Yes, China needs lithography machines from ASML. They are the only manufacturers of the leading edge litho. Without those they won't make much progress. However, they will be able to take whatever TSMC currently has in Taiwan. TSMC currently only has 1 other fab outside of Taiwan and China, located in Washington State, US, but it's a 200 mm Fab, old tech. They are planning to build a big Fab in Arizona, but it won't be ready until 2024 at the earliest.
