Taiwan Fines Foxconn for Unauthorised China Investment

INVESTMENT - TAIPEI. Taiwan on Thursday fined Foxconn T$10 million ($329,088) for making an unauthorised investment in a Chinese chip firm, but said the Taiwanese iPhone assembler had cooperated in the case and so received a lesser punishment.

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

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, but said last month it would be selling the stake.

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

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Its 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" and there was minimal impact on Taiwan's economy or industry.

"At the same time, it (Foxconn) fully cooperated during the investigation of this case," the ministry said in a statement, adding that over the past three years Foxconn has invested more than T$20.4 billion in Taiwan and created 7,943 jobs.

The fine can therefore be reduced at the ministry's discretion, the statement said.

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".

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The Tsinghua Unigroup did not immediately respond to a request for comment.

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, formally called Hon Hai Precision Industry Co Ltd, is keen to make auto chips in particular as it expands into the electric vehicle market.

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