Taiwan Considers Fining Foxconn Over China Investment

The government of Taiwan considers fining electronics giant Foxconn up to T$25 million ($835,600) over its investment in a Chinese chip conglomerate without first getting regulatory approval. Foxconn, the world’s largest contract electronics producer, said earlier this week that it has purchased a stake in Chinese chip conglomerate Tsinghua Unigroup via a 5.38 billion yuan ($797 million) investment by a subsidiary.

Taipei has become wary of China’s ambition to boost its semiconductor industry at Taiwan’s cost. Taiwan has accused Beijing of stealing its chip technology and proposed new laws to prevent it.

The fact that Foxconn did not seek prior approval from the Taiwan government has violated a law governing the island’s relations with China.

Taiwan regulators are considering to give Foxconn the maximum penalty, which is $T25 million, due to the large size of the Chinese investment.

Foxconn cited to an earlier filling on the stock exchange and said it would deliver the documents to the Economy Ministry’s Investment Commission in the near future.

Foxconn could be given a penalty of between T$50,000 and T$20 million for investing without approval. Regulators will investigate the investment and deliver a decision after they receive the company’s application.

Although there’s a chance that an approval will be given, if not, Foxconn will have to withdraw the investment.

Taiwanese law authorizes the government to ban investment in China “based on the consideration of national security and industry development.” Those violating the law could be fined repeatedly until corrections are made.

Foxconn, best known for assembling Apple’s iPhone, has been aiming to venture into the electric vehicle (EV) market. The company has been looking to purchase chip plants globally as the worldwide chip shortage mounts pressure on producers of goods from automotive to electronics.

Taipei prohibits companies from building their most advanced foundries in China to ensure they do not offshore their best technology.

Tsinghua Unigroup, which was acquired by Foxconn, emerged in the last decade as a would-be domestic champion for China’s laggard chip industry. But the company fell into debt, prompting it to default on a number of bond payments in late 2020 end eventually face bankruptcy.

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