China's SiCarrier Aims to Challenge ASML's Dominance in Chip Equipment

Shenzhen SiCarrier Technologies, a Chinese semiconductor equipment maker linked to Huawei, is developing a wide range of machines to replace offerings by ASML and other foreign rivals, Nikkei Asia reports. The company's efforts are aimed at helping China address the severe supply chain constraints imposed by US export controls.

SiCarrier, backed by the Shenzhen government, is developing equipment across various chip fabrication processes, using machines from companies such as ASML, Applied Materials, and Lam Research as benchmarks, sources told Nikkei Asia. The company's focus includes lithography, chemical vapor deposition, measurement, physical vapor deposition, etching, and atomic layer deposition, all areas currently dominated by companies from the Netherlands, US, and Japan.

SiCarrier is reportedly working closely with Huawei's expanding team of specialists in chip production and equipment manufacturing. The company claims to have built critical lithography machines capable of producing 28-nanometer chips or less advanced chips, a segment currently dominated by ASML, Nikon, and Canon. However, the sources added that it remains to be seen whether SiCarrier can successfully commercialize these machines.

While 28-nanometer chips are considered mature technology compared to the more advanced 5-nanometer and 4-nanometer processes currently produced only by TSMC, Samsung, and Intel, they are crucial for a wide range of applications, including microcontrollers for cars and advanced robotics.

"They have started many projects across many different process steps in chipmaking, basically hoping to build all types of machines," said one chip executive with knowledge of the matter. "They are working very closely with needs and requests from Huawei." Another source familiar with the matter said SiCarrier has been aggressively hiring experienced engineers from foreign peers, particularly after tighter US export controls led to downsizing among American chip tool makers in China. "It is a young company, but they've managed to hire and form a big team with experienced talent from the industry," said a source working for a Chinese chip tool maker.

SiCarrier recently announced on WeChat that it will launch a wide range of chipmaking equipment machines, including a new atomic layer deposition (ALD) tool named Alishan, at the SEMICON China industry fair.

Huawei has also been investing heavily in developing chipmaking equipment, actively recruiting top engineers from leading chip companies like TSMC and Intel, as well as major global equipment manufacturers including ASML, Applied Materials, Lam Research, KLA, Tokyo Electron, and Screen. The Chinese tech giant is also building a massive research and development complex for chipmaking machines in Shanghai. Industry executives told Nikkei Asia that Huawei has been collaborating closely with SiCarrier to enhance application engineering expertise and address production challenges during chip manufacturing processes.

Founded in August 2021, SiCarrier's major stakeholder is Shenzhen Major Investment Group, a Shenzhen government investment vehicle. This group is also a major backer of Huawei-linked chip manufacturers such as PengXinWei Integrated Circuit Manufacturing Co and SwaySure Technology.

Access to chipmaking equipment is a major obstacle to China's semiconductor development. Washington has restricted sales of advanced semiconductor machines to China, with its allies the Netherlands and Japan implementing similar measures. Late last year, the Biden administration imposed stricter export controls on chip technology, placing almost all prominent Chinese chip equipment manufacturers on trade blacklists.

Washington's export controls have prompted China to intensify its efforts to produce chipmaking equipment domestically. The country has also found creative ways to circumvent US export controls, such as purchasing advanced AI chips through multiple third-party distributors outside China. China's leading chip equipment builder, Naura Technology, has benefited significantly from this localization push, experiencing a nearly seven-fold increase in revenue from 2018 to 2023. Advanced Micro-Fabrication Equipment Inc. China (AMEC), the second-largest domestic supplier, also saw its revenue grow 282% during the same period.

However, most American chip experts still view export controls as a crucial measure for delaying China's advances in chips needed for advanced applications such as artificial intelligence.