EU may ease curbs on Chinese chip supplier

The European Commission plans to propose this week a temporary exemption from sanctions on a Chinese semiconductor supplier.

European automakers warned the curbs could disrupt production and drain chip inventories within weeks.

The supplier was added to the EU’s 20th sanctions package over allegations that some China-based entities provided dual-use goods or weapons systems to Russia.

Any exemption would need approval from the bloc’s 27 member states.

The industry was already under pressure after a dispute late last year at Nexperia, a chipmaker with operations in the Netherlands and China.

AI-driven demand has also pushed prices higher.

🔗 Source: Bloomberg

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Implications, context, and why it matters.

Sanctions on a legacy chip supplier reveal deep vulnerabilities

Yangzhou Yangjie Electronic Technology Co. faces EU sanctions. It makes power semiconductors such as metal-oxide-semiconductor field-effect transistors (MOSFETs) and rectifiers, which control and convert electricity in cars 1.
After a supply crunch at Nexperia, a chipmaker with operations in the Netherlands and China, Yangjie became a fallback for automakers. The shortage slowed production at companies including Volkswagen and Bosch 2.
The EU is considering an exemption only weeks after it sanctioned Yangjie in April. The move followed allegations that its parts were found in Russian drones and glide bombs used against Ukraine 2.

A legacy chip shortage exposes the EU blind spot

That dependence on basic Chinese parts clashes with the EU push for advanced chipmaking. The NanoIC pilot line, an EU-backed semiconductor research and manufacturing program, received 700 million euros (US$813 million) in EU funding within a 2.5 billion euros (US$2.9 billion) plan for next-generation chips, including sub-2 nanometer technologies 3.
Recent European Commission automotive policy says carmakers must cut tailpipe emissions by 90% from 2035, while specified measures offset the rest. The package also keeps internal combustion engine technologies viable alongside electric and hydrogen vehicles, which supports demand for power-management chips 3.
The quick reversal raises doubts about the EU sanctions approach. Industrial lobbying can sway policy when supply pressure rises, which could weaken future restrictions.