Foxconn, the world’s premier contract electronics maker, is likely to be fined quickly by Taiwan’s governing administration for an unauthorised expense in a Chinese chip maker, a person with direct knowledge of the scenario said on Monday.

Taiwan, which Beijing views as sovereign Chinese territory, has turned a cautious eye on China’s ambition to improve its semiconductor industry and is tightening laws to avoid what it suggests is China stealing its chip know-how.

Foxconn, a main Apple Inc supplier and Iphone maker, disclosed in July it was a shareholder in embattled Chinese chip conglomerate Tsinghua Unigroup, but mentioned late on Friday it would be providing the stake. Taiwan said on Saturday it would fantastic Foxconn around the investment decision.

Taiwan’s government, which requires to distinct all outbound investments, had not accepted the deal. Taipei also prohibits corporations from developing their most innovative chip foundries in China to make sure they do not web site their finest technological innovation offshore.

The man or woman acquainted with the scenario instructed Reuters that the Economic system Ministry would make contact with Foxconn on Monday to confirm the fairness sale.

“Even while the financial commitment was afterwards pulled, the actuality has by now been proven that they invested 1st, and they will be fined,” reported the supply, who was not authorised to discuss to the media.

“It ought to not take too long for Hon Hai to be punished,” the source extra, referring to Foxconn’s official identify, Hon Hai Precision Field Co Ltd.

Reuters has formerly reported that the business could be fined up to T$25 million ($813,749).

Foxconn declined to remark. Its shares closed up 1% on Monday, outperforming the broader current market, which ended .7% reduced.

Tsinghua Unigroup has not responded to a ask for for comment on the investment becoming pulled.

Taiwanese law states the governing administration can prohibit expense in China “dependent on the thought of national stability and industry growth”. Violators of the legislation can be fined repeatedly until finally corrections are built.

Foxconn has been looking for to get chip vegetation globally as a throughout the world chip lack rattles producers of merchandise from cars and trucks to electronics. It is eager to make car chips in distinct as it expands into the electrical auto sector.