Advanced Semiconductor Engineering Inc (ASE, 日月光半導體) shares surged 2.76 percent yesterday after a local environmental protection agency conditionally approved the world’s biggest chip packager’s request to fully restore operations at a problematic plant in Greater Kaohsiung.
The approval, which came after a second review held on Monday, paves the way for the company to end the three-month partial suspension of the K7 plant and end the adverse financial impact of the shutdown.
The company had forecast the partial shutdown of the plant would erode between 4 percent and 5 percent of its revenue from its core business — chip testing and packaging — in the current quarter, bringing down revenue by between 12 percent and 15 percent quarter-on-quarter from NT$37.9 billion (US$1.24 billion).
ASE shares closed at NT$31.7 yesterday. They have risen 14.44 percent since the beginning of the year, outperforming the benchmark TAIEX, which has increased just 0.9 percent over the same period.
In December last year, the Greater Kaohsiung Government’s Environmental Protection Bureau ordered the partial shutdown of the K7 plant it was discovered that the company had discharged wastewater into the nearby Houjin River (後勁溪).
To fully resume operations at the plant, the bureau said on Monday that ASE has to comply with the new, stricter wastewater treatment and scrutiny regulations. ASE also has to submit complementary information about a test run of the K7 plant for regulatory review, the bureau said in a statement.
The company said it would fully cooperate with the bureau and comply with the new regulations.
Credit Suisse AG earlier this month forecast ASE would post 12.5 percent quarterly growth in revenue next quarter, even if the K7 plant disruption extended beyond this quarter.
"K7 restart supports good growth in the second quarter," Credit Suisse analyst Randy Abrams said in a research note yesterday.