Bad batch of chemicals lowers TSMC Q1 2019 guidance

Late last month, news hit the web about a bad batch of chemicals affecting TSMC's wafer production. At the time, the Taiwanese foundry stated the issue would not affect its first quarter financial guidance given on January 17, 2019.

It appears the problem was worse than previously anticipated as TSMCC just revised downward its Q1 2019 guidance following a full assessment of all wafers affected by the sub-par photoresist material:

The incident is expected to reduce TSMC's first-quarter 2019 revenues by about US$550 million, gross margin by 2.6pp, operating margin by 3.2pp, and EPS by NT$0.42, the foundry house said.

TSMC said it discovered that a batch of photoresist from a chemical supplier contained a specific component which was abnormally treated, creating a foreign polymer in the photoresist that affected 12/16nm wafers at its Fab 14B.

To ensure the quality of wafers delivered to customers, TSMC said they have decided to scrap a higher number of wafers than its earlier estimate.

TSMC expects to make up for it in Q2 2019, resulting in a smaller hit for the full year 2019. The foundry anticipates the photoresist incident will reduce full-year gross margin by 0.2pp, operating margin by 0.2pp, and EPS by NT$0.08.

Via: DigiTimes