China has lifted export controls on computer chips essential for car production, granting exemptions for civilian use to ease supply chain concerns for European automakers. The move follows recent trade agreements and aims to stabilize semiconductor flows amid ongoing geopolitical tensions.
The Chinese commerce ministry announced on Sunday that export controls on chips vital for car production have been lifted, with exemptions specifically for exports by Chinese-owned Nexperia intended for civilian purposes. This decision is expected to help carmakers who had feared production disruptions in Europe due to potential chip shortages, alleviating immediate risks to the automotive industry.
This development comes after the Dutch government took control of Nexperia in October, citing serious governance shortcomings and aiming to secure semiconductor supplies for Europe. In response, China blocked exports of the firm’s finished chips, escalating trade tensions and highlighting vulnerabilities in global supply chains for critical components.
Prior to the exemption, industry groups had warned of imminent supply shortages. The European Automobile Manufacturers’ Association (EMEA) stated that Nexperia chip supplies would only last a few weeks, with major carmakers like Volvo, Volkswagen, and Jaguar Land Rover expressing concerns over potential temporary plant shutdowns and threats to their operations.
As part of broader trade de-escalation, China has also paused an export ban to the US on dual-use items such as gallium, germanium, and antimony, and suspended port fees for American ships. These measures follow an agreement between Chinese President Xi Jinping and US President Donald Trump in October to reduce tariffs and pause other trade measures for a year, signaling a temporary thaw in relations.
EU Trade Commissioner Maros Sefcovic announced on Saturday that China agreed to simplify export procedures for Nexperia chips and grant exemptions from licensing requirements for civilian use. He emphasized ongoing engagement with both the Chinese and Dutch authorities to establish a stable, predictable framework that ensures the full restoration of semiconductor flows and addresses underlying disputes.
Experts view China’s actions as a wake-up call for the motor industry, underscoring the need for diversification and resilience. Professor David Bailey from Birmingham University noted that the retaliation was swift and brutal, urging the industry to find alternative processing sites in Southeast Asia or Europe and maintain larger stockpiles to mitigate future supply chain risks.
Looking ahead, the exemptions are likely to stabilize chip supplies for carmakers, but the incident highlights the importance of strengthening international cooperation and supply chain security. The commerce ministry called on the EU to influence the Netherlands to correct its practices, suggesting that diplomatic efforts will continue to shape the resolution of this trade dispute.
