Yeah but they can't use TSMC to make it so they'll have to make due with older or more expensive lithography processes.
That probably explains why there's so few of these CPUs around: the yields of the domestic Chinese lithography processes (non-EUV) are awful.
Xiaomi can and does use TSMC.
Xiaomi has not been sanctioned like Huawei. So it is made by TSMC on N3P. The Huawei chips, made by SMIC, are so far behind they're not competitive at all with even Xiaomi's first generation chip.