Taiwan Semiconductor Manufacturing Co. (TSMC) Loses Millions Due to Substandard Raw Materials Used in Production

According to the foreign brokerages, Taiwan Semiconductor Manufacturing Co. or TSMC loses 1-2 percent of its first-quarter sales due to a failure experienced in the production of their products. The raw materials that were used in the production were below the required standard.

With the use of the substandard raw materials, 10,000 TSMC wafers were damaged.

The problem had been discovered on January 19, 2019, when there were low yields in the production of wafers using the 12 nanometer and 16nm processes at TSMC’s 12-inch wafer production site-Fab 14B.

An American securities house said that because of the incident TSMC will incur a loss of US $ 70 Million which is equivalent to 2 percent of TSMC’s first quarter’s net profit.




Regardless of the incident, the company had decided not to change its guidance on its first-quarter sales. It had estimated its total sales at  $7.3 billion to $ 7.4 billion for the first quarter which is 22 percent lower than its previous quarter’s total sales projections. And the estimated gross profit margin (the percentage of the difference between the net sales and the cost of goods sold over the net sales of the company) for the first quarter is 43 to 45 percent which is also lower than the previous quarter’s projections by 2.7-4.7 percent.

A drop in the sales in the first quarter will cost the company’s annual gross margin to go down if it does not fix this problem in the next three-quarters of their operating cycle. According to an Asian securities house, the company will be reporting deferred sales in the second quarter of their operating year.


The name of the brokerage firms cannot be disclosed since Taiwan does not allow the media to state the actual names of foreign brokerage firms which provide price-moving forecasts for stocks or the broader markets.