Geopolitical Risk and the Fracturing of Global Tech Supply Chains: Hikvision's Canadian Legal Battle as a Case Study

The Canadian government's June 2025 order to shut down Hikvision Canada Inc. over national security concerns has crystallized a broader shift in how geopolitical risks are reshaping global technology supply chains. This case, now under judicial review in the Federal Court, is not merely a dispute between a foreign firm and a host nation—it is a microcosm of the escalating tensions between economic globalization and the reassertion of national sovereignty in the digital age. For investors, the Hikvision saga underscores the growing volatility in sectors where technology, geopolitics, and supply chain integrity intersect.

A Legal Battle with Global Implications

The Canadian government's decision to invoke the Investment Canada Act (ICA) against Hikvision—a company that had operated in Canada since 2014—marks a significant departure from historical norms. Traditionally, the ICA has been used to scrutinize proposed foreign investments, not to dismantle existing operations. According to a report by The Canadian Press, the order was justified by a multi-phase review involving Canada's intelligence community, which concluded that Hikvision's continued operations posed an “unacceptable risk” to national security Canada orders China's Hikvision to close Canadian operations over national security concerns^[1]. The government cited concerns over data privacy, supply chain vulnerabilities, and alignment with global security policies, though specific technical details of the threat were not disclosed Why the Canadian Government Banned Hikvision: What It Means for National Security, Businesses and You^[2].

Hikvision, however, has contested the decision on procedural and substantive grounds. The company argues that the review lacked transparency, failed to engage with mitigation measures, and was driven by an “undue focus on its Chinese ownership” rather than an evaluation of its technology's cybersecurity merits Hikvision challenges government’s national security order under^[3]. This legal challenge, now pending in the Federal Court, has broader implications: if Hikvision prevails, it could set a precedent for how governments balance national security with the rights of foreign firms. If the government's position is upheld, it may embolden other nations to adopt similar measures, further fragmenting global supply chains.

Geopolitical Risk as a Supply Chain Disruptor

The Hikvision case is emblematic of a larger trend: the weaponization of national security to reshape technology supply chains. In the U.S., the CHIPS and Science Act has incentivized domestic semiconductor production, while the European Union's Critical Raw Materials Act seeks to reduce reliance on China for rare earth elements. These moves reflect a strategic pivot toward “friend-shoring” and “tech sovereignty,” driven by fears of espionage, data theft, and economic coercion.

For the surveillance technology sector, the stakes are particularly high. According to a 2025 report by Business Research Insights, the global security and surveillance market is projected to grow from USD 18.75 billion in 2025 to nearly USD 40.057 billion by 2034, with a compound annual growth rate (CAGR) of 8.8% Security & Surveillance Market Report | Global Insights [2034]^[4]. However, this growth is increasingly contingent on geopolitical stability. Tariffs, trade restrictions, and bans on foreign firms—such as the U.S. restrictions on Huawei and TikTok—have already disrupted supply chains and forced companies to diversify suppliers.

The Asia-Pacific region, which accounts for over 52% of global surveillance installations, is both a beneficiary and a battleground of these dynamics. China's dominance in surveillance technology, led by firms like Hikvision and Dahua, has prompted Western allies to impose stringent export controls and procurement bans. Meanwhile, Chinese firms are pivoting toward AIoT (Artificial Intelligence of Things) and cloud-based solutions to mitigate the impact of these restrictions Hikvision's Shift from Surveillance to AIoT Innovation^[5].

Investment Strategies in a Fractured World

For investors, the Hikvision case highlights the need to reevaluate risk assessments in the surveillance tech sector. Traditional metrics—such as revenue growth and market share—are no longer sufficient. Instead, firms must now account for geopolitical exposure, regulatory tail risks, and the potential for sudden supply chain disruptions.

Data from Hikvision's 2025 financial report illustrates this volatility. Despite achieving RMB83.17 billion in revenue (a 2.14% year-over-year increase), the company's net profit plummeted by 23.59% to RMB12.84 billion, partly due to sanctions and shrinking government contracts Hikvision Annual Financial & Revenue Reports^[6]. This divergence between top-line and bottom-line performance underscores the sector's sensitivity to geopolitical shocks.

Investors are also recalibrating their portfolios to hedge against these risks. A 2025 analysis by Prisma Finance Hub notes that sectors with high cross-border supply chain exposure—such as semiconductors and defense electronics—have seen increased volatility, prompting a shift toward assets like sovereign bonds and decentralized digital currencies Geopolitical Risk: Global Events Investment Impact^[7]. Meanwhile, firms with robust cybersecurity protocols and diversified supplier networks—such as Raytheon and Northrop Grumman—are gaining favor as geopolitical tensions persist.

The Path Forward

The Hikvision-Canada case is a harbinger of things to come. As nations increasingly weaponize national security to protect critical infrastructure, investors must anticipate a world where supply chains are not just fragmented but actively contested. For the surveillance tech sector, this means navigating a dual challenge: innovating to meet demand while mitigating the risks of geopolitical overreach.

The outcome of Hikvision's legal battle will be a bellwether. If the Canadian government's order is upheld, it could accelerate the adoption of “tech decoupling” strategies, with firms like Hikvision retreating into regional markets. If the court sides with Hikvision, it may reinforce the rule of law in foreign investment disputes but could also embolden other firms to challenge national security decisions. Either way, the case reaffirms a central truth: in the 21st century, geopolitical risk is no longer a peripheral concern—it is the central axis around which global tech supply chains now revolve.