You should check out this article:
https://www.theregister.com/2024/07/08/us_china_chip_wars_id...There was some news a while back that they had mastered making ball point pen tips. But you gotta keep in mind that these efforts have to be sustained long term and have to be a self-reliant economy on their own.
Anyone can compete short term if you fuel your efforts with mountains of debt. But China's debt level (shadow debt included) has reached a breaking point. How many chip company bankruptcies can they take before the efforts break down?
China can use a lot of "tricks" with their economy, since they're so authoritarian. But they're not THAT special. Their economy is not magic. The local governments have an insane amount of debt now, and they're in a situation where they can't make as much money off land leases anymore, so they have to raise taxes to avoid becoming insolvent. Yet foreign companies are already moving factories out of the country, so how can they stay competitive while raising taxes? This was already a huge debt, it was just never on paper. Now that debt is coming due.
Keep in mind that the local governments are often involved in financing China's domestic industries..
Think about how the outlook would be if SMIC was in any other country. How would a chip company ever survive producing near cutting edge chips without a strong international market and high margins? If a western country bought hundreds of insanely expensive chip manufacturing machines that ended up gathering dust in a warehouse, it would be considered insane. This isn't sustainable.
China has a decent domestic market, but it's very hard to sustain good margins there. Margins they desperately need to sustain an industrial effort that is being run in a much less economically efficient way than the western chip industry.