(Yicai Global) March 18 -- The chip shortage stymying global auto manufacturers is expected to let up in the third quarter of this year amid higher semiconductor prices and stiff competition, according to a new research report.

The auto industry will continue to recover in the second half, Guotai Junan Securities Research Institute said in the report it published today, but the chip shortage will have an impact on production and sales in the first half, especially in the second quarter.

Global carmakers such as Volkswagen, Toyota Motor, Ford and General Motors, have experienced chip shortages. Some are having to dial back on production.

Automakers bought fewer chips in the wake of the coronavirus outbreak in the first quarter of 2020, but demand outstripped forecasts in the third and fourth quarters amid better-than-expected global sales. The industry’s chip demand still accounted for a relatively low share, resulting in weak bargaining power.

The impact of natural disasters in Japan and the United States has made it difficult to increase output. In addition, Taiwan Semiconductor Manufacturing’s MCU series chip accounts for about 70 percent of the market, affecting it relatively greatly, the report said.

Sweden’s Volvo Cars is expected to stop or adjust production in China and the US due to the chip shortage. “We expect the situation to become critical during the second quarter and have therefore decided to take measures to minimize the impact on production while working daily to improve the situation,” it told Reuters yesterday.

Japan’s Honda Motor has confirmed that it will temporarily suspend production next week at most of its North American factories in part because of the lack of semiconductors.

“We continue to manage a number of supply chain issues related to the impact from Covid-19, congestion at various ports, the microchip shortage and severe winter weather over the past several weeks,” a Honda spokesperson said yesterday.

Editor: Peter Thomas