TSMC is "in China" it's just that ROC fabs are a few process nodes ahead of anything in the PRC.
Various US military and government orgs prefer to buy chips entirely sourced within the US, this isn't as much about pointing fingers at China, but it is presumably harder to suborn domestic workers than foreign workers.
Personally, my take on things is that the major world powers should use silicon entirely manufactured and assembled within their borders for critical and military/government hardware. It is too damn hard to verify chips after they are manufactured, because potential backdoors and vulnerabilities are too small to see these days. It is always an arms race between attackers and security, and whichever side is "winning" in a particular domain will shift back and forth, and the cost-effective tradeoffs will shift in position. Same thing happens in physical warfare over the course of history.
The argument that PRC "could probably find a way to interfere" is not germane, because perfect security was never on the table in the first place. We are just comparing different relative levels of security on a probabilistic basis comparing cost of attack and cost of defense.
Military prefers locally sources parts because if war breaks out you need absolute certainly you can get the critical parts you need to build whatever weapons you don't have. For short war this isn't a big deal because you are stuck with whatever you have one hand. For a longer war you need to buy more weapons - and that means you need a source you can buy them from. Friends and enemies change all the time, so the only way to be 100% sure is to produce your own parts in your country.
Various US military and government orgs prefer to buy chips entirely sourced within the US, this isn't as much about pointing fingers at China, but it is presumably harder to suborn domestic workers than foreign workers.
Personally, my take on things is that the major world powers should use silicon entirely manufactured and assembled within their borders for critical and military/government hardware. It is too damn hard to verify chips after they are manufactured, because potential backdoors and vulnerabilities are too small to see these days. It is always an arms race between attackers and security, and whichever side is "winning" in a particular domain will shift back and forth, and the cost-effective tradeoffs will shift in position. Same thing happens in physical warfare over the course of history.
The argument that PRC "could probably find a way to interfere" is not germane, because perfect security was never on the table in the first place. We are just comparing different relative levels of security on a probabilistic basis comparing cost of attack and cost of defense.