That means by next year SMIC will be able to produce 7nm chip.No, it really isn't. SMEE's SSA800 is already in SMIC's hands for trial and verification and will be rolled out commercially next year. That takes care of chips out to 7nm at least (perhaps even 5nm) until the issues with the EUV light source are resolved.
If SMIC is restricted it cannot purchase any further foreign components (which is fantastic motivation for self-sufficiency), there's nothing the US can do to prevent SMIC from using what it already has until substitutes are available.
Lithography is one of the most challenging one, how about software for design (cadence)?