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.

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Source: TSMC