I mean, yes, non-semiconductor firms in China have see business disruption and discontinuity from US export controls (see for example, Alibaba Cloud calling off its IPO and the continued global dominance of AWS and Azure) or US VC funding in China falling rapidly (which was my point - that the bans on exports are circumventable doesn’t mean circumventing them is a 2nd best choice with deleterious impacts elsewhere - if the best alternative ran through non-US products; they would’ve used those previously out of pure business sense).
The point is that controls on inputs to inputs in the semiconductor chain (ex: programming languages and vacuum tubes as inputs to EDA and wafer fab equipment) create various adverse first and second order effects (on competition, on downstream firms competitiveness, on technical diffusion throughout the economy, on productivity, etc)
regardless of the targeted firms response to US actions
Decoupling/self-sufficiency on semiconductors is unavoidable, no matter the cope and sour grape thrown at it. Even if US cancels all export bans, China will not stop what it has started. This is very clear from plenty of official declarations and national plans. It is not a hidden agenda.
China will keep pursuing self-sufficiency in technology no matter what US does. This is the key point that maybe is not so clear in US.
Once China reaches self-sufficiency then maybe they will eventually re-spin trade relation with US on an equal foot: "Ok, what interesting stuff has this US high tech company for us to buy?", and eventually they will return to buy US stuff without fears of "surprises", because domestic alternatives will be already tested and ready to kick in.
US will have no other choice but to compete
only on the product merits....something the rest of the world already does BTW.
P.S: The software example, IMHO is not the best one. Foundational software tools are all open source: compilers, OS, web frameworks, AI platforms, etc. Not only that, it is China that is more and more distancing from US software, see for instance Huawei that dropped Android although they could still legally use the AOSP distribution, but
they don't want to use it.