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Transformation Risks
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Raw Material Supply
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- Natural disasters lead to increased procurement and transportation costs.
- Production delays or shutdowns result in losses in capacity, revenue, and orders.
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- Establishing a local supply chain.
- Developing new suppliers and materials to avoid risks associated with single-source supplier disruptions.
- Maintaining safety stock for raw materials and improving utilization and reducing scrap rates through engineering improvements.
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General Environmental Protection Regulations
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- Stricter environmental regulations increase operational costs.
- Violations of relevant laws lead to work stoppages and shipment delays.
- A tightening waste disposal market, with limited capacity from qualified disposal vendors, results in increased disposal costs.
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- Strengthening management measures and compliance with environmental requirements from regulatory authorities.
- Increased waste recycling rates to reduce environmental impact and simultaneously enhance Company profitability.
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Carbon Emission and Carbon Tax
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- Energy Tax: If levied, it will increase the Company's operating expenses.
- Carbon Fee:
Operation expenses will be higher for the Company owing to the implementation of the carbon fee under Taiwan’s “Climate Change Response Act” will increase operating costs and the installation of carbon reduction equipment.
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- Monitoring regulatory trends and establishing response strategies to meet regulatory requirements.
- Improving and updating equipment to enhance energy efficiency and reduce carbon emissions.
- Setting carbon reduction targets and continuously assessing and planning carbon credit offset strategies to work towards carbon neutrality.
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Matters Relating to Renewable Energy
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- Electricity prices increase annually, raising the cost of energy procurement.
- The cost of green electricity is higher than that of conventional electricity.
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- Enhancing energy usage efficiency.
- Exploring multiple sources for renewable energy suppliers.
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Shift in Client Demand
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Due to global or regional market uncertainty, especially related to climate change issues, it is difficult to predict future product or customer demand.
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Learning market and client demands to develop new low-carbon products.
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Unstable Energy Supply
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- Unstable power supply from power plants due to climate change causes production stoppages and reduced load, leading to revenue loss.
- Overtime costs incurred from rushing to meet delayed delivery schedules.
- Increased costs due to the use of alternative energy sources.
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- Production schedule adjustments in case of unstable power supply.
- Plans to implement the ISO 50001 system to strengthen energy management.
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Shift in Market Demand/ Innovative Technology in the Industry
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Clients may reduce orders if the Company fails to meet carbon reduction standards or other regulatory requirements, and may require the Company to pay additional taxes if necessary.
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Development of low-carbon green materials and establishment of a low-carbon supply chain, meanwhile incorporating them into engineering projects.
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Physical Risks
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Strengthened Extreme Weather Incidents.
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Extreme rainfall or drought events may cause energy anomalies, loss of facilities and equipment, and supply chain disruptions, leading to production delays or even operational shutdowns.
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- Investments in water-saving initiatives and measures/saving water usage on the production lines.
- The Group is subject to limited influences as it has two R&D centers; as for significant facilities of MTI, it is headquartered in the higher elevations of Hsinchu Science Park, at which the impact of extreme weather will only affect the timing of shipments. The same applies to MTI’s facilities in Wuxi.
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