Tell that to the
$545 billion in lost revenue by US semiconductor companies due to export controls.
The problem is Chinese semiconductor companies never gave domestic options as chance because foreign semiconductor companies were much more advanced, cheaper, reliable. Now the Chinese semiconductor equipment and suppliers is thriving thanks to the US sanctions, in ways not previously possible despite many decades of state-led investment and top-down orders.
As Gina Raimondo has said, it's merely a "speed bump", not enduring slow down, at the cost of $545 billion lost revenue for US semiconductor companies, and China still has been able to achieve 7nm nodes and D1z HBM3 which is more than sufficient for advanced GPU inference compute for LLM models.
SMIC's CEO has said they have designs solidified for 5 and 3nm node has been completed in 2020 (
source), it's a matter of implementing them using EUV lithography, which is the chokepoint, not designing new nodes. You don't need GPU compute to design new process nodes. Even sanctioned Huawei can design 3nm or 2nm nodes a long time ago, it's EUV that's the limiting step.