China made a big mistake in being too reliant on TSMC, etc. or maybe it did not have the capacity to go after too many targets. Or maybe it simply did not think it could be a problem. They are quick to learn and adapt, though, not least when the Chinese state throws its whole weight behind something, so I'm thinking that after this initial shock, in a few years the result will be a decline of the relative importance…
I think the more worrying thing is what happens to the West if, when it has built it's own fab capacity (which is much easier said than done, but China will throw enormous resource at it because it has to), China decides to destabilise Taiwan's semiconductor industry.
Western nations would be smart to try and decentralise some of that production capacity (also easier said than done) before that could come to be, but does anyone think the Western nations current or foreseeable leadership really have the strategic foresight to do so?