Media: Carmakers Worry Over Supply Chain Disruption as EU Plans Temporary Suspension of Sanctions on a Chinese Semiconductor Supplier

Bloomberg reports that the EU is set to propose temporarily lifting sanctions against a Chinese semiconductor supplier, following warnings from automakers that failure to do so could lead to supply chain chaos. According to informed sources, the European Commission is expected to present this exemption proposal as early as this week. The implementation of such a move would require approval from all 27 EU member states.

The European Commission spokesperson has not yet commented on the matter. The Chinese semiconductor firm was included in the EU’s 20th round of sanctions against Russia. These sanctions target third-country suppliers providing sensitive high-tech equipment to Russia, with EU authorities accusing multiple Chinese companies of supplying dual-use items to Russia’s defense industry.

According to unnamed sources, European car manufacturers have lobbied the EU to delay the ban, arguing they have not had sufficient time to diversify their supply chains and that these measures would deplete inventories within weeks.

Last year, a power struggle at Nexperia—a China-controlled chipmaker headquartered in the Netherlands—broke into the open, triggering severe supply chain pressures for the European auto industry. The Dutch government invoked a Cold War-era law designed to safeguard national security to take over Nexperia’s operations in the Netherlands.

In response, China imposed countermeasures, banning exports of products from Nexperia (China), resulting in chip shortages and disrupting production at several automakers. Although Nexperia produces so-called "legacy chips"—low-technology semiconductors controlling power systems—rising demand for memory chips driven by artificial intelligence applications has also intensified supply constraints and led to sharp price increases.

Last week, the Financial Times reported that European automakers are concerned that chip shortages caused by sanctions on a key Chinese supplier for allegedly selling military technology to Russia could lead to reduced output. Two EU officials told the publication that an exemption for the automotive sector is under consideration to prevent a crisis. Previously, EU firms had been prohibited from conducting business with Yangzhou Yangjie Electronics Technology Co., Ltd. (hereinafter "Yangzhou Yangjie").

A single vehicle can require up to 3,000 chips, which power everything from tire pressure monitors to headlights. Automotive executives say reliance on chips from Yangzhou Yangjie has increased since last year’s crisis.

This crisis was triggered by the Dutch government taking control of Nexperia and removing its Chinese-born CEO, Zhang Xuezheng, citing “serious governance deficiencies” and risks to national economic security.

Yangzhou Yangjie was added to the EU’s 20th round of sanctions against Russia in response to Russia’s full-scale invasion of Ukraine, which was adopted on April 23. The company, along with others, is accused of supplying electronic components, semiconductors, and other equipment to Russia, as well as providing drone research and development and manufacturing services to support Russia’s military operations. EU sanctions include asset freezes and transaction bans.

Yangzhou Yangjie told the Financial Times that its core business and products are purely civilian in nature, stating, “We do not engage in any research, design, or manufacturing of military products, nor do we produce or sell products with military applications.”

Source: rfi

Original: toutiao.com/article/1865850657945604/

Disclaimer: This article reflects the views of the author alone