Caretaker economic affairs minister Vincent Karremans has halted his intervention in Nijmegen-based chipmaker Nexperia, saying the company “no longer shows signs of continuing the behaviour that prompted my order, nor any intention to do so”.

The minister invoked seldom-used legislation on September 30, giving him far-reaching powers to overturn company decisions that could shift production or expertise abroad. China reacted angrily and temporarily halted deliveries of crucial  chips to European customers, including the car industry.

Karremans said on Wednesday that he had held “constructive discussions” with Chinese officials in recent days and pointed to Beijing’s recent relaxation of its export restrictions as a “sign of goodwill”. In a briefing to MPs, he said suspending the measure could support efforts to reach a longer-term solution.

The intervention followed what the minister described as “serious signals of governance shortcomings” at Nexperia that could threaten European technological know-how and production capacity. Nexperia, formerly part of NXP, is a Dutch company but has been owned for years by Chinese group Wingtech.

“Without intervention, the company’s European front-end production would have disappeared from Europe in the short term as a result of the CEO’s actions,” Karremans said on Wednesday.

“This would have caused the last remaining Nexperia knowledge, expertise and capacity in Europe to vanish, to the detriment of the resilience of the Dutch and European economy.”

Chip supplies have partially resumed since early November, when China eased its export ban for manufacturers of civil equipment. Nexperia’s European factories produce only semi-finished products, which must be further processed in Asia, mainly China, before they can be used.

Karremans said he is now reassured that China will notify him of any plans to move production or expertise outside the Netherlands. He also said that a ruling by the Amsterdam company court, issued a day after his intervention, remains in force and continues to limit the influence of Nexperia’s Chinese owner.

Diplomatic talks between the Dutch and China and coordinated by the EU, “make clear that suspending the order will contribute to the positive progress of discussions on a long-term solution, while safeguarding Dutch and European public interests”, he said.