Print

Mail

wiki links

Investors abandon ASE shares after fire damage

"Restoring flip-chip packaging and the production of substrates is our top priority."

Joseph Tung, chief financial executive at ASE

Shares of Advanced Semiconductor Engineering Inc (ASE, 日月光半導體) yesterday took a nosedive on the first trading session after a weekend fire at one of its plants in northern Taiwan, as investors worried the damage would take a toll on the company's bottom line.

The fire fueled a sell-off yesterday, driving down ASE's share-price by the 7 percent daily limit to NT$19.35 on the Taiwan Stock Exchange.

"The impact will last for a longer period of time on the company's financial results. Probably two quarters," said Murat Atamer, a semiconductor analyst with Primasia Securities Co in Taipei.

As production facilities for the raw materials used in advanced flip-chip packaging, or substrates, were affected, ASE will have to increase purchasing from outside sources and that will hurt its gross margin, Atamer said.

The company is still assessing the effect on its performance.

"At this point, it is difficult to calculate the total damage and the impact on our second-quarter financial result," Joseph Tung (董宏思), a chief financial executive of the world's top chip testing and packaging service provider, said at a press briefing yesterday after the stock market closed.

Initial estimates put damages at the Chungli plant at US$130 million, largely for equipment and raw materials, according to the company.

But, the figure could rise as the firm is still evaluating the extent of the damage, including 10 pricey, dust-free clean rooms contaminated by smoke and water, Tung said.

Before the blaze, ASE purchased about one-third of the flip-chip substrates it uses, while a significant portion were made at the Chungli factory.

Tung would only say that "a very high percentage" of the company's flip-chip substrates were produced at the plant.

"Restoring flip-chip packaging and the production of substrates is our top priority," Tung said.

In the meantime, to fill the shortfall, ASE has requested local firms, including Phoenix Precision Technology Corp (全懋) to increase supplies, he said.

Boosted by the news, shares of Phoenix Precision surged by the 7 percent daily limit to NT$26.05, approaching a one-year high.
This story has been viewed 2528 times.