Yes. I understand your logic. But Truth and Facts are two different things.

We have no evidence that China has actual real capacity to mass produce those phones for mass demand.

As other comments say, it may well be chips that were manufactured before sanctions, or chips manufactured on low scale.

The second point is why Global Foundries dropped the chip race, and why TSMC is the global leader.

And under sanctions, I see no reason why China would suddenly become better at mass production than TSMC.

China has a long tradition of inneficiently throwing money at things, so their chips may also be on a very low yield wafers and heavily subsidized. That's not sustainable either