We propose a surface-edge state theory for half quantized Hall conductance of surface states in topological insulators. The gap opening of a single Dirac cone for the surface states in a weak magnetic field is demonstrated. We find a new surface state resides on the surface edges and carries chiral edge current, resulting in a half-quantized Hall conductance in a four-terminal setup. We also give a physical interpretation of the half quantized conductance by showing that this state is the product of splitting of a boundary bound state of massive Dirac fermions which carries a conductance quantum.