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Lol the west is gonna sabotage their own chip production trying to reshore it, suck out the lifeblood of two of their favorite lapdog states, and hand the lead to China & SMIC
The whole thing has been absolutely hilarious to watch. China was something like 40% of the market for western companies, and now that market is basically gone. Such loss of revenue alone is catastrophic for any business, but it gets worse since China is already dominating in legacy chips globally now and will surely start exporting bleeding edge chips within a few years as well. So, western companies will start having stiff competition on the global market as well which will further shrink their revenues. This is an extinction level event for western chip industry.
There's also nowhere to go forward with silicon. You physically can't make chips smaller than 1nm cause you start running into problems like quantum tunnelling. The only way forward is to explore new computing substrates, and once again China is leading here. For example, a Chinese team managed recently to produce a 12 inch wafer using 2D transition metal dichalcogenides.
A transition to this kind of material could be as significant as going from vacuum tubes to silicon. Even a naively designed chip could be orders of magnitude more performant than what's possible on silicon, and there would be plenty of room to grow. Development of such new technologies is basically impossible under capitalism because it require huge upfront investment that can only be achieved via state funding.