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TSMC expects virus incident to impact 3% of 3Q18 revenues

06 August 2018

It is unclear who targeted TSMC, the world's biggest contract manufacturer of chips for companies including Apple and Qualcomm. (TSMC) is recovering from a major internal computer virus outbreak that ravaged its systems, forcing the chipmaker to shut down several factories. Meanwhile, several operations have been resumed, others would not be active until Sunday. TSMC said it did not have any additional information for now. We estimate the impact to third quarter revenue to be about three percent, and impact to gross margin to be about one percentage point.

During a phone call with Bloomberg, a TSMC representative acknowledged that the company had been hit by viruses before, but never one quite this bad. "The company is confident shipments delayed in third quarter will be recovered in the fourth", the company's statement said.

TSMC's chief financial officer Lora Ho told Bloomberg that the chipmaker has been attacked by viruses in the past, but never has malware affected the company's production lines.

Chief Executive Officer C.C. Wei had said TSMC's sales will rise this year by a high single-digit percentage in USA dollar terms, down from an already reduced projection of about 10 per cent.

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.

The incident marked the most severe disruption in the company's ongoing efforts to ramp up chipmaking for iPhones.

Aside from this issue, both Apple and TSMC are having a good year, with Apple boasting a market value in excess of $1 trillion.

The chip manufacturer didn't specify what it was producing when this problem occurred, but given the timing it was nearly certainly the Apple A12.

TSMC expects virus incident to impact 3% of 3Q18 revenues