New tariffs from the Trump Administration could cost U.S. semiconductor equipment makers big money in 2025 from missed sales of less sophisticated equipment to overseas rivals and the costs of finding and using alternative suppliers for electronic components used to manufacture these complex chipmaking tools.
According to a report from Reuters, the three largest U.S. chip equipment makers — Applied Materials, Lam Research and KLA — may suffer as much as $1 billion collectively this year related to the tariffs. Additionally, smaller rivals like Onto Innovation are also facing tens of millions of dollars in extra spending to compete.
The estimate also includes tariff compliance costs like adding personnel to handle the new rules put in place, the report said.
While the Trump Administration initially paused tariffs on semiconductors and other electronic components and equipment, the administration has undertaken an investigation into electronics and where potential tariffs may be added, including on semiconductors.
The move comes after the Biden Administration continued export restrictions to China to curb the advancement of semiconductors in the country. The first Trump Administration was the first to put export restrictions on China only to be expanded under President Biden.
These export restrictions caused China to invest heavily in its own domestic chip equipment industry, something that the country has made significant strides in the last two years.
Due to the potential new tariffs on semiconductors and semiconductor equipment, lawmakers and administration officials are discussing the potential costs with industry leaders and officials from SEMI, an electronics test equipment international trade group, the report said.
