In 2016, China’s Hefei Province launched a high-profile but cryptic and closely guarded industrial project: The “506 Project.” It leveraged some 54 billion RMB of provincial funds, backed by the Chinese central government’s integrated circuit investment fund, and the expertise of leadership from SMIC, one of China’s top state-owned semiconductor companies, which was placed on the Department of Commerce’s Entity List in 2020. The 506 Project’s goal was simple: To develop a Chinese domestic state champion in DRAM, or dynamic random access memory — part of a larger effort to shore up indigenous capacity across the semiconductor value chain. In...