When the chip wars started China's leading edge (with foreign tools, but theres still use of foreign tools now) was 14 nm.
The first shot was sanctions on direct chip imports. Then they did 3rd country foundry use sanctions. Only when that was found ineffective, they moved to direct sanctions on tools. The sanctioning of tools that 3rd countries bought and paid for years ago was very novel and had no guarantee of working. We can only say that the big surprise was that other countries and regions are far more spineless than expected.
The limit has always been lithography but it is the limit for the US too. China and US have similar non lithography tools. Etch/deposition/clean - US has AMAT and LAM, China has NAURA and AMEC. Inspection: US has KLA, China has Dongfang Jingyuan.
But even full 3rd country sanctions would fail, because Nikon makes lithography tools independently and they're losing hundreds of millions per year. It's either sell to China, keep alive as zombie or go out of business. Only by getting Japan to cooperate in 2017 would've worked but now it's already too late. Japanese cooperation is nice but not necessary at this point.
