According to data released by the Camera & Imaging Products Association (CIPA), from January to May 2024, China accounted for 23.4% of global camera shipments, ranking second globally after the Americas. The camera market, which once cooled off under the impact of smartphones, has regained vitality due to the rise of emerging industries such as live e-commerce and short videos. The intersection of product innovation and traffic economy is opening up a new consumption path for traditional industries.

Toshio Ozawa, Deputy President and Executive Director of Canon Japan, also stated that China's digital camera market grew by 25% in 2023, with mirrorless cameras achieving an even higher growth rate of 31%. It is expected that this growth momentum will continue in 2024, with mirrorless cameras potentially growing by 35%. As the domestic camera market has expanded in recent years, there has been a growing demand for domestic cameras among users.

However, the domestic camera market has long been dominated by Japanese brands. According to data from research firm Techno System Research, Canon led global mirrorless camera shipments in 2023 with 41%, followed by Sony with 32%, Nikon with 13.2%, and Fujifilm with 8.0%. Other brands accounted for 5.5% of the market. All mainstream brands are from Japanese camera companies.

Nevertheless, in recent years, there have been frequent updates regarding the domestic camera industry chain. Earlier this year, many Xiaomi fans petitioned Lei Jun on his social media account to develop digital cameras, with the hashtag "#Can Lei Jun Produce Cameras?" topping trending topics. Later, some tech bloggers claimed that DJI might release a mirrorless camera. Notably, DJI had previously acquired renowned camera manufacturer Hasselblad. In August, news spread that China's first 180-megapixel full-frame CMOS chip had successfully completed trial production. This series of positive news has excited photography enthusiasts who have long awaited domestic mirrorless cameras.

01

What is a Mirrorless Camera?

A mirrorless camera is the counterpart of a traditional DSLR camera.

In a digital SLR camera, the mirror is positioned between the lens and the camera sensor. It reflects light from the lens at a 45-degree angle through a pentaprism structure to the optical viewfinder for observation. Therefore, even when the camera is turned off, users can see the scene through the viewfinder. Upon pressing the shutter button, the mirror flips down to expose the sensor, ultimately generating a digital image. However, this process has drawbacks, such as the space occupied by the mirror and the time lag associated with its movement. Additionally, the angular shape and mirror structure limit the design of DSLR camera lenses.

With advancements in CMOS technology, mirrorless cameras have eliminated the mirror, resulting in faster speed, smaller size, and enhanced autofocus capabilities. Compared to traditional DSLRs, mirrorless cameras feature a simpler structure and more compact body, making them widely popular among users.

So, what are the challenges in developing mirrorless cameras? Why is the high-end camera market largely dominated by Japanese manufacturers?

In reality, high-end cameras are not merely cameras but a comprehensive optical digital imaging system comprising semiconductors (represented by the camera body), ergonomic design, chip design, embedded software, AI, color science, interchangeable lenses (representing optical design), mechanical structure design, and coating technology.

Among these components, CMOS image sensors and optical lenses are core camera technologies.

Firstly, CMOS chips are essentially monopolized by Sony Japan in the camera industry. Sony's strength in cameras can be attributed in part to its sales of mobile phone sensors. By rapidly iterating new technologies on mobile phone sensors, Sony has fed back into the research and development of camera CMOS chips, creating a virtuous cycle that both generates revenue and accelerates R&D, ultimately benefiting its camera business. Last year, Sony even unveiled the world's first mass-produced full-frame global shutter CMOS camera, the A93, causing a stir in the industry. Currently, only Canon persists in using its own CMOS chips for consumer cameras, while other manufacturers rely on Sony's chips.

Secondly, lens development is another crucial aspect. Unlike mobile phone camera modules, which commonly use polymeric materials and extreme aspheric modules, camera lenses are more akin to traditional precision optical instruments. From glass selection, lens design, barrel planning, to assembly, modern camera lenses are highly complex, integrating challenges from optics, electronics, and mechanics. High-end camera lens development also involves overcoming technical difficulties such as autofocus, coating, and zoom capabilities.

Currently, Japanese camera manufacturers have established stable supply, design, and communication relationships with upstream component suppliers in the camera industry. Coupled with strong patent barriers, this makes it challenging for new entrants to compete.

02

Rise of Domestic Camera Chips and Components

The core of mirrorless cameras, CMOS image sensors and lenses, pose significant challenges to companies in terms of semiconductor and optical expertise.

The primary function of CMOS image sensors is to convert image signals into digital signals, making them a crucial component of camera modules. As cameras increasingly demand capabilities such as photography, videography, image recognition, and authentication, the market for CMOS image sensors has grown rapidly. In recent years, China has gradually achieved breakthroughs in the field of APS-C and full-frame CMOS, with some indicators reaching international advanced levels.

In August of this year, Nextchip (of Hefei, China) and Smartsense (of Shanghai, China) announced the successful trial production of the industry's first 180-megapixel full-frame sensor (180MP Type 2.7), breaking Sony's long-standing monopoly in the field of ultra-high-resolution full-frame CIS.

Based on its independently developed 55nm process platform, Nextchip collaborated with Smartsense to develop stitching lithography technology, overcoming challenges in precision control and yield improvement during stitching of pixel columns. They successfully surpassed the limit of a conventional photomask on a single chip size while ensuring consistent electrical and optical performance at the nanoscale manufacturing level.

This sensor boasts a static image output of 180 megapixels, video output at 8K30FPS, and PixGain HDR capability. In this sensor development, Smartsense was primarily responsible for sensor design, while Nextchip provided foundry services.

Another leading CMOS player is Changchun G&H Optics, which emerged from the Changchun Institute of Optics, Fine Mechanics, and Physics (CIOMP) of the Chinese Academy of Sciences, known as the "cradle of Chinese optics." In 2023, DJI and Changchun G&H Optics jointly unveiled the GCINE4349, a 49-megapixel full-frame CMOS image sensor developed through independent research. This high-end chip employs stacked back-illuminated technology and boasts impressive specifications such as 120fps and an ultra-high dynamic range of 110dB. Led by Changchun G&H Optics and co-developed by Huirui Technology, DJI Innovation, and DJI Baowang, the chip's three-year development broke China's long-standing reliance on imports for ultra-high-definition imaging chips and systems.

Domestic lens development is equally promising.

The AF lens products for interchangeable lens cameras in the digital era can be traced back to 2016 with the Xiaomi Yi camera M1 from Xiaomi's ecosystem. Launched simultaneously were the 42.5mm prime lens and the 12-40mm F/3.5-5.6 zoom lens, both with M43 mount. These two domestic AF prime and zoom lenses marked the dawn of the AF era for domestic camera lenses.

In recent years, Viltrox, Zhongyi Optics, and Yongnuo have also made remarkable breakthroughs in the lens industry. Yongnuo even released the domestic first and only auto-focus zoom lens, the YN12-35mm F2.8-4M, albeit exclusive to M4/3 mount. However, China has yet to fully address many technical challenges in the lens industry chain, such as precision glass machining for zoom groups, multi-lens coatings, and more.

The domestic camera industry chain is taking shape, with domestic CMOS sensors already developed. Lens manufacturers like Laowa, Yongnuo, and Mingjiang have been deeply rooted in the industry for years, accumulating substantial technical expertise. Many domestic cinema cameras have also made their mark in the global market, and domestic high-resolution cameras for aerospace applications demonstrate China's world-class coating technology (albeit not yet commercialized). The intense competition among domestic smartphone manufacturers has spurred the development of advanced technologies such as noise reduction and stabilization. Additionally, China possesses technical reserves in areas like color science, ISP chips, EVF, and autofocus technology.

What is currently lacking is a company capable of integrating the technologies of various manufacturers.

03

Revival of the Consumer Camera Market, High Hopes for Domestic Manufacturers

While the consumer camera market may be limited, camera technology plays a vital role in high-tech fields.

Optical Instruments: Camera technology is closely related to optical instruments such as eyeglass lenses, microscopes, and telescopes, with leading companies including Leica, Zeiss, Canon, Fujifilm, and Olympus, all of which have a history in camera production. Optics is a technology-intensive industry requiring significant accumulation, with numerous patents and research achievements not easily acquired through financial investment alone.

Semiconductor Equipment: Nikon and Canon are not only camera manufacturers but also suppliers of lithography equipment. The principle of lithography machines bears a striking resemblance to cameras. The lens at the heart of a lithography machine comprises over 20 large lenses connected in series. ASML's lenses are based on Zeiss technology, and achieving uniform lens material requires decades or even centuries of technological accumulation. In a sense, cameras represent the application of such cutting-edge technologies in the consumer sector.

In recent years, the domestic camera market has shown signs of recovery, presenting new development opportunities for the digital camera industry. Consumers eagerly anticipate domestic manufacturers to introduce affordable and high-quality products, breaking the high-profit monopoly of Japanese manufacturers in the camera market. Currently, Yongnuo and DJI are potential candidates. Yongnuo has deep roots in camera lenses and live streaming cameras (YN455, 433, 450), while DJI has flourished in the professional video field with substantial capital. From domestic appliances, mobile phones, to automobiles, Chinese consumers have increasingly trusted domestic products, challenging the brand dominance of Japanese manufacturers.