Key Apple Supplier Foxconn Faces Heightened Regulatory Oversight In China's Major Manufacturing Regions: Report

Chinese tax regulators reportedly penalized the Hon Hai Precision Industry Co Ltd HNHPF Foxconn Technology Group subsidiary with a 20,000 yuan ($2,800) fine for overstating expenses. Meanwhile, Beijing is exploring the Apple Inc AAPL iPhone maker's operations.

Also Read: Apple Faces Rising Competition In China As Rivals Gain Ground

The Foxconn Industrial Internet Co unit in the central Chinese city of Wuhan faced the penalty for its accounting of research and development expenses in 2021 and 2022, Bloomberg cites National Center for Public Credit Information.

China is already scrutinizing the Apple supplier's tax affairs in the southern provinces of Guangdong and Jiangsu and land use in Hubei and Henan, where the company makes most of its iPhones.

Foxconn founder Terry Gou announced his candidacy for Taiwan's presidential election in January, stating that the Chinese government would not dare interfere with his business empire. Despite a reduction in campaign activities following the announcement of investigations, the billionaire continues his presidential race. 

FII, a key contract manufacturer for Foxconn in China, employs nearly 200,000 people.

Foxconn earmarked over $1.2 billion for southern India's Karnataka state and looked to add two-component factories. At least one of the new factories in Karnataka will produce Apple parts, including for iPhones. Foxconn's move suggests a possible hastening of suppliers shifting their production capabilities away from China, in line with Western investors and companies seeking other options due to regulatory uncertainties in China.