The power consumption and performance difference between 7nm and 2nm is basically not worth it due to the increased design cost, except in the case of smartphones. One promising field is the use of graphene wafers which has potential performance attributes supposedly up to 10 times higher than silicon on the same process. I don't know how much of that is hype, but it's something China should be doing more research on during the catch up stage.
Imo, the primary reason for this slowly boiling frog strategy of the US is their belief that China cannot possibly ever fully catch up on their own. This is borne from the ideological echo chamber of fake China "experts" guiding American foreign policy think tanks. These clueless academics are funded by their biased monied class who choose/use them to push their preconceived plans within a virtuous cycle of BS.
Japan and all the other OECD countries have no technology restrictions enforced upon them. ASML would be a nothing burger without its international collaborations. I think the belief is that no single individual country can do everything and if they could do everything, they will never be the best at anything.
@gelgoog the Japanese had no choice, they were excluded. I still hold my view that the US will never allow Japan to become what she was in the 80's , The American never trusted them before and never will be in the future.
Fyi, somebody here just posted news of IBM recently announcing the first 2nm semiconductor via nanoimprint lithographic technology with 50 billion transistors. Production volumes are probably terrible but the fact they can fab this at the quantum tunneling limit is impressive.
Whoops, actually just read the article, it's "nanosheet" tech, used to make <=3nm transistors. LOL
Sorry, but when I look at the evidence I see a rather different picture. There were various kinds of sanctions/limitation on the type of equipment China can acquire since the 90s. China had the incentive to catch up for over 20 years now.