Investment Rating - The report maintains an "Overweight" rating for the electronics industry [1] Core Insights - Demand for advanced process capacity is continuously rising, with TSMC's 3nm capacity facing severe shortages due to strong demand from major AI chip clients like Nvidia [3][4] - TSMC's 3nm process is expected to have a significant supply gap by 2026, leading to high premiums for capacity and potentially pushing TSMC's overall gross margin above 60% [3] - The smartphone AP-SoC shipment volume is projected to reach 51% advanced process by 2025, indicating a shift towards advanced nodes across various price segments [4] Market Overview - The SW electronics index fell by 4.77% in the past week, underperforming the CSI 300 index by 3.68 percentage points, with all six sub-sectors showing declines [3] - The semiconductor sector is anticipated to experience a comprehensive recovery in 2025, with an accelerated clearing of the competitive landscape and a sustained recovery in industry profitability [5] Investment Recommendations - The report suggests focusing on semiconductor design stocks with real performance and low PE/PEG ratios, such as Zhongke Lanyun and Juxin Technology in the AIOT SoC chip sector [5] - In the analog chip sector, attention is recommended for Meixin Sheng and Nanchip Technology, while in the driver chip area, Fengcai Technology and Xinxiangwei are highlighted [5] - For semiconductor key materials, the report emphasizes the logic of domestic substitution, recommending leading electronic materials companies like Tongcheng New Materials and Dinglong Co [5]