EU Seeks to Lift Ban on Chinese Chips It Barred Only Weeks Ago

The European Union will propose temporarily lifting sanctions on a major Chinese semiconductor supplier after automakers warned of impending supply chain chaos if the ban isn’t removed.

The European Commission, the EU’s executive arm, will propose the exemption for the chip manufacturer Yangzhou Yangjie Electronic Technology Co. as early as this week, according to people familiar with the matter. Implementation of such a move would require approval by the bloc’s 27 member states.

A spokesperson from the commission didn’t respond to a request for comment.

Yangjie Electronic was included in the EU’s 20th sanctions package, which listed entities based ...