Chinese chipmakers are gaining on Nvidia and TSMC

The US has made a number of mistakes in that department, but I don't think sanctions is one of them. Given that China is still struggling to match EULV processes from second-rate fabs, I'd even argue the sanctions are working as-intended.

Stopping China from making chips was never a choice - even Russia has domestic fabs. It is an option to withhold the IP required to match the leading foreign exporters, though. That's what happened, and the outcome isn't much different from what was expected.