iPhone chip maker TSMC races to recover after crippling computer virus delays shipments

Taiwan Semiconductor Manufacturing Co, which makes chips for the iPhone and other devices, is recovering from a debilitating computer virus but warned of delayed shipments and reduced revenue because of the impact on its factories.

TSMC said that 80 per cent of the fabrication tools affected by a virus outbreak Friday evening had been restored and that it expects full recovery on Monday. The Taiwanese company said the incident, which comes as it ramps up chipmaking for Apple Inc.’s next iPhones, would delay shipments, without specifying which customers would be affected. Its shares fell more than 1 per cent in Taipei.

Taiwan’s largest company blamed the infection on a mistake made during software installation that then spread through its network. The chipmaker estimated that third-quarter revenue would be cut by about 3 per cent from a previously forecast US$8.45 billion to US$8.55 billion, while gross margin would slip by about 1 percentage point. It maintained its 2018 forecast of boosting revenue by high single digits in US dollar terms.

The incident underscores the global nature of the technology supply chain, in which companies like Apple and Qualcomm depend on hundreds of suppliers around the world. This is the first time a virus had ever brought down a TSMC facility, recalling the WannaCry cyberattacks of 2017 that forced corporations around the world to suspend operations as they rooted out the ransomware. TSMC says no confidential information was compromised in the virus attack and most customers have been notified.

Mark Li, an analyst at Sanford C Bernstein, said he thinks all of TSMC’s 12-inch wafer fabrication plants had been infected and that many customers had been affected, though the impact will be “very limited” because the company can make up for the losses during the busiest holiday quarter. TSMC makes Apple chips in its 12-inch fabrication plants.