A report published by In-Stat this week indicated that revenue coming from semiconductor chips in IP cameras could reach $300 million (£184 million) or more by 2012.
Michelle Abraham, analyst at the firm, explained that there may be growth in analogue and power components, as well as a significant increase in the video encoder/image processor sector.
She was quoted as saying: "The video encoding processor segment remains among the most dynamic opportunity, as it shifts to H.264 from MPEG-4 part two."
In-Stat reported that the market for IP cameras, IP encoders and digital video recorders may grow to $19 billion in 2011.
The company also indicated that hybrid digital video recorder shipments are growing the fastest in this area.
This week, a researcher at the University of California, Berkeley demonstrated the plasmon, which he claimed is the world's smallest semiconductor laser.
