What happened

The latest salvo in the U.S.-China trade cold war resulted in collateral damage for a clutch of American companies in, or adjacent to, the semiconductor industry. One of these unfortunates was Lam Research (LRCX -2.10%), whose stock lost 16% of its value over the course of this week, according to data compiled by S&P Global Market Intelligence.

So what

The week didn't start off on a high note for the semiconductor industry. The previous Friday, the Commerce Department tightened its restrictions on the export of advanced computer chips from U.S. companies to the sprawling Asian country. 

This affects not only the manufacturers of such products but the companies that supply equipment and services to them. One prominent example of the latter is California-based Lam Research. 

In the days following Commerce's new mandate, both investors and analysts got more gloomy about the semiconductor business. Lam Research was directly in the line of fire, with several prognosticators cutting their price targets -- at times significantly -- on the once-popular stock.

One of the more aggressive cutters was Barclays' Blayne Curtis, who sliced his level way down to $300 per share from his former $405. Already bearish on semiconductor companies' spending on equipment due to an anticipated cyclical downturn, he trimmed his estimates further on the back of the government's move. He said this "only deepens the correction" for Lam Research's shares.

Now what

The government fears that China could use advanced chips for military purposes, giving it an even more powerful presence in a region where America has many allies. We should expect this widened ban to stick, and not anticipate a quick and substantial recovery for affected stocks anytime soon.