilicon chipsets are the most widely used chipset for DSPs (Digital Signal Processors), as well as the chipsets behind a very large number of AI devices and PTZ cameras. This is primarily due to cost.
Very early in our development process at VDO360, we made an engineering decision to steer away from Hisilicon and use competitive products. We felt that this gave us a competitive advantage to utilize best-in-class chipsets for functionality, while only impacting our margins slightly.
And it’s been a lifesaver. Because VDO360-designed cameras aren’t built with HiSilicon chips, we’ve been able to continue production throughout 2020 – with over $1 million worth of USB and PTZ cameras in inventory – (currently in our warehouses in the USA)!
We do not use an OEM camera farm. We contract through an exclusive camera manufacturer that only produces PTZ cameras for VDO360. We’ve worked directly with this company – same team – since the inception of VDO360. They are not only our valued partner, but our family.
The security issues with HiSilicon aren’t anything new. We, as an organization, have been trying to alert the industry about the overlap of security concerns and the impact it will have on business, development and production. The National Defense Authorization Act (NDAA https://www.vdo360.com/news ) has been in effect for several years, yet other camera manufacturers seem to have either missed or ignored the security warnings, hence the massive log of backorders.
In all reality, any security concerns pale in comparison to the effect of COVID-19 on the entire supply chain. That peculiar little bump has brought the entire fragility of our supply into stark relief. We did have some indications in early 2020 as to just how seriously this shutdown would disrupt our supply of chipsets. At that time, we decided to make two very intentional, but risky, choices– diversify our line-up with the SEE family line of USB webcams, and make a very aggressive push on purchasing and stockpiling DSPs and lenses.
This is why we were, and currently are, fortunate enough to be able to provide visual collaboration products to our customers while many are not. Camera supply shortages will continue to be a challenge for those who developed cameras around HiSilicon chipsets. The sad part is that a lot of manufacturers did this development after the NDAA was published, and in effect disregarded it in favor of quick turnarounds and higher profits (and maybe in hopes that no one would find out).
Well, I hope this explains a little about why VDO360 has cameras available while others do not, and that it helps you understand why some camera manufacturers are having difficulty adapting. We continue to make development strides and will be able to supply your visual collaboration devices today and hopefully long into the future.
