iPhone Chipmaker TSMC Forced to Shut Down Factories Following Malware Infection

Malware has caused significant disruptions in the factories of Taiwan Semiconductor Manufacturing Company (TSMC), the world’s biggest contract chipmaker.

REUTERS/Eason Lam

According to a new press release, TSMC, 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 shutting down its factories is a big deal, especially as its fabrication tools were affected and this is the first time a virus has ever taken down the chipmaker’s facilities.

“TSMC has been attacked by viruses before, but this is the first time a virus attack has affected our production lines,” chief financial officer Lora Ho told Bloomberg News, though she reportedly kept tight-lipped on how much the disruption cost the chipmaker.

However, TSMC says that it managed to restore some of its fabrication machines on Saturday, while the rest of the equipment was projected to return to normal operations by late Sunday. More information is expected this week as TSMC conducts an internal investigation to determine exactly how the malware reached its systems.

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 percent from a previously forecast $8.45 billion USD to $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 Inc. depend on hundreds of suppliers around the world. This is the first time a virus had ever brought down a TSMC facility, and the company says no confidential information was compromised in the virus attack and most customers have been notified.

Regardless of the details behind the attack, it clearly comes at a bad time for TSMC. The company is currently the sole producer of the processors that power Apple’s iPhones and it was in the midst of ramping up for the launch of the company’s latest smartphones.