China-based Semiconductor Manufacturing International Corp (SMIC) issued downbeat guidance for 2023, forecasting revenue and margins to decline after sales growth in Q4 2022 slowed.

In its earnings release, the chipmaker predicted 2023 revenue to drop by a low-teens percentage year-on-year and gross margin to also fall. Capex is expected to remain at about the 2022 level of $6.4 billion.

The company noted its gross margin is under pressure due to higher depreciation related to continuous investments to upgrade its equipment.

Depreciation expenses in 2023 are expected to increase by more than 20 per cent year-on-year.

Net profit in Q4 2022 dropped 26.4 per cent year-on-year to $425.5 million, with depreciation and amortisation costs rising 19 per cent to $604.3 million.

Revenue increased 2.6 per cent to $1.6 billion.

The percentage of sales going to China in the final quarter fell to 69.1 per cent from 74.4 per cent. Shipments to North America increased to 25.3 per cent from 19.6 per cent.

Smartphone chips accounted for 28.6 per cent of sales, down from 31.2 per cent, and chips for consumer electronics dropped to 21.6 per cent from 23.7 per cent.

The company said its monthly capacity of 8-inch wafers increased 15 per cent year-on-year to 714,000.

For the full year, sales were up 33.6 per cent to $7.3 billion.

Meanwhile, the company named SVP Wu Junfeng to replace CFO Gao Yonggang, who recently resigned.