Made in China—three words often associated with cheap quality. Four years ago, the Chinese government repurposed the phrase as the name of a new industrial strategy intended to propel homegrown companies into more advanced markets, and to make them less reliant on overseas components. This month, tough new US sanctions on China’s Huawei, the world’s second-largest phone maker, made those ambitions more urgent.

Assessing Huawei’s options now that it’s blocked from tapping US technology shows how China’s tech industry has lessened its dependence on overseas technology. At the same time, US and Chinese companies remain symbiotically entwined. True independence—forced or otherwise—would entail economic pain on all sides.

Huawei’s rise shows how the Made in China 2025 strategy is more than a Communist Party pipe dream. The company was founded in the 1980s by a People's Liberation Army engineer, and initially sold telephone switches and fire alarms imported from Hong Kong. Today Huawei is the world’s leading provider of telecom equipment and ships more mobile devices each year than Apple.

One sign of Huawei’s sophistication is that the two most crucial components inside those devices are designed in-house. The company’s HiSilicon chip division designs the processor and wireless modems inside phones like Huawei’s flagship, the $899 P30 Pro. That mirrors the all-in-one strategy of South Korea’s Samsung, the world’s largest phone maker, which also makes its own processors and modems. Apple, the world’s No. 3 phone shipper, crafts its own processors but buys its modems elsewhere. All three companies’ processors are based on designs licensed from ARM, owned by Japan’s Softbank. Huawei also makes chips for its telecom equipment, whose alleged security risks have sparked conflicts with governments around the world.

Those semiconductor smarts will be crucial if the chokehold the US Department of Commerce placed on Huawei this month becomes permanent. The company was added to a list of people and organizations deemed to threaten US national security or foreign policy, and it must now obtain permission before accessing US technology.

That change prompted Google to revoke Huawei’s licenses to bundle its search engine, app store, and other services onto phones. ARM suspended business with Huawei, saying its intellectual property includes “US origin technology.”

The abrupt end of Huawei’s relationship with ARM sliced at the heart of the Chinese company’s business model. But Huawei will be sheltered for a while, says Jim McGregor, founder of semiconductor analysts Tirias Research.

Huawei gets early access to ARM’s newest designs and will have already spent around two years working with the Japanese company’s latest generation of technology, McGregor says. ARM revealed its latest chip designs publicly Monday ahead of the Computex expo in Taiwan; they aren't scheduled to appear inside devices in chips from partners like Huawei until 2020.

That means Huawei has plenty of time to ship a new line of phones with cutting-edge processors while waiting for the US hostility to cool. If it remains cut off from US tech, the company could even use its prior access to ARM’s technology to make its own line of chips compatible with existing apps and app stores in China, McGregor says.

The Wall Street Journal reported Friday that Huawei is already planning to create its own mobile operating system, to replace Google’s Android. The company could do that without starting from scratch by building on top of the open source version of Android, as Amazon has for its Fire devices.

“They built on Western technology expecting it would always be there. Going it alone was not the plan.” Minyuan Zhao, Wharton School

Creating a parallel mobile ecosystem would cripple Huawei in Western markets, because its devices wouldn’t be compatible with Google’s app store and services. It might work better in Asia, particularly if other Chinese companies join in amid the US-China tensions, says McGregor. “We’ve known for a long time they wanted to develop their own prowess,” he says of Chinese tech leaders. “This dispute is pushing them much harder away from working with US technology companies.”