iPhone-maker Foxconn under investigation by Chinese authorities, stock plummets
What's the story
Foxconn, Apple's primary iPhone assembler, saw its share's value decline by 3.4% on October 23.
This decline came after reports emerged about investigations by the Chinese government into Foxconn's operations, reported Bloomberg. The probes are focused on Foxconn's facilities in central and southern China, specifically in Jiangsu, Guangdong, Hubei, and Henan provinces.
Foxconn, also known as Hon Hai Precision Industry Co. in China, has acknowledged its cooperation with the authorities in China but specific details have not been disclosed.
Details
Tax audits and land use probes
The state-run Global Times reported that Chinese tax authorities are examining Foxconn's subsidiaries in Jiangsu and Guangdong provinces, while the Natural Resources department is looking into land use at its Hubei and Henan province facilities.
Zhang Wensheng, Deputy Dean of the Taiwan Research Institute of Xiamen University, informed the Global Times that such audits and investigations are standard procedures for companies suspected of breaking rules and regulations.
What Next?
Foxconn's obligation to cooperate
Wensheng stressed the necessity for Foxconn's subsidiaries to actively collaborate with the audits and investigations.
"Foxconn's subsidiaries are obliged to actively cooperate with audits and investigations, and if there are indeed violations of laws and regulations, they should admit mistakes and accept penalties and step up rectification," he told Reuters.
Foxconn has maintained that legal compliance is a "fundamental principle" of its operations worldwide.
Insights
Impact on Apple supplier
This government probe comes less than three months before Taiwan's presidential and parliamentary elections.
Terry Gou, the billionaire founder of Foxconn, stepped down from his role as company chief in 2019 and is no longer involved in the company's day-to-day operations.
He's running as an independent candidate in the elections but currently ranks at the bottom of the polls.