This paper presents the implementation of optical seam tracking for a laser welding process with parallel image processing on a smart camera. Real-time extraction of the seam location and direction is enabled by a combination of massively parallel focal plane processing on a Vision Chip and Hough-transform based analysis on an FPGA. The implementation of all analysis within a single embedded camera system offers low-lag control for correcting the path of a welding robot. The vision chip provides illumination adaptive image sensing and neighborhood based feature segmentation. To extract the dominant line from the segmented data, an auxiliary FPGA processor performs Hough analysis on the reduced binary data from the vision chip. The system can achieve a line extraction speed of more than 1000 fps, which enables real-time visual seam tracking and robot control. Evaluation results from on-line laser welding tests with processing performed on the camera system are reported in the article.