The European Commission is preparing to exempt a sanctioned Chinese chipmaker—likely Yangzhou Yangjie Electronic Technology—from the EU’s 20th Russia sanctions package after automakers warned of an imminent supply chain collapse.
Supply Chain Crisis
European automakers have informed regulators that without a temporary derogation, chip inventories will be exhausted within weeks, forcing continent-wide production stoppages. The proposal, which could come this week, requires unanimous approval from all 27 EU member states. Yangjie was added to the sanctions list last month after allegedly shipping over 200 consignments of dual-use technology to Russia since the invasion of Ukraine, with components found in Russian drones and ammunition.
Industry Dependence
Yangjie produces foundational power semiconductors—rectifiers, MOSFETs, IGBTs, and SiC devices—critical for current regulation and power management in automotive electronics. These are not leading-edge processors, but they are irreplaceable in modern vehicles. Dominik Zillner, CEO of distributor Components at Service, told *Handelsblatt* that losing Yangjie was a serious blow to an industry already reeling from the Nexperia crisis.
Geopolitical Fallout
The Dutch government seized control of Nexperia from its Chinese parent Wingtech last October. Beijing retaliated with export controls on Nexperia’s Chinese-made output, forcing temporary shutdowns at Honda, Volkswagen, Bosch, and others. Noureddine Seddiqi, CEO of Sand & Silicon, warned that clients’ remaining Nexperia stocks will last only until July or October. Competing suppliers are at full capacity, making substitution difficult. China partially eased controls in November after a meeting between Presidents Xi and Trump, but Nexperia’s supply chain remains fragile—70% of its European-manufactured chips are sent to China for backend assembly.
Regulatory Dilemma
The proposed derogation would unwind part of the EU’s own sanctions package less than a month after adoption. The 20th package was the largest in two years, designating 117 entities. China’s Ministry of Commerce condemned the inclusion of Chinese firms and retaliated by placing several European defense companies on its own export control list.
Forward Outlook
This episode underscores a structural vulnerability: European automotive production depends on a thin, geopolitically exposed supply chain for mature-node power semiconductors. Policymakers face an uncomfortable trade-off between sanctions enforcement and industrial continuity. Without rapid investment in domestic capacity or diversified sourcing, Europe’s auto sector will remain hostage to external disruptions—and to the very dependencies sanctions are meant to sever.
