Taiwan’s Foxconn, the world’s largest contract electronics maker, said on Tuesday it was heading in a “better direction” for the second half of the year as Shanghai’s COVID-19 lockdown appeared to be easing.

“We are very confident in the stability of the supply chain in the second half of this year,” Foxconn Chairman Liu Yongwei said at the company’s annual shareholder meeting.

The Shanghai government will allow residents in all “low-risk” areas to return to work starting Tuesday.

Foxconn aims to become the first electric vehicle (EV) maker with “no shortage of materials,” Liu said, referring to a chronic global chip shortage that has forced automakers to halt production and hurt smartphones including major customer Apple Production.

“A car that’s worth tens of thousands of dollars can’t be shipped because of a small chip worth 50 cents. It’s a pain for our customers,” he said.

Foxconn aims to capture about 5 percent of the global electric vehicle market by the end of 2025, and has said it wants to increase its production capacity for electric vehicle chips, many of which are small, low-end integrated circuits, including those used for power management.

The company warned this month that revenue from its electronics business, which includes smartphones, could decline this quarter due to rising inflation, cooling demand and escalating supply chain problems due in part to China’s lockdown.

Foxconn reiterated that while China’s tight controls on COVID-19 have had a limited impact on production as it keeps workers in a “closed-loop” system on site, demand for its products in the country has suffered as people remain closed.

© Thomson Reuters 2022