Taiwan Fines Foxconn T$10 Million Over China Investment

 

Taiwan fined its tech giant Foxconn T$10 million ($329,088) on Thursday for making an unauthorised investment in a Chinese chip firm.

The Taiwanese iPhone assembler had cooperated in the case and so received a lesser punishment, Taiwan’s economy ministry said.

Taiwan, which Beijing views as sovereign Chinese territory, has kept a wary eye on China’s ambition to boost its semiconductor industry. The island is tightening legislation to prevent what it says is China stealing its chip technology.

 

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Foxconn, a major Apple Inc supplier and the world’s largest contract electronics maker, disclosed last July it was a shareholder in Chinese chip conglomerate Tsinghua Unigroup.

The move was part of its effort to make auto chips, as it expands into the electric vehicle market. The company is seeking to acquire chip plants globally after a worldwide chip shortage last year rattled producers of goods from cars to electronics.

Taiwan’s government, which needs to clear all outbound investments, had not approved the deal.

Following action from the island, Foxconn said last month it would be selling the stake.

Taiwan’s Economy Ministry said that while Foxconn had acquired the stake without prior approval and so was in breach of regulations, there was no concern about an “outflow of technology”.

There was minimal impact on Taiwan’s economy or industry, it added.

“At the same time, it [Foxconn] fully cooperated during the investigation of this case,” the ministry said in a statement. Over the past three years Foxconn has invested more than T$20.4 billion in Taiwan and created 7,943 jobs, it said.

The fine on Foxconn can therefore be reduced at the ministry’s discretion, the statement said.

 

Taiwan National Security Fears

Taiwanese law states the government can prohibit investment in China “based on the consideration of national security and industry development”. Violators of the law can be fined repeatedly until corrections are made.

To that regard, Taiwan prohibits companies from building their most advanced foundries in China to ensure they do not site their best technology offshore.

The ministry said Foxconn has committed to continue to invest in Taiwan this year and next and the ministry’s Investment Commission will “require the company to implement its commitments”.

Foxconn confirmed in a statement to the Taipei stock exchange that it had fully cooperated with the probe and said it had not intentionally failed to first seek approval for the investment.

It added the fine “has no significant impact on the company’s shareholders’ interests or stock price”.

The ministry said Foxconn has committed to continue to invest in Taiwan this year and next and the ministry’s Investment Commission will “require the company to implement its commitments”.

 

• Reuters, with additional editing by Vishakha Saxena

 

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