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Apple's new iPhones could face chip delays after a major supplier is hit with a computer virus

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By Arjun Kharpal, CNBC

Taiwan Semiconductor Manufacturing Co. (TSMC), which makes chips for Apple's iPhones, suffered a computer virus outbreak and warned it could cause shipment delays as well as hit revenue.
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The issue, which occurred on August 3, was publicly disclosed on Saturday and affected a number of computer systems and so-called fab tools that are required in the chip-making process. TSMC said there could be delays to product shipments, adding that it would reduce third quarter revenue by 3 percent, or $255 million, from its previous guidance.

On Sunday, the company said 80 percent of its impacted tools had been recovered and that all issues would be resolved on Monday.

TSMC said most of its customers have been notified but did not specify who it had contacted.

Apple is one of TSMC's major customers. The Taiwan semiconductor firm produces Apple's A11 processor that is currently in the iPhone X. And it is currently making the next-generation A12 processor that is expected to be in the U.S. technology giant's upcoming smartphones. Apple is rumored to be releasing three new iPhone models later this year.

It's unclear yet what the exact impact on Apple could be, but analysts did not see a huge impact on iPhone production. Fubon Research published a note Monday in which it forecast around 1.5 million to 1.7 million A12 chips being delayed. But it said it expected iPhone production in the second half of 2018 to be 83 million units.

"Since TSMC indicated the delayed shipment from this incident will be recovered in the following quarter, we think there will be no meaningful impact on Apple's new coming iPhone," Fubon said in a note.

Analysts at KGI said in a note Monday that any impact to iPhones would be limited because the supply chain "usually prepares for these incidents and manufactures surplus chipsets during the initial ramp-up stage."

Apple was not immediately available for comment when contacted by CNBC.

TSMC said the virus outbreak was due to "misoperation" during the software installation process for a new tool. It said confidential information was not compromised. While there were no indications of a cyber-attack, analysts said the company needed to provide more information on what happened.
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"In our view, 'misoperation' is simply not good enough an explanation. Although TSMC pointed out data integrity and confidential information were not compromised, we think TSMC needs to provide more details of what happened to alleviate the security concerns of customers and long-term investors," Fubon Research said in its note.

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Technology - U.S. Daily News: Apple's new iPhones could face chip delays after a major supplier is hit with a computer virus
Apple's new iPhones could face chip delays after a major supplier is hit with a computer virus
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Technology - U.S. Daily News
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