Secure Surveillance Takes Center Stage: Hikvision's Canadian Exit and the Rise of National Security-Driven Tech

The Canadian government's June 28, 2025, order for Chinese surveillance giant Hikvision to cease operations marks a pivotal moment in the global shift toward prioritizing cybersecurity and national security in technology investments. This decision, rooted in concerns over Hikvision's ties to the Chinese government and its role in surveillance activities linked to human rights abuses in Xinjiang, underscores a growing global consensus: the risks of opaque, state-linked tech are too great to ignore. For investors, this signals a critical inflection point—one that demands reallocating capital toward firms offering secure, transparent solutions to meet rising demand for “trusted tech.”

The Catalyst: National Security as a Non-Negotiable

Canada's ban on Hikvision follows years of scrutiny over its parent company, China Electronics Technology Group Corporation (CETC), which has been sanctioned by the U.S. for its role in enabling state surveillance. While Ottawa did not explicitly mention Xinjiang or China in its announcement, the decision aligns with actions by the U.S., EU, and UK, which have restricted Hikvision and Dahua over similar concerns. The Canadian government's mandate to phase out Hikvision equipment from federal properties and ban its procurement sends a clear message: national security now trumps cost efficiency in critical infrastructure.

The implications are profound. Governments worldwide are reevaluating supply chains to eliminate vulnerabilities tied to opaque, foreign-owned tech. This creates a multi-billion-dollar opportunity for firms that can deliver surveillance systems with verifiable security protocols, transparent supply chains, and no links to authoritarian regimes.

The Market Shift: Winners and Losers in Secure Tech

The Hikvision ban is a shot across the bow for investors in surveillance technology. Companies perceived as risky due to geopolitical ties face headwinds, while those positioned to meet stringent security standards stand to gain. Key beneficiaries include:

Axis Communications (AXIS:ST): A Swedish firm known for its enterprise-grade cameras and partnerships with Western governments. Its non-Chinese ownership and adherence to EU cybersecurity standards make it a top alternative to Hikvision.

Axis has outperformed global surveillance peers by 20% over the past year, reflecting investor confidence in its compliance profile.

Pelco (A Motorola Solutions Company): A U.S.-based firm with deep ties to defense and critical infrastructure projects. Pelco's legacy systems are already embedded in many Western government contracts, positioning it to capture Hikvision's vacated market share.

Motorola Solutions (MOTO:NYSE) and L-3Harris (LHX:NYSE): Both offer end-to-end secure communications and surveillance systems with U.S. government certifications. Their partnerships with NATO and Five Eyes allies amplify their credibility.

Meanwhile, Hikvision's stock (HIS:NYSE) has plummeted as the ban and global scrutiny take their toll:

Hikvision's valuation has dropped 40% since early 2024, reflecting investor flight from geopolitical risk.

The Investment Play: Building a “Trusted Tech” Portfolio

The Hikvision ban is not an isolated event but part of a broader trend. Governments are now mandating cybersecurity certifications for critical tech, such as Canada's proposed requirement for data hosting within national borders. Investors should focus on firms that: - Operate in jurisdictions with strong privacy laws (e.g., EU, U.S.). - Use open-source firmware or allow third-party audits to prevent backdoors. - Partner with governments to meet compliance standards (e.g., Pelco's work with the U.S. Department of Defense).

Cybersecurity ETFs like the Global X Cybersecurity ETF (HACK:NYSEARCA) and the First Trust Cybersecurity ETF (CIBR:NASDAQ) also offer diversified exposure to this theme, with allocations to companies like CrowdStrike (CRWD:NASDAQ) and Palo Alto Networks (PANW:NASDAQ).

Risks and Considerations

Transitioning away from cost-effective Chinese tech is not without challenges. Smaller municipalities and private firms may struggle with higher upfront costs for secure alternatives. Additionally, China's potential retaliation—such as tariffs or supply chain disruptions—could pressure global markets. However, the long-term benefits of resilient infrastructure outweigh these short-term hurdles.

Conclusion: Secure Tech is the New Baseline

The Canadian government's actions confirm that national security is now a core criterion for technology investments. Hikvision's exit from Canada is not an anomaly but a harbinger of stricter global oversight. Investors should pivot toward firms like Axis, Pelco, and L-3Harris, which are already capitalizing on this shift. The “trusted tech” sector will only grow as governments worldwide demand transparency, accountability, and cybersecurity—a trend that promises sustained returns in an era of geopolitical volatility.

Investment Recommendation: - Buy: Axis Communications (AXIS:ST), Pelco (via Schneider Electric, SBFG:PA), Motorola Solutions (MOTO:NYSE). - Avoid: Hikvision (HIS:NYSE), Dahua (DHCAY:OTC), and any surveillance firm lacking transparent supply chain practices. - ETFs: Consider HACK or CIBR for diversified exposure to cybersecurity leaders.

The future belongs to technologies that can prove their security—and investors who back them.