iPhone Chipmaker Works to Recover After Getting Hit by Computer Virus

Taiwan Semiconductor Manufacturing Co., which makes chips for the iPhone and other devices, detailed its progress in recovering from a debilitating computer virus and warned of delayed shipments and reduced revenue because of the impact on its factories.

TSMC said that 80 percent of the fabrication tools affected by a virus outbreak Friday evening had been restored and that it expects full recovery on Monday, an emailed statement shows. The Taiwanese company said the incident, which comes as it ramps up chipmaking for Apple Inc.’s next iPhones, would delay shipments, without specifying which customers would be affected.

The chipmaker estimated that third-quarter revenue would decline by about three percent and operating margins by about one percentage point, according to the Sunday statement. It maintained its 2018 forecast of boosting revenue by high single digits in U.S. dollar terms.

The incident underscores the global nature of the technology industry’s 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, recalling the WannaCry cyberattacks of 2017 that forced corporations around the world to suspend operations as they rooted out the ransomware. TSMC says no confidential information was compromised in the virus attack and most customers have been notified.

“TSMC has taken actions to close this security gap and further strengthen security measures,” TSMC Chief Financial Officer Lora Ho said by phone Sunday.

The virus outbreak was due to “misoperation” during the software installation process for a new tool, the company said in the statement. The virus then spread once the tool was connected to TSMC’s computer network.

The firm is the latest to fall prey to a growing global scourge. Cyber crime could cost businesses as much as $8 trillion in damage over the next five years, according to the World Economic Forum.

“TSMC has been attacked by viruses before, but this is the first time a virus attack has affected our production lines,” Ho told Bloomberg News on Saturday.

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 Co., its rival in global mobile devices.

The incident comes weeks after TSMC cheered investors with a rosy outlook for smartphone demand in the latter half of the year. That helped the market look past a reduced revenue outlook. A bellwether for the chip industry as well as an early indicator of iPhone demand, it heads into its busiest quarters grappling with waning enthusiasm for the high-powered chips used to mine digital currencies. Chief Executive Officer C. C. Wei had said TSMC’s sales will rise this year by a high single-digit percentage in U.S. dollar terms, down from an already reduced projection of about 10 percent.

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