ASE Falls Most in 22 Months on Pollution Probe: Taipei Mover

Advanced Semiconductor Engineering Inc. (2311) fell the most in 22 months in Taipei trading after regulators idled and threatened to shut down a plant because of pollution.

Advanced Semiconductor dropped 6.9 percent to NT$25.75 at the close in Taipei, the biggest decline since February 2012. Taiwan’s benchmark Taiex index fell 0.8 percent.

Regulators ordered machines to be idled at a company plant in Chungli city, northern Taiwan, because waste water hasn’t been treated, violating pollution laws, the Environmental Protection Bureau of the Taoyuan county government said yesterday.

Waste water systems at a Kaohsiung city plant that accounts for at least 28 percent of group capacity are now compliant with government standards and operating normally, the chipmaker said in an exchange filing today after Chairman Jason Chang addressed the public in a televised press conference.

ASE was given until Dec. 19 to improve its waste water systems before city authorities planned to shut down its K7 factory, which accounts for at least 28 percent of group capacity, Eddie Chen, a company spokesman, said on Dec. 10.

Negative Publicity

“The wide negative publicity is exerting pressure on the government to take actions,” wrote Mark Li, an analyst at Sanford C. Bernstein & Co. in Hong Kong, in a note dated today. A director at the K7 plant was detained for alleged offenses against public safety, according to the Kaohsiung District Prosecutors Office on Dec. 14.

Chang said today the company will donate at least NT$3 billion over the next 30 years towards 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, Chang said.

The pollution-related incidents may result in earnings per share in 2014 to be reduced by 11 percent, Li said. Competitors including Siliconware Precision Industries Co. (2325) and Taiwan Semiconductor Manufacturing Co. stand to benefit in the short term, according to the analyst. Siliconware surged as much as 6.9 percent in Taipei today, closing 4.3 percent higher.

A report by the Commercial Times saying customers such as Qualcomm Inc., MediaTek Inc. and Freescale Semiconductor Ltd. may move orders to competing chipmakers are false, ASE, based in Kaohsiung, southern Taiwan, said in a separate exchange filing earlier today.

To contact the reporter on this story: Debra Mao in Taipei at dmao5@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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