Mercedes-Benz car maker Daimler AG on Friday raised its profit outlook for 2021, but said the global semiconductor chip shortage may continue to impact sales in the second quarter.

Daimler said it assumed there would be some recovery in chip availability in the second half of this year but there was limited visibility at present.

Chief Financial Officer Harald Wilhelm said underlying car demand was strong, but the chip shortage had prevented sales from reaching full potential.

Wilhelm, speaking on a conference call with analysts, said lost production would only be partially recovered by the end of 2021 and the carmaker would continue to allocate chips more to higher-end products while the shortage lasts.

Cars have become increasingly dependent on chips for everything from computer management of engines for better fuel economy to driver-assistance features such as emergency braking.

The chip shortage has forced a number of automakers to curtail production, including General Motors Co, Stellantis, Ford Motor Co and Daimler’s German rival Volkswagen AG.

Earlier this week, Daimler cut working hours for up to 18,500 employees and said it would temporarily halt production at two plants in Germany due to the chip shortage. But the German carmaker still expects its operating profit this year to be significantly above 2020 as the global economy recovers from the coronavirus pandemic.

Daimler now expects an adjusted margin from its Mercedes cars and van business of between 10% and 12%, up from its previous outlook of between 8% and 10%.

The company also raised its outlook for China, saying it expected more than 7.5% growth in 2021, up from its previous estimate of between 2% to 7.5%.

CFO Wilhelm told analysts sales in China so far in the second quarter were “just great” and the company could probably do even more if the chip shortage had not curtailed production.