If China actually catches up and surpasses the West/TSMC in fab technology and production, I think they'd have a better option, which is simply flooding the world market with high-end chips and obliterating the Taiwanese economy. Eventually, joining an economically dominant China might become more palatable, or a necessity.
The leadership will have a price in mind and they won’t be the ones under the boot. Everyone has a price to look the other way even if they think they are principled now.
This would be more in-line with their strategy in other areas. Quietly massively improve technical capability and then utterly out-compete international competitors. They did this with solar, multicopters, are in progress with doing this with TVs, nuclear power, etc. War is expensive and destructive, it's easier and nicer to just negate the economic relevance of your opponents if you have the time and resources to do it (which they do).
China is also doing this with weapons. It's just a little more difficult normal people to see the results because people can't get a Dongfeng 2x series rocket from Ali Express.
Realistically, the general public doesn't have access to an honest appraise of their capabilities. So we are left to infer from their accomplishments in other high-tech areas what their military industry is capable of producing.
