MKS Instruments hit by class-action litigation following ransomware attack

MKS Instruments is facing a class action lawsuit in California in connection with a February ransomware attack that forced the company to suspend part of its manufacturing capacity, according to the company’s annual 10-K filed Tuesday with the Securities and Exchange Commission.

The lawsuit was filed March 3 in the Orange County Superior Court in California seeking unspecified damages. The company said it plans a vigorous defense.

MKS late last month warned the attack, which disrupted its photonics and vacuum solutions divisions, would result in more than a $200 million hit to quarterly revenue during the first quarter. The company was previously expecting to reach $1 billion in revenue for the period.

A Moody’s analyst said the ransomware attack is credit negative for the company, which is a key supplier to the semiconductor industry.

“The financial ramifications, temporary manufacturing delays and the class-action lawsuit underscore the potential cascading impacts of any cyber incident and the need to bolster cybersecurity across the industry,” Terry Dennehy, VP and senior credit officer at Moody's, said in a statement.

Moody's officials said the comment should not be considered an official ratings downgrade of the company, but more of an assessment of the financial impact.

MKS said an investigation shows ransomware actors encrypted some of its systems by deploying malware, according to the regulatory filing. The company has since restored many of its IT systems and reopened certain manufacturing and service operations.

The company retained security specialists to help assess and remediate the company’s IT controls, and is strengthening access requirements and threat detection capabilities.

MKS is also implementing procedures to facilitate a more timely restoration of its financial reporting capabilities. The company delayed release of its quarterly earnings report following the attack.

MKS has cybersecurity risk insurance coverage, but the coverage may not cover all of the costs related to the attack, the company said.