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Apple supplier TSMC hit by computer virus

Cyberattack comes at busiest time of year, just ahead of new iPhone release

A security guard stands near the logo of Taiwan Semiconductor Manufacturing Co.   © Reuters

TAIPEI -- Key Apple supplier Taiwan Semiconductor Manufacturing Co. on Saturday confirmed a computer virus has stopped production at at least one factory, just as the company gears up to produce core processors for upcoming iPhone models.

The virus is disrupting an information technology system dedicated to production, and more than one factory may have been halted, according to an industry source.

"A number of TSMC production tools were infected by a computer virus on the evening of Aug. 3," the chipmaker confirmed in a statement on Saturday afternoon. "TSMC has contained the problem and found a solution, and recovery of the affected tools is in progress."

TSMC said the degree of infection varies from site to site and that "certain factories returned to normal in a short period of time." The chip giant, based in the Taiwanese city of Hsinchu, expects other plants to return to normal in a day.

All production sites in Taiwan, TSMC’s primary production base, have been disrupted by the virus, according to the company.  

"It's extremely sensitive," an industry source familiar with the matter said on condition of anonymity. "The news has spread across the industry since late Friday night. The computer virus was first detected in TSMC's 12B facility."

The source said this facility is TSMC's most essential research and development base and is near the company's headquarters. The R&D plant "holds crucial production data and leading nanotechnology blueprints," the source said.

The virus comes amid a burst of alleged industrial espionage cases. In early July, U.S. authorities charged a former Apple employee with theft of trade secrets. According to reports, the former employee, Xiaolang Zhang, had disclosed his intention to work for a Chinese self-driving car startup and booked a last-minute flight to China -- after downloading the plan for a circuit board for Apple's self-driving car.

On Wednesday, a General Electric engineer in New York state with ties to businesses in China was arrested for allegedly stealing trade secrets related to GE turbine technology.

The virus attack on TSMC's computer systems also comes as trade tensions and a technology cold war escalate, mostly between Washington and Beijing. Nation-states increasingly consider their private sectors' chip technologies to have deep national security implications.

It is not clear how the virus got into TSMC's IT system, but the company says it was not hacked.

Currently, iPhone core processors are made with TSMC's most cutting-edge, 7-nanometer technology, in the central Taiwanese city of Taichung.

It is unclear how the production schedule for the iPhone's core chip will be affected.

Since 2016, the Taiwanese company has been the sole supplier of the core processors for Apple's phone.

The next iPhones are to be unveiled in September.

TSMC plays a crucial role in the global semiconductor and electronics supply chain. Apple, Qualcomm, Nvidia, Broadcom, NXP, Xilinx, Cirrus Logic, Analog Device, MediaTek and Huawei chip unit Hsilicon Technologies are among the 450 companies that rely on TSMC technology.

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