(Image courtesy of TSMC).

TSMC Restarts Operations After Virus Takes Down Factories

Aug. 8, 2018
TSMC Restarts Operations After Virus Briefly Takes Down Fabs

Taiwan Semiconductor Manufacturing Corporation has resumed normal operations after expelling the computer virus that disabled part of its manufacturing operations last week, costing it hundreds of millions of dollars in shipment delays and other costs. But industry analysts say that the impact on customers will likely be minimal.

The world’s largest contract chip manufacturer said that the incident occurred on Friday when it installed infected software onto a new fabrication tool, which caused the virus to spread into its factories once the tool was connected to its computer network. The company said that its factories were affected to varying degrees and that it had resolved all issues on Monday.

TSMC said that there could be delays to product shipments, adding that it would reduce third quarter revenue by about three percent, or around $255 million, from its previous guidance. The made-to-order chip company said it would try to recover delayed shipments in the fourth quarter. It also confirmed that confidential information was not compromised by the virus.

On Monday, the company said it had contacted most customers in the aftermath of the virus being detected. But industry analysts say that it usually prepares for these types of incidents by having excess manufacturing capacity that can be used to smooth over delayed orders. “It’s amazing how adaptable the supply chain is,” said Dan Hutcheson, chief executive of VLSI Research.

TSMC has never had to close factories following a virus before. But the company, which makes chips for Nvidia and Apple, among others, prides itself on working through earthquakes that can damage wafers and shut down factories much longer than the virus did. These incidents set off alarm bells in the electronics industry but everything usually resolves itself. The virus, Hutcheson said, will be “negligible. It’ll be noise.”

A spokesperson for TSMC did not return a request for further comment.

Falling prey to the computer virus is a black eye for the Hsinchu, Taiwan-based company, which holds more than half of the foundry business and has taken the early lead in high volume production of 7-nanometer chips. “Long-term, TSMC’s trustworthy image is somewhat tainted but it is hard to quantify the effect now,” said Mark Li, an analyst with Sanford C. Bernstein, in a report on Sunday.

“But the bigger wakeup call is to the semiconductor wafer fab industry that security needs a lot more attention,” Hutcheson said. TSMC’s virus was based on WannaCry, which ravaged companies around the world last year by encrypting data and demanding ransom payments. The malware forced closures of factories owned by Renault and Boeing, among others.

Tools that can process silicon wafers can cost more than $100 million each, and many factories have more than a thousand pieces of equipment inside. Companies are increasingly trying protect these tools by connecting them to computer networks to monitor for glitches or other anomalies. But that, inevitably, has raised security concerns.

Last year, a computer virus made GlobalFoundries shut down its manufacturing operations in Burlington, Vermont. The company, which makes chips for Advanced Micro Devices and IBM, said fabrication tools were taken down to prevent the spreading of the virus. Like TSMC, the Milpitas, California-based company said it was not the target of hackers.

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