US$250 million ‘negative impact’ at Applied linked to cyberattack

News | February 21, 2023

By Peter Clarke

A ransomware attack at process control equipment provider MKS Instruments has been linked to an estimated $250 million “negative impact” given in guidance at Applied Materials.

MKS Instruments Inc. (Andover, Mass.) has suspended operations at some of its facilities due to a ransomware attack. And although Applied Materials posted increased profits and revenue in its first fiscal quarter financial results, it warned of an estimated US$250 million negative impact in the second fiscal quarter due to a cybersecurity event recently announced by one of its suppliers.

Applied Materials did not name the supplier that had suffered the cybersecurity event but observers have indicated it is MKS Instruments.

MKS has delayed the publishing of its fourth quarter and full year 2022 financial results until Monday February 27, 2023, to be in a better position to address the financial impact of the ransomware event.

In Security Exchange Commission filings dated February 13, MKS said it first became aware of the ransomware attack on February 3. It said it in the early stages of its investigation and assessment of the incident and that it had notified law enforcement authorities.

In a press release issued on the same date MKS said the incident had affected the vacuum products and photonics divisions but not the materials division.

In an SEC filing the company said: “The incident has affected certain business systems, including production-related systems, and as part of the containment effort, the company has elected to temporarily suspend operations at certain of its facilities. The company is working diligently to complete the investigation and restore the company’s systems and impacted operations as quickly as possible. The full scope of the costs and related impacts of this incident, including the extent to which the company’s cybersecurity insurance may offset some of these costs, has not been determined.”

Applied Materials reported a net profit of US$1.72 billion on net sales of US$6.74 billion in the first fiscal quarter ended January 29, 2023. Sales were up 7 percent compared with the same quarter a year before.

In its business outlook for the second quarter of fiscal 2023 Applied said it expected net sales to be approximately $6.40 billion, plus or minus $400 million including ongoing supply chain challenges and the negative impact of the cybersecurity event.

Tower Semiconductor Ltd. (Migdal Haemek, Israel) was hit by a ransomware attack in September 2020. It was reported that the specialty foundry was prepared to pay hundreds of thousands of dollars to regain control of computer systems. However, the biggest cost to Tower was expected to be lost production (see Cyberattack will impact Tower’s 3Q results).