Taiwan-headquartered iPhone manufacturer Foxconn is under investigation by Chinese mainland tax authorities, according to state media reports.
Sources told The Global Times that the inspections are being conducted on key enterprises of Foxconn in Guangdong, Jiangsu, and other provinces.
Foxconn enterprises in Henan and Hubei are also reportedly subject to investigations into land utilisation by China’s natural resources desk.
The move comes as Foxconn’s founder Terry Gou, who resigned from the board in 2019, seeks to become Taiwan’s next president in elections scheduled for next January, in which he is running as an independent.
According to The Global Times, "many people" in Taiwan believe the tax investigation is linked to Gou’s presidential run.
However, Chinese state officials said it was “normal and legitimate, as any company goes through tax inspections".
Other commentators see the investigation as a means of hitting back at US-led technology sanctions against China, which have severely limited China’s access to cutting-edge artificial intelligence semiconductors.
US President Joe Biden has ramped up these sanctions in order to hobble China’s military advancements.
"It does feel like this might be a bit of a retaliation to the US sanctions," Rachel Winter, investment partner at Killik & Co, told the BBC, suggesting that the Foxconn investigation could have a negative impact on America’s largest company Apple Inc (NASDAQ:AAPL)/
"We will actively cooperate with the relevant units on the related work and operations," Foxconn said in a statement.
One of the richest men in Taiwan, Gou is seen as a relatively Beijing-friendly candidate for the Taiwanese presidency, at a time when China is attempting to exert greater influence over the disputed territory.
He has previously described himself as a friend of Chinese leader Xi Jinping and has been characterised as a political outsider in the vein of Donald Trump.
Gou maintains a sizeable stake in Foxconn.