No, they don't have EUV. They have 7nm which they're doing with DUV, but they're hitting the same issues Intel did with abysmal yields and there's no guarantee that SMIC will be able to solve something Intel was never able to.
They do have EUV machines, albeit unreliable. Like you yourself mentioned the yields are the problem here.
This is really more of an engineering problem, you need more cycles for quality and reliability. But it's not something unsurmountable. Intel had no reason to try hard enough, Intel is never going to get sanctioned.
'Necessity is the mother of all innovation' might come to play here. If it comes down to living vs dying, people go to no ends to make things happen.