The automotive semiconductor shortage is expected to continue until 2023, and the government and related industries should be prepared to handle rising demand, an automotive think tank said Monday.

According to the Korea Automotive Technology Institute, or Katech, the global shortage of automotive semiconductors that started around the end of 2020 will continue to affect the global car industry for the first half of 2022. Even after 2023, some companies may still feel its effects.

This year, the chip shortage is expected to take about 10.1 million vehicles out of production, the think tank said, citing statistics from Auto Forecast Solutions.

South Korea’s government and its automotive companies have put up a good defense, Katech said, encouraging more active cooperation from different sectors.

Up to September, major global automakers such as Volkswagen, Stellantis, GM Motors and Honda witnessed their respective accumulated production volume fall by around 30 percent from the same period in 2019, according to Katech.

But Hyundai Motor and Kia, Korea’s two leading automotive firms, both under Hyundai Motor Group, produced only 14 percent fewer vehicles during the first three quarters of this year compared with 2019.

With production volume increasing by 7.1 percent this year from a year earlier, Hyundai Motor and Kia combined would rank No. 3 in terms of production volume, after Toyota and Volkswagen, Katech added.

Demand for automotive semiconductors is expected to grow. Citing data from IHS Markit, Katech said demand will increase from 132.5 billion chips in 2021 to 209.3 billion in 2027, showing an annual average growth rate of 8 percent.

By sales, that amounts to $49.7 billion in 2021 and $89.2 billion in 2027, for an annual average growth of 10.2 percent, it added.

Against that backdrop, vehicle manufacturers and auto parts companies should set a long-term plan to prepare the domestic auto industry for a prolonged shortage, Katech said.

Chip companies should also focus on long-term market potential rather than short-term profit, and should pursue cooperation with automakers on technology development and investment, the think tank said.

By Jo He-rim (herim@heraldcorp.com)