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If everyone realizes it's a national security issue, that might change. Sure, US, EU and China have players in the industry and can attract fabs with a bit of incentive, but what if Russia or India or Pakistan or Brazil or Iran want to ensure a steady supply even under sanctions? Some of them might open up smaller fabs that might not be economically viable but are of strategic importance.

Doesn’t Malaysia have fabs? Singapore?

You could fab chips in your basement. However your costs per chip would be in the tens of thousands each for basic chips. Large scales allows making those same chips for less than a dime each.

You'd still need chemicals, a pure substrate, a chip design that's been converted into a manufacturing process, a UV aligner, spin coater, etc... can't do everything in your basement. You have to trade with others.

> Computer chips are a product that is only possible to produce at the largest scales

Perhaps, or perhaps we're dealing with monopolization.