When Liao Heng joined Huawei Technologies’ chip-design unit in 2016, he was sceptical about whether China could ever build world-class semiconductors. A former child prodigy who entered Beijing’s prestigious Tsinghua University in 1987 at age 14 before moving to Princeton University for postdoctoral research, Liao had spent over a decade in the United States watching what he described as a “long sunset” for American chip start-ups. Working abroad, he noted, often bred a “blind arrogance” that...