You shouldn’t be doubtful. China executes the exact same strategy with manufactured goods exported to the US.

Exporting their extremely cheap and relatively good quality products to the US destroys any incentive to invest in domestic manufacturing and production.

If the Chinese were to stop exporting those goods to us, there would be massive incentives to make those products domestically. Given a few years we would be producing everything we previously bought from China after a painful adjustment period.

The incentive effects are identical for chip producers in China. Give it a few years and they’ll be at parity with any western producer.

“Show me the incentive and I’ll show you the outcome.” -Charlie Munger