The usual argument made against the strategy of regulation is that the economic pressures would drive production underground, possibly literally, frustrating any attempt at regulation or enforcement.
My point is that other economic pressures force consolidation into a few efficient and extremely expensive & vulnerable facilities, which can be affected by ordinary military mechanisms - hence, regulation + military-level enforcement may well work in contrast to the usual pessimism.
I have got to say that when you're talking about capital requirements in the billions, and construction of the sort where you use the world's largest cranes, and a need for clean-room facilities, I have a really hard time seeing how production could go underground. Explosives, drugs, and weaponised bacteria, yes; these are all technologies that were known well before 1800, you'll note. Chips? I really don't see it.
Did you perhaps mean that the fabricators will go for unregulated markets, but build openly there? Possible, but they still have to sell their ...
In this essay I argue the following:
Full essay: http://www.gwern.net/Slowing%20Moore%27s%20Law