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China lifts key export restrictions on auto chips and US-bound materials
China's commerce ministry announced Sunday it would remove export controls on semiconductor chips critical for automobile production, granting exemptions for Chinese-owned Nexperia's civilian-use shipments. The move follows weeks of industry warnings that European carmakers-including Volvo, Volkswagen, and Jaguar Land Rover-faced imminent production halts due to supply chain disruptions.
Simultaneously, Beijing suspended a ban on exports to the US of dual-use materials-such as gallium, germanium, and antimony-vital to semiconductor manufacturing, along with a one-year waiver on port fees for American vessels. The measures reflect a broader de-escalation after Presidents Xi Jinping and Donald Trump agreed in October to reduce tariffs and pause retaliatory actions for 12 months.
Nexperia dispute and European supply risks
The conflict centered on Nexperia, a Dutch-based chipmaker owned by China's Wingtech. In October, the Netherlands nationalized the firm, citing "serious governance shortcomings" and fears of supply chain vulnerabilities. China retaliated by blocking Nexperia's chip exports, which process 70% of their European output in China before global redistribution.
The European Automobile Manufacturers' Association (EMEA) warned in October that stockpiles would deplete within weeks without intervention.
"Supply shortages were imminent," EMEA Director General Sigrid de Vries told the BBC earlier this month, underscoring risks to automotive plants.
EU-China negotiations yield temporary relief
On Saturday, EU Trade Commissioner Maroš Šefčovič confirmed China's concession via X (formerly Twitter), stating exemptions would apply to civilian-use chips, with licensing waivers for exporters. Šefčovič emphasized ongoing talks to "ensure the full restoration of semiconductor flows" but called for a "lasting, stable, predictable framework."
China's commerce ministry urged the EU to pressure the Netherlands to "correct its erroneous practices," while analysts framed the dispute as a cautionary tale.
Bailey advocated for diversifying processing sites-potentially in Southeast Asia or Europe-and maintaining larger chip inventories."The Dutch government's move was a wake-up call," said Prof. David Bailey of Birmingham University's business school. "Retaliation from China was swift and brutal."
Broader trade detente: Rare earths and port fees
Beyond semiconductors, China suspended export controls on rare earth materials and lithium batteries Friday, alongside the dual-use materials ban (effective until November 27, 2026). The transport ministry also waived port fees for US-affiliated ships starting 05:01 GMT Monday, aligning with the October Xi-Trump accord.
The dual-use export ban, initially imposed in December 2024, had targeted materials with military applications. Sunday's reversal marks the most significant easing of restrictions since the trade truce was announced.
Industry reactions and next steps
Automakers have yet to comment on production adjustments, but analysts expect a gradual resumption of normal operations. The EU and China are scheduled to hold further talks on semiconductor trade frameworks, though no timeline has been set.
