China has already been tripling down on their local industry for years, with limited success. YMTC is doing a good job with 3D NAND memory chips. Apple recently added it to its list of suppliers. But progress on advanced products is stalling since SMIC said it produced a 7nm chip back in mid 2021. Experts are sceptical that they can manufacture this model at scale. China may be a decade away, if not more, from replicating TSMC's 2nm products. Add to this dependency on electronic design automation tools or extreme ultraviolet lithography tools, stuff from Japan and the Netherlands. Frankly it's not certain they can pull this off.

These restrictions put pressure on China at the high end of the economic spectrum, forcing the country to divert ressources into a technology race it most likely can't win, instead of attending to its fundamentals. Meaning healthcare, public welfare and a broader social security net. So turns out China is also pressed on the low end of the economic spectrum. Most of its competitors dealt with social coverage in the 70's (the US are an exception).

The PLA has less incentives not to bomb the crap out of TSMC's factories in the event of a campaign over the island. No reason to keep the thing running if you won't get a piece of it. If Biden cornered them this way, he must be confident (1) the US can prevent Chinese air superiority above Taiwan or (2) they can replicate TSMC's work somewhere else. No declassified evidence of either option so far.