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(Bloomberg) -- Semiconductor Manufacturing International Corp. plunged Friday after China’s leading chipmaker warned sales could fall as much as 6% this quarter because of production disruptions.

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Co-CEO Zhao Haijun said sales would fall between 4% and 6% in the June quarter versus the first three months, compared with projections for about an 8% rise. The warning came after the company discovered unspecified issues with production lines. SMIC though is sticking with plans to spend $7.5 billion this year to boost and upgrade output, in line with previous outlays.

Zhao also warned of risks in the consumer market, saying a shipment correction in the smartphone market was likely to happen in July or August due to an overly ambitious target. SMIC’s stock fell 4.6% Friday in Hong Kong, the biggest fall in more than a month.

“The incident had affected the process accuracy and yield of our products,” Zhao said. “Certain upgrade efforts during equipment verification had also affected yield.”

SMIC reported $188 million in net income for the first quarter, missing an average analyst estimate of $218.1 million, despite posting 28% growth in sales.

The company’s weak second quarter sales guidance demonstrates the toll of pricing pressure and softer-than-expected consumer chip demand in China, both aggravated by US tariffs, analysts Charles Shum and Steven Tseng wrote in a note.

“SMIC’s 1Q sales undershot consensus by 4.7%, with an earnings miss of 16%, despite the front-loading of orders prior to US tariffs being implemented,” they said.

Zhao dismissed the potential for damage from US tariffs. “We expect positive results from trade talks. If that happens, we believe the impact to semiconductor contract making business can be absorbed,” he said.

Hua Hong Semiconductor Ltd., another major Chinese chipmaker, also said any tariffs wouldn’t have a meaningful impact on its business. The impact would be limited because the company mostly sells its products in China, President Peng Bai said in an earnings call Thursday.

“As long as the tariff situation doesn’t disrupt too much of the market dynamics or the market logic too much, we still expect that 2025 will play out as we originally expected,” he said. Shares of the firm fell as much as 13% after first-quarter net income missed estimates by a wide margin.