ARM IP, even full architectural license, is relatively small percentage of the cost of a semiconductor. Know-how for fables microarchitecture designs is widely distributed. Most fabless work goes to specialized asics.
It's the inability for SMIC to obtain EUV lithography equipment for their sub-7nm process technologies from ASML that prevents China from getting into high-end semiconductors, not the domestic microarchitecture know-how.
Here is an interesting question: how long will it take China to catch up? I predict 10 years! The Chinese government sees a leading position in semi manufacture as being of extreme strategic importance. There are several reasons why I think China will succeed other than government strategy: the size of the Chinese market (already the biggest processor market in the world), the ease with which Taiwanese semi expertise can be brought to China (legally, salaries are just higher in Shanghai than in Taipei).
I think they squandered that recently. We will see with Biden but the Trump administration basically encouraged Brexit and repeatedly adopted anti-
EU positions in key geopolitical issues (Syria, NATO, Iran, Israel, and Ukraine). These things come with a cost and the EU will try to rectify this. Enhancing Chinas CPU tech by a few generations might be worth it if it can advance EU interests and ensure future good-faith from a supposed ally.
Enhancing China’s CPU tech even a single generation is in the EU’s interest in exactly 0 alternate universes, along with this one.
As long as the US has the world’s only reserve currency and as long as the EU economy - especially the productive bit in the North - is built on exporting to the all-powerful US consumer, the EU has very little leverage in its affairs with the US.
It's the inability for SMIC to obtain EUV lithography equipment for their sub-7nm process technologies from ASML that prevents China from getting into high-end semiconductors, not the domestic microarchitecture know-how.