As Apple prepares to launch its 2018 flagship iPhones, one of its biggest suppliers has come under a massive virus attack. Taiwan-based TSMC, the sole supplier of A12 chips for the upcoming iPhones, said in a statement that it was recovering from the virus attack that forced it to halt production at several facilities Friday night. The scale of the attack is so massive that it could delay the 2018 iPhones launch.
Virus attack at TSMC to delay shipments
TSMC said it had notified most of its customers. It didn’t specify which customers would be affected, but the attack comes at a time when it was ramping up production for the next-gen iPhones. The company has warned of lower revenues and delayed shipments due to the virus attack.
By late Sunday, the Taiwanese chipmaker had restored nearly 80% of fabrication tools affected by the virus. The company assured its customers that no confidential information was compromised in the outbreak.
So, what triggered the virus outbreak or who was behind the attack? The company told media that the virus wasn’t introduced by an outside hacker. It was caused by “misoperation” during software installation for a new tool. It spread to all the production lines once the tool was connected to TSMC’s computer network.
The Taiwanese chipmaker estimates that the virus attack would affect its third-quarter revenues by 3% while gross margins would decline by 1 percentage point. For the full-year 2018, the company expects high single digits percentage revenue growth.
2018 iPhones launch: What would happen now?
There is a good chance the virus attack at TSMC would delay the 2018 iPhones launch or at least cause a supply shortage. Apple is TSMC’s largest customer, accounting for more than 21% of its revenue. The Cupertino company is preparing to release three new iPhones next month. It could also unveil the Apple Watch Series 4 at the same event. New Macs and iPads will likely be unveiled in October.
Apple tends to prepare for such problems in advance, but it is unclear how the company would deal with the virus attack at TSMC, which has become the sole supplier of A12 chips. Research firm SMBC Nikko told investors that if the 7nm process products suffer from the outbreak, there could be a potential delay in 2018 iPhones launch.
According to multiple leaks, the A12 chipset that would power all the three upcoming iPhones will be based on TSMC’s 7nm process technology. It means the new chip should be smaller, faster, and more energy efficient compared to last year’s A11 Bionic processor, which was based on the 10nm process.
LCD iPhone launch will get delayed, but for another reason
Apple is expected to release three new iPhones next month: a 6.5-inch OLED iPhone X Plus, a 5.8-inch iPhone X2, and a 6.1-inch iPhone with an LCD screen. The iPhone X Plus and iPhone X2 both will have dual cameras on the back and 4GB RAM. The LCD model would get only a single camera. Anyway, all three models will look almost identical to last year’s iPhone X. Apple isn’t going to change the design this year.
The LCD iPhone would have a more affordable price tag compared to its OLED siblings. To keep its price down, Apple will launch the LCD model without the 3D Touch functionality, though it will offer Face ID technology. The LCD iPhone will be available in single-SIM and dual-SIM variants in select markets such as China.
A few days ago, Morgan Stanely analyst Katy Huberty told investors that the LCD iPhone would be delayed by about four weeks. She said the LCD iPhone entered mass production a month later than usual due to issues with the “LED backlight leakage.” Even if Apple manages to launch it in September, it could be in short supply.