Constructive diplomacy between The Hague and Beijing has prompted the Dutch government to pause its direct intervention in chipmaker Nexperia, signaling potential de-escalation in a dispute that has strained Europe’s automotive supply chain. Officials described the latest discussions with China as productive, though they cautioned that the broader commercial and legal standoffs surrounding the company remain unresolved.

In a statement released Wednesday, Dutch Economy Minister Vincent Karremans characterized the decision to suspend intervention as a goodwill gesture following China’s partial rollback of export restrictions on Nexperia’s finished chips. He said the government was “positive about the measures already taken by the Chinese authorities to ensure the supply of chips to Europe and the rest of the world,” while confirming that negotiations will continue.

European Commission Vice President and trade chief Maroš Šefčovič welcomed the Dutch move, saying it could help stabilize fragile semiconductor supply chains. Nexperia is a major supplier of essential chips for carmakers, and its recent shortages have forced production slowdowns across the automotive sector. BMW, Bosch and Aumovio offered cautious approval of the easing tensions but said it was too early to assess the impact. Mercedes-Benz and Volkswagen declined to comment.

The current dispute traces back to September 30, when the Dutch state stepped in to prevent Nexperia’s former CEO from shifting operations to China. Beijing responded on October 4 by halting the export of Nexperia’s packaged chips—an action since partially relaxed. Most of Nexperia’s wafers are produced in Hamburg before being shipped to Dongguan, China, for packaging.

Despite the diplomatic progress, the corporate rift between Nexperia’s European management and its Chinese parent, Wingtech, persists. After the Dutch intervention, the company’s Chinese division declared it no longer recognized European control. The European side then stopped shipping wafers on October 26, citing unpaid bills. Chinese facilities are currently selling down existing stockpiles, providing temporary relief but leaving long-term supply uncertain. Nexperia said it is preparing a formal response.

The dispute is also unfolding in court. In October, an Amsterdam judge ordered the removal of former CEO and Wingtech founder Zhang Xuezheng over allegations of mismanagement. Wingtech has forcefully denied the accusations, urging the Dutch government to withdraw its involvement in the case. A spokesperson for the Enterprise Court confirmed that hearings on a potential full investigation will follow, though no date has been set.

While diplomatic channels appear to be warming, industry executives and officials acknowledge that the underlying stalemate—legal, managerial and logistical—continues to pose a threat to Europe’s already-strained chip supplies.