Investment Rating - The industry investment rating is maintained at "Overweight" [2] Core Views - The report highlights that TSMC's strong financial results and outlook for AI demand indicate a sustained strong growth trajectory for AI-related sectors [6][8] - The semiconductor industry is experiencing significant growth, with TSMC reporting a 30.3% year-on-year increase in revenue for Q3 2025, driven by advanced process technologies [6] - The report emphasizes the ongoing recovery in consumer electronics, particularly with the introduction of new foldable smartphones and the high demand for AI infrastructure [9] Market Performance - The electronic industry index fell by 7.14% during the week of October 13-17, 2025, underperforming the CSI 300 by 4.91 percentage points [11] - Over the past 12 months, the electronic industry has seen a relative return of 37.8% and an absolute return of 56.9% [3][11] Valuation Metrics - The electronic sector's Price-to-Earnings (PE) ratio (TTM, excluding negative values) is 61.09X, down 4.78X from the previous week, and is positioned at the 43.59th percentile over the past decade [5][12] - The Price-to-Book (PB) ratio is 4.86X, also reflecting a decrease, and is at the 58.57th percentile historically [5][12] Industry Dynamics - TSMC's revenue from advanced processes accounted for over 70% of its total wafer revenue, with a notable focus on high-performance computing (HPC) which represented 57% of its revenue [6] - The report anticipates continued strong demand for AI, with TSMC increasing its capital expenditure forecast for 2025 to between $40 billion and $42 billion [6][9] Investment Recommendations - The report suggests focusing on investment opportunities in AI infrastructure, edge SOCs, and the supply chain for foldable smartphones, maintaining an "Overweight" rating for the electronic industry [9]