HTSC released a report stating that with the ongoing recovery in consumer electronics demand, the domestic wafer foundry leader's capacity utilization rate is expected to continue to recover, with performance expected to remain positive. Supported by a stable rebound after hitting rock bottom in fundamentals, the valuations of the subsequent Hong Kong semiconductor manufacturing sector are expected to sustainably improve. The report points out that so far this year, the foundry industry has shown two major differentiations, between advanced and mature processes. Strong demand for high-end smart phones and AI in the first half of the year, with 3/5nm fully utilized, has led to rapid revenue growth at Taiwan Semiconductor, which has outperformed in both revenue growth and stock price in the sector. However, mature processes have been somewhat sluggish, with UMC, GlobalFoundries, and others only seeing single-digit revenue growth from January to August. Meanwhile, driven by localized production demand and restocking in consumer electronics industry chains such as mobile phones and home appliances, mainland Chinese manufacturers such as SMIC and Hua Hong have achieved a capacity utilization rate of around 90% in the first half of the year, significantly better than overseas counterparts such as UMC at around 70%. Since mid-September, SMIC and Hua Hong's valuations and stock prices have rapidly recovered, with the potential for sustained valuation recovery in the current round of the semiconductor manufacturing sector amid ongoing demand recovery.