Semiconductor Manufacturing International Corp shares tumbled 3.6% in Hong Kong trading after the Chinese chipmaker's soft revenue forecast and memory chip supply warnings overshadowed strong fourth-quarter results. The company's shares fell to HK$68.95, significantly underperforming the broader market's 0.4% gain.

SMIC warned of increased margin pressure in 2026 as it ramps up capacity to meet surging chip demand, with depreciation costs expected to jump 30% this year. The company forecast flat revenue growth for the current quarter, citing rising costs and capacity expansion. Co-CEO Zhao Haijun highlighted that strong AI-driven demand for memory chips is squeezing supplies for other sectors, particularly consumer electronics, driving up costs for manufacturers.

Despite fourth-quarter earnings that showed net profit surging 60.7% on strong domestic demand and revenue jumping nearly 13%, investors focused on the near-term challenges. The memory chip concerns and middling outlook overshadowed SMIC's AI-driven growth story. Other major Chinese chipmaking stocks also declined following SMIC's warning, with Hua Hong Semiconductor and Cambricon Technologies falling between 1% and 2%. The sector-wide selloff reflects growing concerns about supply chain pressures and margin compression in China's semiconductor industry.