"1) are the Chinese fabs adding capacity to make chips?

2) how far advanced are the Chinese chip equipment makers?"

China is probably 5 -10 years away.  In the semiconductor timeline, that is like 50 years behind. China never invested in semiconductor R&D significantly until recently.  China imported 80% of its semiconductor.  Of the 20% it produces, they are lower end ones.

To make high end lithography and fabs, it will take quite a while.  Under laboratory conditions, I am sure China can now make 14nm processors or even 7nm, but to scale up the production scale with good yield is another story.  It is very hard.  If it is not hard, how come only a few companies in the world can make them.  Only AMSL can make EUV lithography machines.  TSMC and Samsung are the only ones that can have foundries making high end chips.

I am sure China will over come these challenges like it did with other challenges.  Just think of semiconductor technology like jet engine tehcnology. It takes time and only a few companies in the world that can make them. 

So the author has some good points.  It is a mistake to underestimate China's will to overcome this by looking at it in such a short term timeframe. I think he is just pleasing his neocon funders.