TSMC Coming Back Online After Major Virus Issues

Aug 07, 2018

TSMC is bringing its factories back online after a virus crippled its production and slowed wafer processing at the company’s foundries. The company has released a statement on the outbreak, which began on August 3 and was 80 percent contained as of August 5. The foundry expected to be back online again sometime Monday, August 6. The company writes:

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…

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. Data integrity and confidential information was not compromised. TSMC has taken actions to close this security gap and further strengthen security measures.

This wording seems to imply that the virus either infected the tool being installed or was already on the tool prior to installation. It’s not clear what “tool” means in this context; that phrasing can refer to relatively prosaic installations of support equipment or an enormous piece of fixed machinery. The EUV lithography manufacturing machines built by companies like ASML are also referred to as “tools,” despite their enormous costs and months-long installation procedures.

The fact that it took TSMC over two days to solve this problem and that the company expects to take such a revenue hit implies this was a fairly serious breach. A 3 percent revenue decline might not sound like much, but we can use TSMC’s Q3 2017 revenue report as a guideline for what the 2018 decline might look like.

In Q3 2017, TSMC reported $8.3B in revenue. This implies the company believes it lost nearly $249M in revenue due to the need to scrub its systems for malware over two days. The several-day delay could impact Apple’s next-generation iPhone launch later this year, but TSMC doesn’t anticipate any major problems. TSMC has been contacting its customers individually and will work with them to set new delivery timetables and to manage any inventory concerns. The foundry is currently in volume production on 7nm chips and Apple will likely be the first customer to debut the node. AMD is also building its 7nm Epyc CPU (codename Rome) and a machine intelligence-focused version of its Vega GPU on the new process.

Source: Extreme Tech