Foxconn will receive fine for investing in China
2022.12.17 11:50
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Foxconn will receive fine for investing in China
Budrigannews.com – Even though the Taiwanese company stated that it would be selling the stake, the government of Taiwan said on Saturday that it would impose a fine on Foxconn, the largest contract electronics manufacturer in the world, for making an illegal investment in a Chinese chip manufacturer.
Taiwan is tightening its laws to stop what it claims is China stealing its chip technology and has turned a cautious eye toward China’s plans to expand its semiconductor industry.
Foxconn, a significant subsidiary of Apple supplier and iPhone manufacturer disclosed its membership in the troubled Chinese chip conglomerate Tsinghua Unigroup in July.
In a filing to the Taipei stock exchange late on Friday, Foxconn stated that its subsidiary in China had agreed to sell its entire equity stake 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.
It stated, without providing additional information, “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.”
According to sources who are familiar with the situation, Foxconn did not seek approval from the government of Taiwan prior to making the investment. Authorities believe that this contravened a law governing Taiwan’s relations with China, which claims the island as its own.
Foxconn stated in a statement on Saturday, prior to the economy ministry’s, that the initial investment had “remained unfinished” as the year’s end approached.
According to Foxconn, Xingwei, which is 99 percent owned by its China-listed unit Foxconn Industrial Internet Co Ltd (FII), has agreed to sell its holdings to a Chinese company called Yantai Haixiu for at least 5.38 billion yuan, or $772 million.
Xingwei owns 48.9% of a different company that owns 20% of the vehicle that owns Unigroup as a whole.
“The Xingwei Fund will transfer its entire holding in Shengyue Guangzhou to Yantai Haixiu in order to avoid uncertainties from further delays or impact on investment planning and the flexible deployment of capital,” the statement read.
“FII will no longer indirectly hold any equity in Tsinghua Unigroup after the transfer is completed.”
A request for clarification was not received by Tsinghua Unigroup.
According to Taiwanese law, the government can “based on the consideration of national security and industry development” prohibit investment in China. Repeated fines could be imposed on those who break the law until they make amends.
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Foxconn, formerly Hon Hai Precision Industry Co. Ltd., is eager to produce automotive chips as it enters the market for electric vehicles.
Since there is a worldwide shortage of chips, producers of goods ranging from automobiles to electronics have been scrambling to acquire chip plants.
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