Foxconn penalties for China chip investment is considered by Taiwan

According to the reports, Taiwan’s government is considering fining tech giant Foxconn up to $25 million Taiwanese dollars ($835,600 USD) for investing in a Chinese semiconductor company without first receiving regulatory approval.

The largest manufacturer of contract electronics in the world, Foxconn, said this week that a subsidiary has invested 5.38 billion yuan ($797 million USD) to become a shareholder in the troubled Chinese semiconductor behemoth Tsinghua Unigroup.

The investment comes as Taiwan, which has proposed new regulations to stop what it claims is China stealing its chip technology, keeps a cautious eye on China’s goal to expand its semiconductor industry.

According to a person familiar with the situation who spoke to Reuters, Foxconn did not obtain prior approval from the Taiwanese government before the investment was made, and authorities believe that this violates a statute governing the island’s relations with China.

Due to the amount of the Chinese investment, regulators are debating whether to levy Foxconn the “highest” fine available, which is taiwanese dollar $25 million, the source noted.

Foxconn told Reuters that it will soon send the documents to the Investment Commission of the Economy Ministry and pointed Reuters to a previous filing on the stock exchange.

According to a source, Foxconn may be fined between $50,000 and $20 million for making investments without getting permission. The source also stated that regulators will review the investment and provide a ruling after receiving the company’s application.

“The likelihood of the request being granted exists. Hon Hai will have to cancel the investment if that is the case “Hon Hai Precision Industry Co Ltd. is Foxconn’s official name, the person said.

In accordance with Taiwanese legislation, the government is permitted to impose investment restrictions on China “based on the assessment of national security and industry growth.” People who break the law risk receiving fines repeatedly until the problem is fixed.

Foxconn, which is best known for producing Apple Inc.’s iPhones, is particularly interested in producing auto chips as it enters the electric vehicle sector. The business has been looking to buy chip manufacturing facilities all over the world as a global chip shortage unnerves manufacturers of items ranging from electronics to vehicles.

To prevent corporations from offshoring their greatest technology, Taipei forbids them from constructing their most sophisticated foundries in China.

Tsinghua Unigroup, which began as a division of China’s esteemed Tsinghua University, rose to prominence in the preceding decade as a potential domestic champion for the country’s struggling chip industry.

However, under the leadership of the previous chairman Zhao Weiguo, the company’s debt increased, causing it to fall behind on a number of bond payments in late 2020 and finally declare bankruptcy.

There are currently no world leaders in the semiconductor industry produced by the firm.

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