On February 7, HSBC Research issued a report highlighting that the relentless expansion of second-tier foundries could result in a protracted period of oversupply, with capacity utilization rates yet to peak. Additionally, the report mentioned that other foundries might emulate United Microelectronics Corporation (UMC) in revising their pricing strategies. Notably, Chinese foundries have been actively reducing prices between 2023 and the first half of 2024. It is anticipated that these fabs will implement modest price adjustments to sustain pricing competitiveness and enhance capacity utilization rates. HSBC's scenario analysis revealed that pricing might decline by an additional 5% to 15% by the second half of 2025, with average earnings expectations 7% to 20% lower than the bank's base forecast. Consequently, HSBC Research downgraded Semiconductor Manufacturing International Corporation (SMIC) (00981.HK) from Hold to Underweight but increased the target price from HK$26.47 to HK$35. The bank contends that the current share price does not fully encapsulate the pricing pressures and uncertainties surrounding short-term demand.