Makes the chips inside Chinese smart TVs by being the only supplier whose silicon handles both Chinese and Western video formats at once.
Amlogic builds the chips that sit inside Chinese smart TVs, and what makes those chips hard to replace is a specific piece of silicon: decode engines for AVS2 and AVS3, the video standards that Chinese streaming platforms and telecom operators require, built onto the same die as the Western codec engines that international content demands. Qualcomm and MediaTek have not built AVS2/AVS3 silicon because the Chinese smart TV market is not large enough to justify the tape-out cost against their global revenue — so Amlogic sits in that gap alone. That gap is what forces TCL, Hisense, and Xiaomi into 12-to-18-month hardware redesigns and a fresh round of Google Android TV certification if they try to switch suppliers, making the engineering cost of leaving higher than any chip price difference. The whole structure depends on AVS2/AVS3 staying mandatory — if Chinese policy shifted to a successor codec standard that a competing supplier had already implemented, the redesign penalty would disappear and Qualcomm or MediaTek could re-enter without the tape-out cost that currently prices them out.
How does this company make money?
The company charges electronics manufacturers between roughly $8 and $25 per chip, depending on how powerful the chip is and how large the order is. It also earns licensing fees when other companies use its proprietary video processing technology blocks.
What makes this company hard to replace?
Switching to a different chip supplier means redesigning the physical circuit board, which alone takes 12 to 18 months. On top of that, the manufacturer must pass Google Android TV certification on the new platform, which is a separate process. The software that controls video playback is also written against Amlogic's own video processing interfaces, so porting that code to a different chip requires significant engineering work beyond the hardware redesign.
What limits this company?
Every chip sold that plays H.264, H.265, or AV1 video carries a mandatory licensing fee paid to patent holders like MPEG-LA and Dolby — fees that cannot be avoided because customers require international video support. On top of that, every move to a smaller, faster chip design requires months of verification and testing at the foundry that cannot be sped up or handed off to someone else, which puts a hard cap on how quickly the next generation of chips can reach customers.
What does this company depend on?
The company cannot operate without ARM processor core licenses for the CPU inside each chip, foundry capacity from TSMC and SMIC to manufacture chips at 12nm-to-28nm process nodes, Google Android TV certification for chips used in smart TVs and streaming boxes, video codec licenses from MPEG-LA and Dolby to legally include H.264, H.265, and AV1 decode, and EDA design tools from Cadence and Synopsys to design and verify the chips in the first place.
Who depends on this company?
TCL and Hisense smart TV production lines would face months-long delays if they had to find an alternative chip with the same video processing capabilities. Xiaomi Mi Box and similar Android TV streaming devices would lose their primary chip supplier for products sold under $100. Chinese ODM manufacturers making white-label set-top boxes for telecom operators would have to redesign their hardware entirely around a different chip platform.
How does this company scale?
Once the video processing and graphics software blocks are built and verified for a given chip generation, they can be reused across every variant in that product family without additional engineering work — so volume grows without proportional cost. The bottleneck that never goes away is process node migration: every time the company moves to a newer, smaller manufacturing process to keep performance competitive, it must go through a full new round of design verification and yield tuning at the foundry, and that work cannot be parallelised or handed to a third party.
What external forces can significantly affect this company?
US export restrictions could block access to advanced foundry technology below 12nm, which would limit how much the company can improve chip performance over time. Chinese government policies pushing semiconductor self-sufficiency could require shifting manufacturing from TSMC to domestic foundries like SMIC, which may not offer the same process node capabilities. Growing streaming service adoption in lower-income markets is also pushing demand toward cheaper chips, squeezing the price range the company can charge.
Where is this company structurally vulnerable?
If the Chinese government or major streaming platforms slowed down or abandoned AVS2 and AVS3 — or mandated a new video format that a rival had already built into their chips — the entire advantage disappears. Qualcomm and MediaTek could then enter the Chinese smart TV market without having to pay the design cost that currently keeps them out, and the 12-to-18-month switching penalty for TV makers would dissolve.
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