President Trump’s new tariffs could cost semiconductor equipment manufacturers more than $1 billion a year, according to industry calculations discussed with Washington officials and lawmakers last week, two sources familiar with the issue said.
Each of the three largest chip equipment manufacturers in the United States (Applied Materials, LAM Research, KLA) could suffer a yearly loss of around $350 million, sources said. Small rivals such as innovation could also face tens of millions of dollars in additional spending.
The potential $1 billion costs for the chip equipment industry and discussions between industry executives and US officials over several days will be reported here for the first time.
Companies are building some of the world’s most popular chip-making equipment that could require thousands of specialized parts.
The chip equipment maker has already lost billions of revenue after then-President Biden implemented a series of export controls aimed at restraining the shipment of sophisticated semiconductor manufacturing equipment to Chinese companies.
The Trump administration has almost suspended mutual tariffs announced in April. But to promote more US manufacturing, it is weighing further obligations in the chip industry and began investigating imports on Monday.
The estimated costs discussed in Washington last week include losses in revenue from missed selling unskilled equipment to rivals overseas, and the costs of finding and using alternative suppliers for the complex components of chip-making tools. The estimate also includes customs compliance costs, including adding personnel to handle the complexity of following the rules.
As part of the ongoing dialogue, lawmakers and administrative staff discussed tariff costs with executives and staff from the CHIP industry of Semi, an international trade group.
Applied did not respond to requests for comment. KLA and LAM declined to comment.
As Trump’s administration’s obligations become effective, the initial rough estimate could change to $350 million per $350 million. Each chipmaking tool has multiple components and the ultimate tariff regime is unknown, making it difficult to create a quick calculation.
The Biden administration has cracked down on China’s chip industry for three years, hampering its ability to produce state-of-the-art chips used in artificial intelligence, military use, or other ways that could threaten US national security.
US export controls are spurring China to invest in the domestic chip equipment industry.
