The US New Tariff Can Lose Chip Equipment Producers More Than IDR 16.6 Trillion Per Year

Donald Trump's tariff policy has caused huge losses to chip-making companies (photo: x @whitehouse)

JAKARTA The new tariff policy from US President Donald Trump is expected to harm semiconductor equipment manufacturers from the United States to more than US$1 billion per year (Rp16.6 trillion). This is known, according to industry estimates discussed with officials and lawmakers in Washington last week.

The three largest companies in the chip equipment sector 'Applied Materials, Lam Research, and KLA Corporation' are expected to suffer a loss of around US$350 million each year (Rp5.8 trillion) due to the tariff, sources said. Meanwhile, smaller companies such as Onto Innovation are also said to be facing an additional fee of up to tens of millions of dollars.

The estimated large loss includes lost revenue from the sale of simpler chip equipment to overseas markets, costs to find alternative suppliers to the components of the chip production equipment complex, as well as compliance costs to new rates, including recruiting additional staff to deal with the complexity of the rules.

Previously, the US semiconductor industry had also lost billions of dollars in revenue following President Joe Biden's era export policy limiting the delivery of advanced chip manufacturing equipment to Chinese companies, as part of efforts to limit China's technological capabilities in the military and artificial intelligence.

Now, the Trump administration is considering imposing additional tariffs on imports of chip equipment as part of a push to strengthen the domestic manufacturing sector. On Monday, the government began an investigation into imports of the chip industry as a first step towards imposing further tariffs.

Discussions between chip industry executives and government officials, including from the SEMI, an international trade organization in the semiconductor sector, lasted for several days in Washington. This is part of a sustainable dialogue to measure the impact of new policies on industry players.

The Applied Materials company declined to comment, while KLA and Lam Research also rejected requests for interviews.

Estimates of an initial loss of US$350 million per company can still change depending on the final form of the tariff policy applied. A definite calculation is difficult to implement as chip manufacturing equipment consists of thousands of different components, and the tariff scheme to be implemented is not yet fully clear.

For information, the Biden administration previously imposed more than three years of export restrictions on China's chip industry to inhibit the production of advanced semiconductors that could be used in military technology or artificial intelligence which is considered to have the potential to jeopardize the national security of the United States.

But now, with Trump's new tariff policy, US tech companies are facing huge challenges in maintaining their global competitiveness, amid increasingly fierce competition with players from Asia and Europe.