EU to Seek Carve-Out for Banned China Chips to Shield Auto Firms

The European Union will propose temporarily lifting sanctions on a 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 derogation 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 immediately respond to a request for comment.

The Chinese semiconductor firm was included in the EU’s 20th sanctions package, which listed entities based in China that the bloc says provided dual-use ...