U.S. President Donald Trump’s recently proposed tariffs could impose an annual financial burden exceeding $1 billion on American semiconductor equipment manufacturers, as indicated by industry assessments shared with officials and lawmakers in Washington last week, according to two informed sources.
The three largest U.S. chip equipment manufacturers—Applied Materials, Lam Research, and KLA—are projected to incur losses of approximately $350 million each over the course of a year due to these tariffs. Additionally, smaller competitors like Onto Innovation may also experience increased expenses amounting to tens of millions of dollars.
This potential billion-dollar impact on the chip equipment sector, along with discussions between industry leaders and U.S. officials regarding these financial implications, is being reported for the first time.
These companies produce some of the most coveted chipmaking machinery, which often requires thousands of specialized components. The chip equipment sector has already faced significant revenue losses, amounting to billions, following the implementation of export controls by former President Joe Biden, aimed at restricting the export of advanced semiconductor manufacturing equipment to Chinese firms.
While the Trump administration has largely suspended the reciprocal tariffs announced in April, it is considering additional duties on the chip industry to encourage domestic manufacturing and has initiated an investigation into their imports as of Monday.
The estimated financial repercussions discussed last week in Washington encompass lost revenue, primarily from missed sales of less advanced equipment to foreign competitors, as well as the costs associated with sourcing alternative suppliers for the intricate components necessary for chipmaking tools. This estimate also accounts for compliance costs related to tariffs, such as hiring additional personnel to navigate the complexities of regulatory adherence.
Lawmakers and administration officials engaged in discussions about the tariff implications with executives from the chip industry and representatives from SEMI, an international trade association, as part of an ongoing dialogue.
Applied Materials did not provide a response to a request for comment, while KLA and Lam Research opted not to comment.
The initial, approximate assessment of $350 million for each company may be subject to revision as the tariffs imposed by the Trump administration come into play. Rapid calculations are challenging due to the complexity of chipmaking tools, which consist of numerous components, and the lack of clarity surrounding the final tariff structure.
Over the past three years, the Biden administration has intensified efforts to restrict China’s chip sector, aiming to undermine its capacity to manufacture advanced chips utilized in artificial intelligence, military applications, and other areas that could pose a risk to U.S. national security.
In response to U.S. export controls, China has increased its investments in its domestic chip manufacturing equipment industry.
