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Taiwan's Foxconn said that its subsidiary in China has agreed to sell its entire equity stake in embattled Chinese chip conglomerate Tsinghua Unigroup.
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Taiwan has turned a wary eye on China's ambition to boost its semiconductor industry.
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Taiwan is tightening legislation to prevent what it says is China from stealing its chip technology.
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Foxconn, a major Apple supplier and iPhone maker disclosed in July it was a shareholder of Tsinghua Unigroup.
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Foxconn did not seek approval from the Taiwan government before the investment was made.
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Authorities believe it violated a law governing the island's relations with China.
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Foxconn said that Xingwei has agreed to sell its holdings for at least 5.38 billion yuan ($772 million) to a Chinese company called Yantai Haixiu.
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Xingwei controls a 48.9% stake in a different entity, with a 20% stake in the vehicle owning all of Unigroup.
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Foxconn said in August it had a plan B if Taiwan's government did not approve the investment, giving any details at the time.
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