Chipmakers across the world are bracing for a heavy fallout after the Biden administration announced new restrictions on doing business with China’s semiconductor industry. California based Applied Materials, a leading manufacturer of chipmaking equipments, slashed its fourth quarter forecast on Wednesday, saying new restrictions will reduce sales by around $400 million during the period. The company’s new revenue expectation is at $6.4 billion, compared with a previous forecast of $6.65 billion.

The company has also started to pull employees from Yangtze Memory Technologies Co. (YMTC), along with other chipmakers including KLA and Lam Research. YMTC is at the center of U.S. export curbs on China. ASML Holding NV, another top producer of manufacturing gear, told its employees in the U.S. to refrain from servicing customers in China.

It is estimated that new restrictions could cut off as much as $7 billion in 2023 sales for vendors like Applied Materials.

The Biden administration outlined the new restrictions on Friday, one of the most severe of its years long campaign to hamper China’s ability to develop the most advanced chips and equip its military. China is pouring billions of dollars into developing a domestic semiconductor industry that’s less dependent on the rest of the world, but those chipmakers still need to purchase highly specialized equipment from suppliers in the U.S., Europe and other parts of Asia.

The Biden administration’s export curbs came at a time when the industry has already been suffering a downturn because of a worldwide chip shortage since the pandemic.

Netherlands-based ASML has been selling its deep ultraviolet, or DUV, machines to Chinese customers but has held back its more advanced extreme ultraviolet, or EUV, technology. It’s not clear whether those existing sales will be affected by the new Biden administration regulations.

The semiconductor industry was expecting tighter rules for weeks, with Nvidia warning in September that U.S. government restrictions on exporting AI chips to China could affect hundreds of millions of dollars in revenue.

Companies such as Applied Materials and Intel can’t easily walk away from China, which is the biggest single market for their products and part of a global supply chain for electronics.

Fallout was not limited to the United States as Asia’s biggest chip stocks are also reeling. Taiwan based TSMC, the world’s largest contract chip manufacturer, plunged by 8.3% on Tuesday. Samsung and Tokyo Electron also retreated.

Applied Materials shares are down about 14% since last Thursday, the day before the new restrictions were announced.

Applied Materials slashed its profit forecast as well. The company expects earnings will be $1.54 to $1.78 a share in the fourth quarter. That’s down from as much as $2.18 previously.

The lower earnings outlook is a result of reduced sales and a writedown of 23 cents a share for inventory and manufacturing tied to the new export regulations, the company said. Applied Materials also expects the rules to hurt sales in its fiscal first quarter by roughly the same amount.