The Dutch government has suspended its intervention at Nexperia, a Chinese-owned chipmaker based in the Netherlands, following talks with China.

The Hague took action in September over “serious governance shortcomings” and concerns over the European supply of semiconductors for cars and other electronic goods. In response, Beijing blocked exports of the firm’s chips.

However, on Wednesday the Dutch government said it would halt its original decision following “constructive talks” with Beijing.

China said it welcomed the move, adding it was a “first step in the right direction towards a proper resolution”.

Nexperia is a major supplier of basic computer chips to the car industry, and shortages have threatened global supply chains.

A shortage of computer chips used in various electronic goods and cars would hugely impact the ability of manufacturers to make their products.

The decision by the Dutch government will ease tensions between the European Union and China, which have been mounting in recent months over trade and Beijing’s relationship with Russia.

Vincent Karremans, economic affairs minister, said that he considered it right to suspend action, made under the Goods Availability Act, ahead of further talks with the Chinese government.

“We are positive about the measures already taken by the Chinese authorities to ensure the supply of chips to Europe and the rest of the world,” he said in a statement.

The Dutch government said it originally invoked the Act following concerns “from actions attributed to the now-suspended CEO, involving the improper transfer of product assets, funds, technology, and knowledge to a foreign entity”.

“These actions ran counter to the interests of the company, its shareholders, and Dutch and European strategic autonomy and security of supply,” it said.

In October, a Dutch court ordered the removal of ex-Nexperia CEO and Wingtech founder Zhang Xuezheng, citing alleged mismanagement.

The Dutch government added that its decision had aimed to prevent a situation in which chips could become unavailable in an emergency.

In December last year, the US government placed Wingtech, which owns Nexperia, on its so-called “entity list”, identifying the company as a national security concern.

Under the regulations, US companies are barred from exporting American-made goods to businesses on the list unless they have special approval.

In the UK, Nexperia was forced to sell its silicon chip plant in Newport after MPs and ministers expressed national security concerns. It currently owns a UK facility in Stockport.

Following the Dutch government’s reversal, the Beijing acknowledged the move but said it was “still a step away from addressing the root cause of the global semiconductor supply chain turmoil and chaos”.

“Furthermore, the erroneous ruling by the corporate court, spearheaded by the Dutch Ministry of Economic Affairs, to strip Wingtech of its control over Nexperia remains a key obstacle to resolving the issue,” it added.

Wingtech has said it will fight the decision.

Following the latest move, a spokesperson for Wingtch said the company “strongly” rejected the allegations against its chief executive.

“To date, no proof has been provided,” it added. “If the Dutch government is sincere about solving the problem, the Ministry should now file a letter with the Enterprise Chamber, explicitly withdrawing its support for the proceedings.

“These proceedings form a threat to the continuity of Nexperia B.V. and therefore for the economic security of the Netherlands and Europe – which is the exact same argument the Dutch government made previously in support of judicial intervention.”