Applied Materials, Lam Research, KLA Drop Amid Fresh Trade War Fears, Revenue Risk

Chip equipment stocks Applied Materials, Inc. AMAT, Lam Research Corp LRCX and KLA Corp KLAC are trading lower Wednesday, in line with the semiconductor sector’s fear of repercussions from the Trump administration’s tariff attack on countries including China.

Also, the chip equipment company ASML Holding ASML reported its first-quarter results on Wednesday. ASML reported quarterly revenue of €7.742 billion or $8.764 billion, beating analyst estimates of $7.760 billion.

Also Read: ASML Approaches End Of China Backlog, Eyes Growth in AI and Advanced Chip Demand

The company reported basic earnings of €6 or $6.83 per share, above estimates of $5.760. CFO Roger Dassen outlined the potential fallout from tariffs imposed on complete system shipments into the U.S., parts and tools required for ASML’s field operations within the U.S., the material imports that ASML needs to manufacture in its U.S.-based facilities, and the reciprocal tariffs imposed by other countries on ASML’s shipments from the U.S.

Reuters reports, citing industry calculations, that the new tariffs could cost U.S. semiconductor equipment makers more than $1 billion annually.

Applied Materials, Lam Research, and KLA may each suffer a loss of close to $350 million over a year related to the tariffs.

Chip equipment makers have already lost billions in revenue due to the Biden administration’s semiconductor sanctions on China.

The Trump administration is weighing further duties on the chip industry and initiated a probe into their imports on Monday.

Applied Materials, Lam Research stocks have tanked ~30% in the last 12 months.

Needham analyst Charles Shi and KeyBanc analyst Steve Barger had predicted that U.S. tariffs on China would weigh on Applied Materials’ second-quarter results, considering the company’s exposure to the country. Barger noted ~$400 million impact in fiscal 2025, half of which will affect the second quarter, and that China exposure would drop to ~25% this quarter.

Applied Materials acquired a 9% stake in Besi in April to advance hybrid bonding for energy-efficient chip packaging.

Goldman Sachs analyst Toshiya Hari expects Lam Research to outperform its immediate peers in 2025, backed by a quarterly recovery in the overall Wafer Fab Equipment market.

In February, Lam Research committed $1.2 billion to boost India’s semiconductor ecosystem. The country aims for a $63 billion chip market by 2026.

Price Actions: AMAT stock is down 4.43% at $138.99 premarket at last check on Wednesday. LRCX is down 4.44%, and KLAC is down 2.46%.

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