Chinese video surveillance gear maker Hikvision said on Wednesday that US sanctions against the company won’t have a long-term impact on its businesses due to its limited reliance on US technology.

Why it matters: The latest US Commerce Department’s move to blacklist the Hangzhou-based company has put it in a similar position with Chinese telecommunications equipment maker Huawei, and both of which are targeted because of their ties with the Chinese government.

  • The company is one of the world’s largest manufacturers of video surveillance equipment and plays a key role in China’s ambitions to export its surveillance to the world.
  • The company is partly owned by the Chinese government through a series of entities that report up to the State-owned Assets Supervision and Administration Commission, the country’s powerful central body that oversees its state sector.
  • China Electronics Technology Group Corp., a state-owned defense and military electronics manufacturer, owns 40% of Hikvision, making it its biggest shareholder.

Details: Hikvision has “relatively low” reliance on US semiconductors as it sources most of its chips from domestic suppliers such as HiSilicon, a Huawei semiconductors subsidiary, said company CEO Hu Yangzhong on a conference call with analysts on Wednesday afternoon.

  • Hu said the company is still heavily relies on some advanced components from the US, including some photoelectric devices and lens for its surveillance cameras but declined to reveal the percentage of US components to its total supply.
  • The company pledged to expand investment into research and development as well as designing their own chips, according to Huang Fanghong, the senior vice president and secretary of the board.

Context: The US Commerce Department on Monday added the company, along with other Chinese government agencies and private firms, to a so-called “Entity List,” barring them from buying technology and equipment from American companies without approval from the US government.

  • A similar move against Chinese telecommunications equipment maker Huawei has forced the companies to lower revenue forecasts by $30 billion over the next two years and has made it difficult for the company to sell its new smartphones in overseas markets.
  • Hikvision suspended trading for its shares on the Shenzhen Stock Exchange on Tuesday, saying that the company is evaluating the impact of the incident.

Writing about semiconductors and telecommunications.

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