The two sides are moving to resolve a dispute that erupted in September when the Dutch government effectively took control of Nexperia, which is based in the Netherlands but whose parent company is China's Wingtech.

China responded by banning re-exports of the firm's chips, triggering warnings from carmakers that their factories could grind to a halt without the components Nexperia supplies, which are critical to onboard electronics.

The Netherlands stepped back from its position after Beijing announced over the weekend it would exempt some chips from the export ban -- reportedly part of a trade deal agreed by President Xi Jinping and his US counterpart Donald Trump.

Dutch Economy Minister Vincent Karremans said Wednesday that "in light of recent developments" he considered it "the right moment to take a constructive step by suspending my order under the Goods Availability Law regarding Nexperia".

It was the first time the Dutch had invoked the Goods Availability Law -- a Cold War-era law designed to keep vital supplies flowing during wartime.

"China welcomes the Dutch side's initiative to suspend the administrative order, considering it the first step in the right direction towards properly resolving the issue," a commerce ministry spokesperson said in a statement.

The takeover has been suspended rather than cancelled, and the minister can reinstate the measure later.

- National security -

The dispute between China and the Netherlands is part of a wider global battle for control of the supply of semiconductors, the tiny components used across many industries and electronic products.

Karremans said the Netherlands was "positive" about China's recent moves to ensure chip supply to Europe and the rest of the world.

"We see this as a show of good will," he said of his move to suspend the takeover, vowing to continue talking to Chinese officials.

The move was welcomed around Europe, with EU trade commissioner Maros Sefcovic saying it was "another key step in stabilising our strategic chip supply chains".

Germany, a global centre for car making, also approved, with an economy ministry spokeswoman telling reporters in Berlin that "the situation is easing".

However, China's commerce ministry spokesperson warned there was "still a gap in addressing the root cause of the turbulence and chaos in the global semiconductor supply chain".

The Netherlands had argued that poor management at Nexperia, which was once part of Dutch electronics giant Philips but bought out by Wingtech in 2018, risked jeopardising the chip supply chain in Europe.

An Amsterdam corporate court subsequently ordered the suspension of Nexperia's chief executive Zhang Xuezheng, citing poor leadership and poor preparation for incoming US trade restrictions.

The decision drew Beijing's wrath and Wingtech stressed that Wednesday's move had not fully restored the Chinese firm's control over Nexperia.

The firm is no stranger to regulatory concerns in the West.

The United States put Wingtech on one of its "entity lists" last December, meaning the government believed it was acting against US national security and foreign policy interests.

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Koninklijke Philips