Semiconductor manufacturing giant Taiwan Semiconductor Manufacturing Company (TSMC) will prioritize its capacity allocation to automotive chips and Apple orders for the third quarter of this year, followed by chip orders for personal computers, servers, and networking equipment, DigiTimes said Tuesday, citing people familiar with the matter.

Chip orders for phones and consumer electronics will come in third, and TSMC will continue to address supply shortages and select orders based on profitability and other reasons, the report said.

The global automotive chip shortage is expected to ease by the third quarter of this year as TSMC increases its automotive chip supply.

TSMC will also increase production of the upcoming iPhone series in the third quarter, Apple supply chain chip suppliers are also stepping up to complete the supplier's orders in the third quarter, with orders 30 percent-40 percent higher than in the second quarter, the report said.

In March, a fire at the Renesas Electronics Corp plant, which holds nearly one-third of the global automotive microcontroller chip market, hit global automotive production hard. The company previously said it expected to return to 100 percent capacity around mid-June.

While automakers still expect the chip shortage to be unresolved in the near term, analysts have recently begun to expect the situation to begin to show marginal improvement.

In a recent research note, top Chinese investment bank CICC said that chip supply bottlenecks dragging down sales performance and earnings pressure due to raw material price hikes are two of the core concerns investors have about the auto industry.

However, the good news is that the team believes that looking forward, these two major concerns are improving at the margin, and the share price correction has been price in the pressure on the performance of car companies.

On the chip supply side, CICC expects it to have an impact on the second-quarter sales of around 200,000 units, less than the first quarter, signaling a marginal improvement in the impact of the chip issue.

Along with the continued easing of chip supply in the third and fourth quarters, Chinese auto sales are still expected to reach 22 million units for the year, the CICC said.

Chip shortage's impact on China's first-half auto sales within 10%, says auto association

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