Computer Virus Infects iPhone Chip Maker

Tom Jowitt is a leading British tech freelance and long standing contributor to TechWeek Europe

Concern that chip production for next Apple iPhone may be impacted by virus infection at TSMC

Taiwanese contract chipmaker Taiwan Semiconductor Manufacturing Co Ltd (TSMC) has sought to reassure after concerns that a computer virus have impacted its manufacturing process.

It issued an update about its “computer virus outbreak on the evening of August 3, which affected a number of computer systems and fab tools in Taiwan.”

It comes amid market concerns that the infection could have result in delays to shipments of chips used in Apple’s iPhone handsets.

Virus infection

TSMC said that the degree of infection varied by fab, and that it has “contained the problem and found a solution.”

It said on Sunday 5 August that about 80 percent of the company’s impacted tools have been recovered, and it expects full recovery on Monday 6 August.

“TSMC expects this incident to cause shipment delays and additional costs,” it warned. “The Company is confident shipments delayed in third quarter will be recovered in the fourth quarter 2018.

According to TSMC, the 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.”

It said that the virus had not compromised any data or confidential information, and that it has taken actions to close this security gap and further strengthen security measures.

“While it’s unclear who targeted TSMC and which areas of the factory were affected, the company denied it has been a victim of a “cyberattack,” James Hadley, CEO and Founder of Immersive Labs, told Silicon UK via email.

“However, they’ve still taken reactionary measures to ‘further strengthen security measures’,” he added. This just emphasises the importance to have a proactive risk and cyber security strategy to mitigate potential disruption to all aspects of an organisation from supply chain through to accounts. With an acknowledged uplift in cyber threats in the region, organisations should prioritise reviewing their cyber security strategy.”

The admission of the infection did cause some market worry however that it could delay the shipment of vital chips used in smartphones such as the new Apple iPhone.

Limited impact?

But analysts suggested that the impact will be limited as TSMC has prepared itself for such disruptions.

Mark Li, an analyst at Sanford C. Bernstein, was quoted by Reuters as saying in a report on Sunday technology giant Apple was one of the impacted customers but a swift recovery in the fourth quarter should keep the impact minimal.

“Long-term, TSMC’s trustworthy image is somewhat tainted but it is hard to quantify the effect now,” Li reportedly said.

KGI Securities meanwhile said in a report on Monday that while some of TSMC’s 12-inch wafer shipments will be delayed, the impact to the upcoming iPhone launch is limited because “the upstream supply chain usually prepares for these incidents and manufactures surplus chipsets during the initial ramp-up stage”.

Apple did not immediately respond to a Reuters request for comment.

Last week, Apple became the first publicly listed US company worth $1 trillion (£770bn), after its share price was buoyed by a stronger-than-expected earnings report.

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