It would be feasible for a large government to build ASICs to take over more than half of the network hash rate, but what would they gain from it? In any case the Bitcoin economy would likely collapse as people lose trust in it and exchange their Bitcoins for other currencies, and the government would be out however much they put into destroying it.

Other cryptocurrencies that may be better at resisting this type of attack than Bitcoin could pick up where it left off. Litecoin, for example, is designed to be difficult to implement on an ASIC.