Apple iPhone chip supplier TSMC halts factory after cyber-attack

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Taiwan Semiconductor Manufacturing (TSMC), the main supplier of chips for Apple iPhones, has halted its factories on Friday night due to a major cyber-attack, Bloomberg reports.
TSMC for iPhones
The sole supplier of the iPhone’s main processor said a number of its fabrication tools had been infected. Apple is in the process of finalizing a range of innovative iPhones targeting Samsung ahead of the festival season.

TSMC said it had contained the problem and resumed some production. TSMC will not re-start several of its factories till at least Sunday. The virus wasn’t introduced by a hacker, the company added in a statement.

It’s unclear who targeted TSMC, the world’s biggest contract manufacturer of chips for companies including Apple and Qualcomm. It’s 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 said it is working on solutions now but said the degree of infection varied from factory to factory, and that it will provide more information Monday after it’s assessed the situation.

“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 by phone. She wouldn’t talk about how much revenue it would lose as a result of the disruption, or whether the facilities affected were involved in making iPhone chips.

It’s unclear how the lost days of output would affect the Taiwanese firm. Globally, cyber crime could cost businesses as much as $8 trillion in damage over the next five years, according to the World Economic Forum.

The implications are also unclear for Apple. The iPhone maker last week surpassed a market value of $1 trillion, largely on the strength of sales for its pioneering smartphone. The U.S. company has employed in the past foundries owned by Samsung Electronics, its rival in global mobile devices.

Research firm Canalys said Apple shipped 41 million (–1 percent) iPhones in Q2 2018 against Samsung’s 73 million (–8 percent) and Huawei Technologies’ 54 million (–41 percent).

Earlier, TSMC cheered investors with a rosy outlook for smartphone demand in the latter half of the year. TSMC CEO CC Wei had said TSMC’s sales will increase this year by a high single-digit percentage in US dollar terms, down from an already reduced projection of about 10 percent.

TSMC, the world’s largest contract chipmaker, said on Sunday that the company expects full recovery on August 6.

“TSMC expects this incident to cause shipment delays 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,” it said.

“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 chipmaker has notified its customers and is working with them on the wafer delivery schedule. The virus outbreak occurred during the software installation for a new tool, which caused a virus to spread once the tool was connected to the company’s computer network, TSMC said.

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