1 Trillion Investment in July Without Taiwan Authorities' Approval
Taiwan Authorities: "Investment Without Government Approval"
[Asia Economy Reporter Han Ye-ju] Taiwan's Foxconn, the world's largest assembler of Apple products, has decided to withdraw its investment in a Chinese semiconductor company.
According to Reuters on the 17th (local time), Foxconn announced that it agreed to sell its 5.38 billion yuan (approximately 1.0098 trillion KRW) stake in Tsinghua Unigroup, held by its Chinese subsidiary Xingwei, on the Taiwan stock exchange the previous day. Tsinghua Unigroup is a leading semiconductor design and manufacturing company in China.
Foxconn stated, "Ahead of the year-end, we decided to withdraw the investment to resolve delays or uncertainties in the investment plan," adding, "Once the share sale is completed, we will not hold any indirect stake in Tsinghua Unigroup in the future."
In July, Foxconn had announced its intention to invest 5.38 billion yuan in Tsinghua Unigroup through a private equity fund contribution method. This amount corresponds to about 10% of the 60 billion yuan acquisition price paid by a consortium of Chinese private equity funds, Beijing Zilu Asset Management and Beijing Zhenguang Asset Management, which acquired Tsinghua Unigroup during its bankruptcy restructuring.
Tsinghua Unigroup, a symbol of China's "semiconductor rise," underwent bankruptcy proceedings due to excessive debt management and related-party transactions, and its ownership and management were replaced in July this year. Although the final acquirer of Tsinghua Unigroup was a private equity fund, it is known that several local Chinese governments and state-owned enterprises actually provided the acquisition funds. This led to interpretations in the market that Chinese authorities injected capital to rescue Tsinghua Unigroup.
Foxconn's decision to withdraw its investment is interpreted as a result of pressure from Taiwanese authorities. Foxconn's investment in Tsinghua Unigroup was made without approval from Taiwanese authorities, causing discomfort within the Taiwanese government. This was due to worsening cross-strait (China and Taiwan) relations amid rising geopolitical tensions and concerns that Taiwan's semiconductor technology could be leaked to China. There is also speculation that the United States, which is strengthening its semiconductor alliance with Taiwan, may have exerted indirect pressure.
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