Malware outbreak forces Apple chip supplier to shut down operations; new iPhones could be delayed

Taiwan Semiconductor Manufacturing Company (TSMC) was forced to suspend operations last week because of a malware outbreak at its factories. TSMC makes the A-series processors powering Apple’s popular gadgets, including the iPhone.

In a press release issued yesterday, TSMC explains the Friday evening events at its foundries:

“This virus outbreak occurred due to misoperation during the software installation process for a new tool, which caused a virus to spread once the tool was connected to the Company’s computer network.”

The company doesn’t say whether the outbreak was the hand of a bad actor. However, TSMC Chief Financial Officer Lora Ho tells Bloomberg that, “TSMC has been attacked by viruses before, but this is the first time a virus attack has affected our production lines.”

TSMC said in an August 5 update that it expects the incident to cause shipment delays (which will most likely impact its clients) and additional costs.

“We estimate the impact to third quarter revenue to be about three percent, and impact to gross margin to be about one percentage point. The Company is confident shipments delayed in third quarter will be recovered in the fourth quarter 2018, and maintains its forecast of high single-digit revenue growth for 2018 in U.S. dollars given on July 19, 2018,” the press release reads.

Some estimates put TSMC’s losses in the hundreds of millions of dollars.

TSMC builds chips not only for Apple (reportedly the A12 series for the next generation of iPhones and iPads), but also AMD, NVIDIA and Qualcomm. However, Apple is by far TSMC’s most valuable customer. Considering that TSMC’s Cupertino, California-based client barely copes with demand for its new handsets each year, one can only wonder how they will deliver on schedule this time.

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