TSMC’s Fab 14B Photoresist Material Incident: $550 Million in Lost Revenue
by Anton Shilov on February 20, 2019 8:30 AM EST
TSMC on Friday revealed more details regarding an incident with a photoresist material at its Fab 14B earlier this year. The contaminated chemical damaged wafers on TSMC’s 12 nm and 16 nm lines, and the company now expects the full impact of the event to reduce their revenue by a whopping $550 million in the first quarter.
TSMC said that a batch of photoresist it used included a specific element which was abnormally treated, creating a foreign polymer in the photoresist. The problem was detected late when the wafer yeilds were lower than expected. As it turns out, consequences of the photoresist incident at Fab 14B were more serious than initially calculated by TSMC. There are media reports claiming that between 10,000 and 30,000 wafers were affected and had to be scrapped, but TSMC has never confirmed either of the numbers.
According to media reports, the affected companies include HiSilicon/Huawei, NVIDIA, and MediaTek, but TSMC has not disclosed names of its customers that suffered from the incident. The only thing that TSMC does confirm is that it has already negotiated new delivery scheduled with its customers.
In any case, the cost of the wafers totals $550 million and they will be made up in Q2. In the meantime, TSMC is pulling in "certain production" from Q2, which will bring in $230 million in additional revenue in Q1. As a result, TSMC’s first quarter earnings are now expected to be between $7 billion and $7.1 billion, down from $7.3 - $7.4 billion predicted in mid-January.
In a bid to avoid similar situations in the future, TSMC will make inspection of incoming materials more thorough and will strengthen inline wafer inspection. The company also indicated that it will need better controls because of increasing complexity of leading-edge fabrication technologies.
Related Reading:
- TSMC Chip Yields Hit By Bad Chemical Batch
- TSMC: 7nm Now Biggest Share of Revenue
- TSMC: Outbreak of Malware That Triggered Delays & Losses Caused by Software for New Tool
- TSMC: First 7nm EUV Chips Taped Out, 5nm Risk Production in Q2 2019
Source: TSMC
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CiccioB - Wednesday, February 20, 2019 - link
$550 Million for the worst case of 30000 affected wafers means that each of them costs $20k.I think it is a bit too high a price or I am missing something.
PeachNCream - Thursday, February 21, 2019 - link
Labor and missed deadlines on contract deliveries, rework, root cause analysis investigations, shutting down production while the problem was isolated...there is a lot more happening here than loss of raw materials.CiccioB - Thursday, February 21, 2019 - link
Most of what you list is already included in the cost of the new wafer they had to start in place of those scrapped.I doubt missing the delivery date is going to costs x4 the value of a wafer.
I think that TSMC is hiding some other losses into this accident, like for example less revenue due reduced iPhone and other smartphones production (together with probably nvidia reduced wafer requests seen their stock levels).
Putting those losses into the cost of the accident simply does not appears like a slowing down of their business, seen they are quite exposed and need to have the best market conditions to pay their debts.
PeachNCream - Friday, February 22, 2019 - link
That reads like a conspiracy theory. Have fun with it.CiccioB - Friday, February 22, 2019 - link
It's just math that doesn't make up.Morawka - Sunday, February 24, 2019 - link
Not really, they are reporting 500 Billion in losses but adjusting their guidance by 2-3 billion.Morawka - Sunday, February 24, 2019 - link
oops, 500 Million is what I meant to say.boozed - Thursday, February 21, 2019 - link
OopsieFreeb!rd - Thursday, February 21, 2019 - link
The winner in all of this? Probably Nvidia if it was GPU production... aren't they already reporting that new RTX line isn't selling as fast as they wanted and then there is still the overhang of oversupply of GTX 10x0 in the market, to they get a rebate on their orders or discount for late delivery or just get to not pay for them until the next quarter...?