Tech war: US chip equipment makers calculate revenue losses in the billions after Washington’s curbs on China exports

Lam Research Corp is the latest semiconductor equipment maker to issue an estimate of financial losses stemming from US restrictions on China-bound exports of its products, joining rival Applied Materials in putting a price tag on Washington’s strategy of containing China’s advanced semiconductor development.

Silicon Valley-based Lam also confirmed that it has pulled supporting teams from Chinese-owned wafer fabs after the Biden administration issued sweeping new measures to restrict exports of advanced chip technologies to China, including a prohibition on “US persons” working at Chinese semiconductor facilities without prior approval.

“We have taken the necessary steps to ensure full compliance with the rules and have ceased shipments and support as required,” Lam CEO Timothy Archer said on an analysts call on Wednesday. The trade restrictions could reduce Lam’s 2023 revenues by up to US$2.5 billion, the company said.

The estimate echoed earlier warnings from Applied Materials, the largest US chip equipment maker, which said last week the US export curbs to China would lead to US$250 million to US$550 million in lost net sales for the quarter ending October.

Lam, Applied Materials and KLA, the third-largest US supplier of wafer fab tools, have all been scrambling to cut certain services to their Chinese clients to comply with the regulations, according to a report by the Financial Times.

The export restrictions are seen by many analysts as a sign that Washington has put strategic and security considerations ahead of commercial interests when dealing with the Chinese government.