Honda Motor Co. joined Nissan in upgrading operating profit forecasts for the fiscal year through March, after a rough start last year. Toyota Motor Corp. kept its forecast for 2.8 trillion yen ($24 billion) in annual operating profit, even after halting domestic output for several days in January.

The carmakers proved over the past half century that Japanese manufacturing could not only compete, but dominate the global auto industry. Now, they’re in the unfamiliar territory of not being able to predict their own fate because of the global chip crunch, fueled by booming demand for computers, gadgets and devices as people work remotely and spend more time indoors.

Macquarie Securities Korea Ltd. is forecasting “slower-than-expected normalization of IC chip supply,” analyst James Hong said in an email.

While tight supplies of semiconductors are set to ease later this year, the next bottleneck is likely to come from growing demand for analog chips, which are increasingly being used in automobiles as they become electrified and autonomous. Last year’s chip crunch was mainly due to a shortage of microprocessors, the main computing chips that are used in smartphones and computers.

“Analog chips are likely to become the main constraint for vehicle production for the next three years,” IHS Markit wrote in a report last month.

Covid lockdowns, missing parts and shortages of chips are common challenges that automakers are facing across the globe. These disruptions will restrict vehicle production through the end of this year and push a broader market recovery into 2023, according to a recent report by Fitch Solutions.

Toyota on Track

Compared with its initial outlook, Toyota has mostly kept on track. The world’s biggest carmaker’s operating profit forecast is slightly higher than the initial outlook issued in May, while its sales forecast was trimmed slightly because of production halts.

Honda was forced to downgrade its outlook in November because of the chip crunch, fueling concerns over its ability to recover profit and sales. The carmaker bounced back this week, however, and now sees fiscal year operating profit of 800 billion yen, even higher that it originally forecast last year.

Nissan, which initially forecast flat annual profit, now sees profit of 210 billion yen for the year ending March, thanks to favorable exchange rates and vehicle profit margins. Nissan also embarked on a recovery plan in 2020 to remove about 300 billion yen in annual costs, reduce capacity and cut back on margin-eroding incentives.

Koji Endo, an analyst at SBI Securities, sees semiconductor supplies improving as chipmakers ramp up production globally. The supply crunch will probably continue for the first half of the fiscal year and improve in the latter half, he said. “Although slight, automakers’ output is getting better,” Endo said.

Even so, it may be too early to celebrate. Mitsubishi Motors Corp. Chief Financial Officer Koji Ikeya said during an earnings briefing this week that the outlook remains murky, with a high chance of a prolonged chip crunch.

“We’ll see the impact in the next year,” Ikeya said.

Analysts at Bloomberg Intelligence say that auto production is now starting to exceed their output plans. “Uncertainty around chip shortages still continues but automakers will reach pre-Covid production levels if they boost 5-10% of their output,” wrote Masahiro Wakasugi and Tatsuo Yoshida in a note dated Feb. 4, adding that they are expecting sales to recover in 2022.

The upside for earnings is that since demand is strong, car prices are going up and automakers that relied on discounts are selling cars without doing so, said Seiji Sugiura, an analyst at Tokyo Tokai Research.

“They’re being patient because demand for new cars is piling up,” he said. But for now, “automakers can’t do anything so they have no choice but to wait.”