Taiwan’s government has announced that it will punish Foxconn, the world’s largest contract electronics manufacturer, for an unapproved investment in a Chinese semiconductor manufacturer, despite promises from the Taiwanese company to sell the offending stake.
Taiwan has viewed China’s plans to expand its semiconductor industry with skepticism and is strengthening rules to prevent China from allegedly stealing its chip technology.
Foxconn, a major Apple supplier and iPhone manufacturer, reported in July that it was a shareholder in troubled Chinese chip giant Tsinghua Unigroup.
Foxconn disclosed late Friday in a filing with the Taipei stock exchange that its Chinese company has agreed to sell its whole equity position in Tsinghua Unigroup.
In response, Taiwan’s Economy Ministry stated that its investment commission, which must approve all foreign investments, will request a “complete explanation” from Foxconn on Monday.
“As for the fact that the investment was not declared beforehand, the amount will still be calculated in accordance with the formula and the penalty will be imposed in accordance with the law,” the document stated, without providing further information.
Foxconn did not respond to a request for comment immediately.
Prior to making the investment, Foxconn did not obtain consent from the Taiwan government, according to sources who spoke to Reuters, and authorities believe this breached a statute controlling Taiwan’s relations with China, which claims the island as its own.
As the end of the year approaches, Foxconn stated in a statement released Saturday before the economy ministry’s that the original investment had “remained unfinalised”
Foxconn stated that Xingwei, which is controlled by its China-listed subsidiary Foxconn Industrial Internet Co Ltd, had agreed to sell its assets to Yantai Haixiu for at least 5.38 billion yuan ($772 million).
Xingwei possesses a 48.9% ownership in a separate business that holds a 20% investment in the vehicle that owns the entirety of Unigroup.