NT$20B.Taiwan-made Products Fail to Meet RoHS Directive

Taipei, April 3, 2006 (CENS)--An estimated NT$20 billion (US$625 million at US$1:NT$32) worth of products from 164 Taiwanese suppliers may fail to meet Restriction of Hazardous Substances (RoHS) directive, which will become effective on July 1 this year, according to the Ministry of Economic Affairs.

The ministry recently said that the 164 publicly held Taiwanese enterprises were considering retreating from programs installed to help the island's enterprises meet the directive, which imposes restrictions on uses of toxic chemical substances Pb, Hg, Cd, Cr VI, PBBs and PBDEs in electronics and electrical equipment bound for Europe.

The ministry said these suppliers conceded they are not able to meet the directive by July 1. Their products represent a combined 10% of Taiwan-made products destined for Europe.

The 164 suppliers are the rest of previously unqualified 212 enterprises receiving RoHS program. After taking the program, 21 of them are qualified now and 27 can continue doing the improvement work on their own.

The ministry hopes over 90% of the island's publicly held enterprises to be RoHS compliant by the end of this June as a result of its intensive assistances. Most of them said they are RoHS ready except some critical disputes over corporate internal controls and manufacturing process.

Taiwan ships NT$200 billion (US$6.25 billion at US$1:NT$32) worth of electrical and electronics products to Europe annually. Of which, 80% come from suppliers of information-technology and communications equipment, suggesting that the suppliers will bear the brunt of the RoHS impact.

Integrated Service Technology (IST) Inc., a leading Taiwanese supplier of examination services for electronics and electrical devices, pointed out that RoHS is only a beginning of ecological directive. Mainland China and the United States will soon put their versions of RoHS directive into force. All of these regulations will take serious toll on Taiwan's electrical and electronics industry.

IST executives pointed out that RoHS would mostly challenge Taiwanese suppliers in two respects. The first one is that some Taiwan-made products may be deemed failing the RoHS directive in Europe although they are proved qualified in Taiwan since some standards are expected to be set up only after July 1. The second is that many local PCB (printed circuit board) suppliers have adopted zinc-lead alloy as the major welding material used on their boards to reduce Pb substances in their products. But the efforts may amount to nothing if the new formula does not meet the directive's requirement. Even though Taiwanese suppliers have to seek other formulas, they will take three to five years to complete readjustment work.