Partial ASE shutdown in Taiwan might benefit competitors

Facing a possible shutdown of an offending plant involving water pollution at home, Taiwan-based Advanced Semiconductor Engineering might be seeing the shift of some orders to its rivals.

There is a growing concern that the shutdown of part of the Advanced Semiconductor Engineering (ASE) plant in southern Taiwan, due to recent water pollution accusations, might benefit its rivals, according to market analysts cited by the state-run Central News Agency (CNA).

According to CNA, in analysts' opinions, possible beneficiaries of the predicament of ASE, the world's largest IC packaging and testing services provider enjoying roughly 30 percent global market share, include Taiwan-based Siliconware Precision Industries, South Korea-based Amkor Technology, and Singapore's STATS-ChipPAC.

ASE was fined TW$600,000 ($20,300) on December 9 by Kaohsiung City government for discharging untreated industrial wastewater into the Houjin River from its "K7" plant in the Nanzi industrial complex. It has been confirmed that the plant's wastewater contains toxic heavy metals, including carcinogenic nickel compounds.

According to ASE, it has been providing explanations and related documents to the city's Environmental Protection Bureau. The deadline for filing its explanation is December 19.

However, bureau director-general Jin-de Chen said on December 12 that ASE should be prepared to receive an order in the near future to shut down its K7 plant. According to Chen, some data of the plant's wastewater monitoring system, such as chemical oxygen demand (COD) levels and pH levels, ASE submitted to the bureau has been confirmed fake, according to CNA.

"The plant has seriously violated environmental laws. ASE should be prepared for a possible halt of the plant," Chen told a news conference held in Kaohsiung.

ASE said on December 12 that it would keep making efforts to communicate with the local government, according to CNA.

Due to the concerns over the possible shutdown of the offending plant, shares of ASE closed down 1.60 percent at NT$27.60 ($0.93) on December 12. It was the third consecutive session for the stock to drop, according to CNA. ASE's clients include major designers of communications chips, such as US-based companies Qualcomm, Broadcom, and Marvell Technology Group, as well as Taiwan-based MediaTek. The ASE Group generated sales revenues of $6.5 billion in 2012, and employs over 57,000 people worldwide.

The local government is working on piecing up a big picture of the river pollution, partly caused by ASE. On December 11, local environmental inspectors visited ASE's other plants, discovering several secret storage tanks for wastewater at its K11 plant. Meanwhile, they found that wastewater meters at both K5 and K11 plants were malfunctioning.

The polluted Houjin River is a major source of irrigation water for about 900 hectares of farmland. On December 12, the local governments notified farmers growing vegetables in affected croplands of the pollution, ordering them stop harvesting vegetables.