Taipei: Taiwan is currently conducting an investigation to determine whether four of its companies violated US sanctions or Taiwanese investment regulations by providing services to Chinese firms reportedly assisting Huawei in building semiconductor plants, CNN reported.

Emile Chang, an official from the Ministry of Economic Affairs responsible for investment oversight, stated that an "administrative probe" has been initiated into the four Taiwanese companies mentioned in a media report.

The investigation will focus on whether the companies' business activities in China complied with the approvals granted by the ministry. If any violations are found, each company could face a maximum fine of 25 million New Taiwan dollars (USD 7,77,000). Additionally, the ministry will examine whether these companies violated any US sanctions.

The four firms under scrutiny--Topco Scientific, United Integrated Services, L&K Engineering Co, and Cica-Huntek Chemical Technology--have all denied any wrongdoing. They clarified in separate statements that their involvement was limited to wastewater management, interior decoration, or approved construction work in Taiwan, with no supply of semiconductor materials or equipment, according to CNN.

Huawei has been at the centre of the tech rivalry between the United States and China in recent years. Concerns about potential espionage on behalf of the Chinese government led Washington and its allies to restrict Huawei's access to advanced chip technology and chip manufacturing equipment. Huawei, however, has consistently denied these allegations.

Although many Taiwanese companies, including chip giant TSMC and Apple supplier Foxconn, operate in China and are deeply integrated into its supply chains, the Taiwanese government closely monitors their activities and prevents the production of its most advanced technology on the mainland.

Taiwan's Minister of Economic Affairs Wang Mei-hua addressed reports suggesting that the four companies had provided services to Huawei for building chip manufacturing infrastructure in China. She explained that the services rendered were related to "wastewater and environmental protection equipment," which, according to the Taiwan government's designation, were distinct from critical technologies with potential national security implications, as reported by CNN.

For years, Taiwanese companies have navigated a delicate balance between capitalising on China's commercial opportunities and avoiding potential breaches of export controls, particularly in the face of increased military pressure from Beijing.

Cross-strait relations are a pivotal issue in Taiwan's upcoming presidential election, scheduled for January.

While China remains Taiwan's largest trading partner, the Chinese Communist Party claims Taiwan as its territory, despite never having governed it, and has persistently aimed to "reunify" Taiwan with the Chinese mainland, even if it requires the use of force, CNN reported.