You don't start at the cutting edge immediately. You start where it is better understood. Then you can still pay the enormous investments needed for getting to cutting edge and furthering it, if you want. Also, from an economic perspective, there is still plenty of demand in the market for non-cutting edge node sizes, i.e. in embedded the priority is more around the fact that the chip is not changed from a specific design that was made 4 years ago than having the latest and greatest.
From a strategic perspective, it is absolutely important that you have the capability to build chips in your country, of a reasonably modern node size. You need this for weapons manufacturing, for a working government apparatus (governments use computers now), for sending messages to your population. And if China bombs Taiwan, then this fab will become the cutting edge, instead of you having zero chip manufacturing capabilities.
From a strategic perspective, it is absolutely important that you have the capability to build chips in your country, of a reasonably modern node size. You need this for weapons manufacturing, for a working government apparatus (governments use computers now), for sending messages to your population. And if China bombs Taiwan, then this fab will become the cutting edge, instead of you having zero chip manufacturing capabilities.