Apple Supplier Foxconn Faces Hefty Fine If It Invests In China Without Taiwan's Approval

The world's largest contract electronics maker and Apple, Inc.'s AAPL iPhone assembler Foxconn would need government approval if it invests in embattled Chinese chip conglomerate Tsinghua Unigroup.

What Happened: Earlier, Taiwan media reports said that Foxconn was looking to invest RMB 9.8 billion ($1.46 billion) for a stake in Unigroup through its China-listed unit Foxconn Industrial Internet Co Ltd., as a part of its plans to get more into chipmaking, Reuters reported.

In a bid to save its crown jewel, Taiwanese government deputy executive secretary of the Economy Ministry's Investment Commission, Rio Lu, told the publication that they had been in contact with Foxconn and "reminded them that the case needs to be reviewed before doing anything."

This came after the Taiwanese Premier Su Tseng-chang, in April, had called for the swift passage of revisions to laws to prevent China from stealing its semiconductor technology.

Taipei now prohibits companies from building their most advanced foundries in mainland China to ensure they do not offshore their best technology.

Lu said that her department has already reported this plan to Economy Minister Wang Mei-Hua, and if Foxconn breaks the law, it can be fined T$25 million ($837,577).

Foxconn told Reuters that it would handle the case "in accordance with the rules" and did not provide more information.

Apart from Apple, Foxconn supplies to big techs like Alphabet, Inc. GOOG GOOGL, Dell Technologies, Inc. DELL, and Sony Group Corporation SNEJF.

Taiwan is also home to the chip-manufacturing giant Taiwan Semiconductor Manufacturing Company Limited, which accounts for 92% of the world's most advanced semiconductor manufacturing capacity.

Price Action: According to Benzinga Pro data, OTC shares of Foxconn, also widely known as Hon Hai Precision Industry Co., Ltd., closed 0.37% at $6.82 apiece on Wednesday.