Taiwan to investigate four tech firms for suspicion of helping Huawei, China in developing advanced chips

The government of Taiwan has initiated an investigation into four companies that were mentioned in a media report as being engaged in business transactions with companies in China associated with U.S.-sanctioned Huawei. This move comes as part of the government’s efforts to examine these companies’ activities in China and assess whether they align with the terms of their initial investment approvals granted by the Taiwanese government.

Taiwan’s Economy Minister, Wang Mei-hua, has stated that the investigation will scrutinize whether these companies’ operations in China are consistent with the conditions set forth during the approval process. The investigation is a response to concerns regarding potential violations or discrepancies in business activities related to Huawei, given the U.S. sanctions against the Chinese tech giant. Additionally, Taiwan is contemplating the implementation of stricter regulations pertaining to key technologies.

“If not, then the highest permitted fine is up to T$25 million ($775,300),” she said.

Wang did not give details on what rules the companies might have broken. She said earlier this week they had been engaged in low-end work like handling wastewater.

A Bloomberg news report this week said the firms had been working with Huawei-connected firms to build infrastructure for chip plants.

The companies – Topco Scientific, L&K Engineering, United Integrated Services, and Cica-Huntek Chemical Technology Taiwan – have all denied any wrongdoing.

Huawei did not immediately respond to a request for comment. China is in the middle of its long National Day holiday.

Wang also said Taiwan’s government will soon unveil tighter rules on “key technologies”, taking into account international practice, she added, without giving details.

The Chinese telecommunications giant has, for the last four years, been barred from obtaining components and technology from U.S. firms without approval.

While many Taiwanese tech companies, including chipmaker TSMC (2330.TW), have operations in China, Taiwan’s government bans the production of the most sensitive technology in the country and keeps a close watch on all its companies’ tech investments there.

China claims Taiwan as its own territory and has in recent years increased its military activities around the island.

(With inputs from agencies)