Agreed with you on most of the points except this one.The strategic mistake was to show their hand too soon. Cutting off chips at a more critical moment - like the start of a war between the US and China over Taiwan - would've been much more devastating, but I guess US policy makers had no patience and were tired of waiting for China to actually make a stupid move.
War can break out all of a sudden but tension will need to take time to build up gradually. China certainly would not expect to keep the trade going with the US when the war starts. The war-time economy would run very differently from the one in peace time. It's difficult to tell how bad it will be for China suddenly not being able to get the west-made chips.
Thanks to the ongoing sanctions on military and some dual-use technologies by the west, China has never stopped the effort in making its war machines and MIC self-sufficient and self-sustainable. I doubt if there are still many west-made components in PLA's weapon systems that are without feasible domestic backups. Same for the critical civilian infrastructures.
A large portion of the chips bought by China eventually go back to the west, US included, in different forms of final goods. If China cannot make those final goods anymore, where can the US find the alternative suppliers in short time? Given how much the two economies are still coupled, a sudden cut-off of the trade between China and the US will have huge impact on both. IMO this is what keeps the US from going all out in its current trade and tech wars against China. Both need time to decouple from each other. Thus the danger of war will actually rise if the trade between China and the US keeps dropping. Both sides will have their hands untied when the interdependency is below certain threshold.
As a side note, while it was the the US that brought up the supply chain de-risking concept, China actually started its own de-risking earlier with the BRI. That is to create and grow new markets for China-made goods to avoid overly relying the US and its running dogs.
The world has been watching China accelerating the progress in overcoming the "neck-choking" barriers. Its dependence on western technologies is certainly not increasing. The US is fully aware of this. The US must have been regretting of not keeping the cold-war style total sanctions against China.