EU forced to exempt banned Chinese chipmaker after auto industry warns of supply crisis —
May 21, 2026
(Image credit: Getty / Inna Fassbender)
The European Commission is preparing to propose a temporary exemption for a Chinese semiconductor manufacturer, likely (but unconfirmed) to be Yangzhou Yangjie Electronic Technology, from the EU’s 20th Russia sanctions package, Bloomberg has reported. European automakers warned that without the derogation, chip inventories would be exhausted within weeks, forcing production stoppages across the continent. The proposal, which could come as early as this week, would still require approval from all 27 EU member states.
Yangjie was one of several third-country entities added to the sanctions list when the EU adopted the package last month. According to EU sanctions filings, the Yangzhou-based company allegedly shipped over 200 consignments of dual-use technology to Russia since the invasion of Ukraine, with its components found in Russian drones and ammunition.
Unfortunately for automakers still reeling from the Nexperia crisis, Yangjie had become a crutch for sourcing components after the Dutch government seized control of Nexperia from its Chinese parent Wingtech last October. Beijing retaliated with export controls on the chipmaker’s Chinese-made output, forcing temporary production shutdowns at Honda, Volkswagen, Bosch, and others.
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Yangjie most notably makes power semiconductors, including rectifiers, MOSFETs, IGBTs, and SiC devices. They’re far from leading-edge processors, but they do play a foundational role in regulating current and managing power in automotive electronics. Dominik Zillner, CEO of distributor Components at Service, told German newspaper Handelsblatt that losing Yangjie as a supplier was a serious blow to an industry that had relied on the company to fill the gap left by Nexperia.
Noureddine Seddiqi, CEO of Frankfurt-based chip distributor Sand & Silicon, also told Handelsblatt that clients’ remaining Nexperia chip stocks are expected to last only until “July or October.” Competing suppliers are operating at full capacity, making quick substitution difficult, and several companies are seeking urgent alternative sources.
China partially eased its Nexperia export controls in November, granting exemptions for civilian-use chips after a meeting between Presidents Xi Jinping and Donald Trump in Busan, South Korea. But Nexperia’s supply chain remains fragile, and around 70% of Nexperia chips manufactured in Europe are sent to China for backend assembly before being re-exported, a dependency that any future geopolitical friction could disrupt again.
The proposed derogation would effectively unwind part of the EU’s own sanctions package less than a month after adoption. The 20th package was the largest round of Russia-related listings in two years, designating 117 individuals and entities across energy, finance, and military-industrial sectors. China’s Ministry of Commerce condemned the inclusion of Chinese firms and responded by placing several European defense companies on its own export control list.
