The European Union will propose temporarily lifting sanctions on a major Chinese semiconductor supplier after automakers warned of impending supply chain chaos if the ban is not removed.
The European Commission, the EU’s executive arm, will propose the exemption for the chip manufacturer Yangzhou Yangjie Electronic Technology Co. as early as this week, according to people familiar with the matter. Implementation of such a move would require approval by the bloc’s 27 member states.
A spokesperson from the commission did not respond to a request for comment.
Yangjie Electronic was included in the EU’s 20th sanctions package, which listed entities based in China that the bloc says provided dual-use goods or weapons systems to Russia. The Chinese semiconductor firm was sanctioned in April after dozens of shipments of its technologies allegedly reached Russia and its products were found in drones and glide bombs used against Ukraine.
European automakers lobbied the EU to delay the ban, saying they have not had time to diversify their supply chains and that the measures would cause stocks to be depleted in weeks, said the people, who spoke on the condition of anonymity. Any derogation would be temporary and likely last several months to give the industry more time to find alternative suppliers.
The auto industry felt severe supply strains late in 2025, when an internal corporate feud at Chinese-owned chipmaker Nexperia spilled into the public domain. The Dutch government took control of operations located in the Netherlands, invoking a Cold War-era law designed to protect national security.
Beijing hit back by blocking exports from Nexperia’s China unit, which led to chip shortages and hampered production at several automotive companies, even though Nexperia makes so-called legacy chips – low-tech semiconductors that control power supplies.
Since then, a demand surge for memory chips led by artificial intelligence applications has also crimped supplies and pushed prices sharply higher. BLOOMBERG
