## Foxconn Fined by Taiwan for Unauthorized Investment in Chinese Chipmaker
Foxconn, the world’s largest contract electronics manufacturer and a major Apple supplier, has been fined NT$10 million (about US$330,000) by the Taiwanese government for making an unauthorized investment in China’s Tsinghua Unigroup, a major semiconductor conglomerate[1][6][8]. The penalty was imposed after Foxconn failed to seek the necessary regulatory approval from Taiwan’s Ministry of Economic Affairs before proceeding with the investment, as required by law.
**Background of the Investment**
Foxconn, formally known as Hon Hai Precision Industry Co., made the investment through its China-listed subsidiary, Foxconn Industrial Internet (FII). The stake was acquired via a complex, multi-layered structure involving Xingwei (Guangzhou) Industrial Fund, which is 99% controlled by FII[6][8]. The investment gave Foxconn an indirect stake in Tsinghua Unigroup, raising concerns in Taipei about the potential transfer of sensitive semiconductor technology to mainland China at a time of heightened cross-strait tensions[5][7][8].
**Legal and National Security Concerns**
Under Taiwanese law, companies must obtain government approval before investing in mainland Chinese entities, especially in strategic sectors like semiconductors, due to national security and industrial policy considerations. The law allows for repeated fines until violations are corrected[5][7]. Taiwan has become increasingly vigilant about protecting its chip industry from Chinese influence and technology transfer, prohibiting the construction of advanced foundries in China[5][7][8].
**Foxconn’s Response and Sale of Stake**
Foxconn stated that the investment was not intentionally concealed and that it proactively reported the deal to authorities once it was identified[6]. Following regulatory scrutiny and public concern, Foxconn agreed to sell its entire stake in Tsinghua Unigroup to Yantai Haixiu, a Chinese investment firm, for at least 5.38 billion yuan (about US$772 million)[5][7][8]. After the sale, Foxconn no longer holds any equity in Tsinghua Unigroup.
**Reduced Fine and Mitigating Factors**
The NT$10 million fine was a reduction from the maximum possible NT$25 million, with authorities citing Foxconn’s significant investments in Taiwan and its creation of nearly 8,000 local jobs over the past three years as mitigating factors[8].
**Conclusion**
The Foxconn fine underscores Taiwan’s strict regulatory environment regarding cross-strait investments, especially in critical technology sectors. The episode highlights ongoing concerns about technology transfer and the geopolitical sensitivities surrounding the global semiconductor supply chain[5][7][8].
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