No, they're ahead because they mastered EUV lithography. It's not just another shrink, it requires a lot of changes and they all have to work and play nice together. The fact that Intel can't seem to get it right, and global foundries voluntarily stopped short is very telling.
Having cleared the hurdles TSMC is rapidly going through a bunch of new nodes: 7,6,5,3,2.
ie. how many intel and TSMC bought and is using now
TMSC instead decided to try EUV. That was a risky bet. But then ASML from The Netherlands managed to solve the problem of EUV intensity and Intel had found that they just could not manage to push traditional lithography further.
The best you could do is go back to making older systems for which the factories may not exist anymore, or design and build new systems using the old CPU tech and new everything else. Both options would impose a severe economic and military cost and take years to implement.
It doesn't matter that 5nm chips aren't used in military hardware today. You can bet military hardware is being designed now that will use 5nm chips. Therefore access to that production capacity is strategic.
Imagine if the situation is missile defense, both the missile and the defense systems are computerized and not only the milliseconds but also the microseconds are the difference between a hit and a stopped missile. Whoever had the newest fab node would have a notable advantage in being able to push their system harder. It could be better ML in missile to lock on and dodge, vs the defense system predicting paths as fast as possible with as low latency as possible to defend a ship or similar asset.
Its asymmetric in the example of course, but both sides would be doing both shooting and defending.
Have a look at what type of microchips are used in “cutting edge” military equipment like fighter jets. They are often decade olds. More speed is simply not important enough.
But if we were in desperate times, I think the limits would matter and fab tech would be an important strategic asset for what it enables. The nature of it is that its easier to attack, but we hopefully have something to defend.
Intrinsically larger process nodes are better for analog and have uses even as new fabs come along. In 7nm your analog signals are not treated very nicely, but these are important for sensors. Also power electronics are not really on the newest nodes either. The microchips are old because they get the job done and I don’t think we feel so threatened to push the limits.
Nevermind the nation probably has more than 1 of such old fabs, so it can't be technologically decapitated by destroying a single precious 5nm fab it has.