You're probably right
I upvoted you because, your argument is coherent and quite possibly correct. And also because the rather chaotic US policy seems driven by domestic politics, not by any actual understanding of the world or realistic vision of the future.
But I would also mention that the difficulty of achieving state of the art design varies from field. For example, I'm told that Chinese airframe designs seem competitive with those of the US,France,Russia. But Chinese Jet engines aren't, I'm told, quite up to best in the world standards.
OTOH, It's not clear that semiconductors that are a few years behind the best possible technology aren't perfectly fine for making consumer goods and equipping an army. It takes a long time to design, build, field test, tune and deploy a weapons system or complex consumer product. By the time your cruise missile, walkie-talkie, or electric car reaches the troops/customers, their electronics won't be state of the art anyway.