Advanced Semiconductor Engineering Inc. (2311) was ordered to shut down a factory responsible for almost 30 percent of capacity after a pollution incident led to the detention of a plant director.
Evidence of hazardous chemicals was found during government checks, Chen Chin-der, director of the Environmental Protection Bureau in the southern Taiwan city of Kaohsiung, said at a press conference broadcast on cable networks today. The shutdown of the K7 factory takes effect when ASE receives the government notice and will be lifted after the company provides satisfactory remedies, he said.
ASE was given until Dec. 19 to improve its waste water systems at K7, which houses at least 28 percent of group capacity, Eddie Chen, a company spokesman, said on Dec. 10. A director at the K7 plant was detained for alleged offenses against public safety, the Kaohsiung District Prosecutors Office said Dec. 14.
The K7 plant accounts for about 9 percent of revenue, an ASE spokesman Joseph Su said when reached by phone today, declining to comment further as the company has yet to receive the government notice.
Shares closed unchanged at NT$27.25 in Taipei today. ASE has tumbled 8.4 percent since Dec. 9, when Kaohsiung’s environmental regulator said it would fine the company NT$600,000 ($20,000) for water pollution.
Foreign investors have bought more than they sold ASE shares every day for nearly two weeks, according to the Taiwan Stock Exchange website.
Facilities in the northern Taiwan city of Chungli were fined NT$510,000 and some machines were idled at a company plant because waste water hadn’t been treated, violating pollution laws, Taiwan’s Taoyuan county government said.
ASE this week said waste water systems at K7 were compliant with government standards and operating normally. Chairman Jason Chang also said the company would donate at least NT$3 billion over the next 30 years toward environmental protection efforts in Taiwan.
A new water recycling facility will begin operating in the second quarter of 2014, expedited by an additional NT$750 million investment, according to Chang.
Shutting down K7 for one quarter would reduce sales and earnings-per-share by as much as 4 percent in 2014, Barclays Plc analyst Andrew Lu wrote in a report this week. Lu said “no material impact” would be seen in 2015.
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