A chip manufacturer saw its half-year profits surge by more than 20 times. Another industry leader pocketed nearly 8 billion yuan in net profit for the half-year and plans to distribute 5 billion yuan in dividends. Yet within the same sector, some companies are still struggling on the edge of losses. This is the report card that listed companies across the security industry chain delivered for the first half of 2026. Based on the interim reports and earnings forecasts disclosed so far, companies across different links of the security industry chain are showing divergent performances, with stark differences in the quality of growth and distribution methods. It should be noted that the following analysis is based on publicly available financial data from A-share listed security companies, most of which are leaders or key players in their respective sub-sectors. Their performance reflects, to a certain extent, the operating conditions of core links in the industry chain, but it cannot fully represent the overall picture of the entire security industry. Especially against the backdrop of market downgrading and the dominance of leading enterprises, the actual situation of the vast number of small, medium, and micro enterprises may differ significantly from the prosperous landscape presented by listed companies.
Full Performance Overview: Upstream Surging, Midstream Steady, Downstream Under Pressure
In terms of revenue growth, explosive growth of more than double was almost entirely concentrated in the upstream links of the industry chain. Fullhan Microelectronics expects revenue of 1.4 to 1.5 billion yuan, up 103% to 118% year-on-year; Beijing Ingenic recorded revenue of approximately 3.989 billion yuan, up about 77% year-on-year; Raytron Technology posted revenue of 4.397 billion yuan, up 72.84% year-on-year. Without exception, these companies have all ridden the cyclical wave of AI chips. Midstream players in intelligent IoT devices and solutions posted relatively steady performance. Hikvision generated revenue of 46.823 billion yuan, up 11.97% year-on-year; Dahua Technology recorded revenue of 16.704 billion yuan, up 10.03% year-on-year, achieving five consecutive years of growth; EZVIZ posted revenue of 3.007 billion yuan, up 6.35% year-on-year. The growth rates may not be spectacular, but the sheer scale is massive, and the fundamentals remain solid. In the downstream segment, however, companies in traditional security engineering integration and smart transportation are clearly under pressure. Affected by de-integration trends and slower project acceptance progress in public safety, smart city, and smart transportation sectors, their revenue scales have declined year-on-year.
The divergence at the net profit level is even more pronounced. Companies achieving year-on-year growth or turning losses into profits account for about 30%, those reducing losses account for nearly 30%, while companies with declining net profit or expanding losses account for about 40%. This indicates that although the overall industry sentiment is recovering, the gap in the pace of profitability recovery among different companies is widening.
Three Core Characteristics: AI, Market Downgrading, and Divergence
Characteristic One: AI Computing Power and Chip Tracks "Racing Ahead"
If there is one "strongest tailwind" in the security industry for the first half of the year, it is undoubtedly edge-side AI chips. Fullhan Microelectronics's financial report could be described as "explosive": it expects net profit attributable to shareholders of 270 million to 350 million yuan, up 1,072.72% to 1,420.19% year-on-year, with non-GAAP net profit growth as high as 1,640.93% to 2,164.52%. The logic behind this is clear: against the backdrop of global memory chip price increases, the company adjusted prices accordingly; AI-ISP chips embedded with edge-side AI computing power met new demands from smart hardware; and coupled with efficient supply chain management, both Q2 revenue and net profit hit record highs for a single quarter. SigmaStar Technology has also shown remarkable performance: it expects net profit attributable to shareholders of 820 million to 900 million yuan, up 583.72% to 650.42% year-on-year. The concentrated surge in demand from downstream core tracks including embodied intelligence, service robots, home intelligent agents, in-vehicle edge computing, and LiDAR has provided strong support for its growth. Rockchip posted net profit attributable to shareholders of 859 million yuan in the first half, up 61.73% year-on-year. AI large models are accelerating their penetration from the cloud to terminals, and the deep integration of edge-side AI with smart vehicles, robots, smart homes, and other scenarios has directly driven shipments of its chip platforms. Beijing Ingenic, benefiting from the major memory cycle, saw net profit attributable to shareholders grow 431% to 531% year-on-year. The common thread behind these companies' explosive performance is that AI has moved toward large-scale commercial implementation. While the industry was still debating whether AI would change the security sector, chip manufacturers have already provided the answer with multi-fold profit growth.
Characteristic Two: Market Rapidly Moving Downstream, Fragmented Scenarios "Taking Over" from Large Projects
A noteworthy shift in market demand structure emerged in Q2: fragmented scenarios such as small and medium-sized projects, community grids, and county-level and rural areas are taking over from traditional large engineering projects as a major force driving market growth. Supported by the new generation of AI and IoT technologies, the procurement threshold and deployment costs of security products continue to decline, and overall demand is accelerating its penetration from traditional large engineering projects into broader scenarios including urban grassroots governance, community grid management, and county and rural security. This trend has been most fully validated in Hikvision's performance structure. Among its three major domestic business groups, the SMBG segment targeting small and medium-sized enterprises and channel markets saw revenue grow 13.55% year-on-year, far outpacing the PBG public services business group (+4.67%) and the EBG enterprise business group (+3.63%), making it the fastest-growing business segment. Although Dahua Technology did not separately disclose SMBG data, its smart IoT products and solutions revenue grew 18.69% year-on-year, and software business revenue grew 30.07%, also reflecting the strong penetration of leading enterprises into diversified scenarios.
The high growth of Hikvision's SMBG sends a dual signal that warrants deep reflection across the industry. On the one hand, demand from SMEs and downstream markets is strong and far from saturated, and the security industry still harbors considerable growth potential in lower-tier markets. For all industry participants, this is a positive signal worth continuous cultivation—the market ceiling is still high. On the other hand, Hikvision's aggressive entry into the SME market with its systemic advantages in brand, channels, supply chain, and cost has objectively created head-on competition with small and medium-sized enterprises that already have limited resources, further squeezing their living space. When giants enter small fragmented scenarios with economies of scale and AI large models, the impact on regional distributors and small and medium-sized integrators is real. Of course, in the face of this competitive pressure, SMEs are not without breakout paths. The key lies in finding differentiated positioning: for example, becoming "invisible champions" in vertical scenarios, building professional advantages, and using depth to replace breadth; or pursuing a software-hardware integrated value-added service route, achieving recurring revenue through differentiated software platforms, data services, and operations and maintenance, thereby enhancing customer stickiness and repurchase rates; or embracing open-source ecosystems and domestic substitution, using agile development and small-batch customization capabilities to quickly respond to non-standard demands in lower-tier markets. The security market space is far from hitting its ceiling. As long as SMEs identify differentiated positioning and continue to cultivate niche demand, they can still find room for survival and growth amid fierce market competition. Pessimists see giant crushing, optimists see scenario fission—the industry's incremental growth often lies hidden in those "unremarkable" fragmented demands.
Characteristic Three: Industry Chain Divergence Intensifies, R&D Investment Concentrates on Core AI Capabilities
The divergence in performance among leading enterprises is not simply a matter of differences between individual companies, but rather a systematic restructuring of the entire security industry chain under the impact of the AI wave. Looking at business structure, the growth gap between AI innovation businesses and traditional core businesses is widening. Companies that have deeply embedded new technologies such as AI large models, edge-side intelligence, and embodied intelligence into their products and services generally achieved improved gross margins and profit growth outpacing revenue; whereas companies still reliant on traditional hardware sales and standardized project integration face the dual squeeze of price wars and shrinking demand. Meanwhile, there is also a clear divergence between specialized and civilian fields—Wuhan Guide Infrared and Raytron Technology, benefiting from continued delivery of model projects and the penetration of infrared chips into civilian products, saw significant volume growth; while companies focused on traditional public safety and smart city general contracting businesses experienced relatively slower recovery due to fiscal payment rhythms and project acceptance progress. It is worth noting that despite the uneven performance across companies, the industry's overall attitude toward technological innovation investment is highly consistent. Whether it is chip companies with surging performance or engineering integrators in adjustment periods, all are continuously increasing R&D investment in frontier technologies such as AI large models, edge-side chips, and embodied intelligence.
Trend Outlook: Clear Directions of Certainty
Taken together, the security industry has already shown several clear evolutionary directions in the first half of 2026. On one hand, AI is reconstructing the value chain of the security industry. From Hikvision's Guanlan large model to Fullhan Microelectronics' AI-ISP chips, the integration of edge-side AI and embodied intelligence is taking technology into thousands of industries, and edge-side applications are entering a phase of large-scale volume growth. Whoever can deeply embed AI into vertical scenarios will grasp the industry's voice for the next three years. At the same time, the underlying logic of market demand is undergoing a silent yet profound shift. The driving force of traditional large engineering projects has been broken, and fragmented scenarios such as county and rural areas and community grids are resonating with massive downstream demand, pushing the security market from "project-based" toward "universal" and "refined." Against the macro backdrop of accelerated implementation of key areas in the "15th Five-Year Plan" and continued efforts in digital economy infrastructure, the certainty of industry growth does not come from short-term policy stimulus, but from the structural incremental growth released by the deep integration of AI technology with physical scenarios. The security industry in 2026 is undergoing a profound AI-driven value reassessment. Some are reaping substantial profits through technological barriers, while others are still struggling in the mire due to slow transformation. When the tide recedes, you will find: what ultimately determines a company's position is not its past scale, but its speed of response to technological change.
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