Advanced Semiconductor Engineering (ASE) has received a government order to shut down part of its K7 factory located in Kaohisung, southern Taiwan, as a result of water pollution, according to the semiconductor assembly and test services provider.

　　ASE disclosed that it has suspended work at the K7 plant's wafer-level process that uses nickel and requires wastewater treatment, after receiving an official notification from the Kaohsiung Environmental Protection Bureau (KEPB). ASE has also been fined about NT$110 million for the discharge of untreated wastewater into a river.

　　ASE revealed K7 factory generates approximately US$58 million from production per month, accounting for about 9% of the company's total consolidated revenues. Of the revenues generated by the facility, around US$40 million worth of monthly capacity come from non-wafer level processes.

　　ASE expects the suspension to affect only capacity for wafer-level processes, which generates US$18 million monthly.

　　"It is our objective to swiftly complete the improvements and apply to the bureau to resume normal production at K7 and minimize the impact to our operations," ASE noted in a statement.

　　"ASE has mobilized all its resources to ensure minimal impact to our customers, and we believe that the situation, though challenging, is under control," the company continued. "Our relationships with customers have been built steadily over the years and remain strong, despite this situation."

　　ASE's K7 factory employs about 5,000 people. "During the work suspension period, we will continue to pay our employees according to prevailing labor laws to preserve our employees' labor rights," according to ASE.

　　Industry observers expect the partial suspension of ASE's K7 factory to affect its supply chain for less than a quarter, as the IC packager has undertaken measures to minimize the impact. ASE already moved some of its K7 facility equipment to other plants so that it would be able to satisfy orders coming in around the end of first-quarter 2014, previous reports quoted sources as saying.