China's semiconductor equipment investments are projected to decline significantly in 2025 and 2026, with spending expected to drop to $29.7 billion in 2025, a 19.5% decrease from 2024. This downturn is driven by stricter US export controls and high inventory levels, leading to a slowdown in orders from key suppliers like ASML.Despite these challenges, Chinese firms are advancing in artificial intelligence, with domestic providers anticipated to capture around 20% of the market this year. UBS recommends shares of NAURA Technology Group, while downgrading Advanced Micro Fabrication Inc to "Neutral," citing limited growth potential.