China needs EUVs somehow. As for TSMC I can’t expect being distracted by the US is good for them
I expect China will be able to make EUV machines domestically within a few years. What’s more exciting is that China is actively exploring alternative computing substrates. If one of those pans out, then it could make silicon look like vacuum tubes overnight. For example, stuff like this looks very promising https://www.sciencedirect.com/science/article/abs/pii/S2095927323004206
The reality is that we’re now hitting physical limits of what you can do with silicon effectively. There’s really no path forward past 1nm. Whoever manages to scale up production f a new computing substrate first will have a huge advantage going forward. China is most likely to get there before the west because it’s a state driven effort.
Meanwhile, the west largely relies on companies and competition to drive innovation, and it’s not profitable for companies to invest huge amounts of money into research that will take many years to bear fruit. Instead, they focus on short term profits and squeezing what they can out of current technologies.
With cars they figured they were far behind and there were many patents on internal combustion engines that it made sense for Chinese companies with government directives to skip straight to battery electric vehicles. Maybe they will do the same with semiconductors, maybe not. I hope so but I hate to mix hope with insight or prescience.
There are strong incentives for China to push the boundaries with semiconductors. Data processing and analytics is becoming an essential tool in many domains. Being able to process huge volumes of data faster than your adversaries becomes a really powerful strategic advantage. For example, if you can accurately model patterns in global trade, then you can allocate resources better than your competition. That’s just one example where having powerful processing capability is crucial. It’s pretty clear that Chinese leadership sees the potential here, and I expect we’ll see some amazing things happening in the coming years.
