Fri, Dec 13, 2013 - Page 14 News List

Wastewater issue presents no-win scenario for ASE

By Kevin Chen  /  Staff reporter

Advanced Semiconductor Engineering Inc (ASE, 日月光半導體) is unlikely to see a total plant shutdown after it was fined for releasing toxic wastewater into a river in Greater Kaohsiung, but rather a partial closure for a period of time until a substantial improvement is made, Yuanta Securities Corp (元大證券) said yesterday.

Either way, clients of the world’s largest chip packager might shift their orders to ASE’s rivals, which include Taiwan’s Siliconware Precision Industries Co (SPIL, 矽品), South Korea’s Amkor Technology Inc and Singapore’s STATS-ChipPAC Ltd.

“ASE’s affected customers will first see if the company has available capacity for the same affected products elsewhere,” Yuanta analyst Andrew Chen (陳治宇) said in a client note.

“If not, ASE is likely to offer ‘switchable capacity’ — prioritizing higher importance customers and products — but this could take a little transition time,” he added.

In a worst-case scenario, customers might go elsewhere for ready and certified capacities, with Siliconware a potential event beneficiary, Chen said.

On Monday night, the Greater Kaohsiung’s Environmental Protection Bureau found that ASE’s K7 plant had been discharging toxic wastewater into the Houjin River (後勁溪).

ASE was fined three times for the same violation last year and the bureau imposed the heaviest fine possible and ordered a halt to the plant’s operations.

The company operates 17 plants in Greater Kaohsiung.

The K7 plant is the largest of ASE’s flip-chip and bumping facilities, which accounts for 10 percent of the company’s total sales.

Major customers for this plant are Qualcomm Inc and MediaTek Inc (聯發科), according to Deutsche Bank researcher Michael Chou (周立中), who said Siliconware could be the beneficiary of order shifts if the plant were shut down.

Greater Kaohsiung Environmental Protection Bureau Director-General Derek Chen (陳金德) said yesterday that ASE should be prepared to shut down the plant, the Central News Agency reported.

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