what is the subject of last clause?

Solution 1:

[But shrinking the band gaps of such materials just that little bit further, to the point where a brilliant red is reflected instead], has so far proved beyond their chemical skills.

The subject of “has” is the entire sequence “but shrinking the band gaps of such materials just that little bit further, to the point where a brilliant red is reflected instead”.

The PP within the commas is not a supplement, but is sufficiently integrated into the main clause to be analysed as a modifying adjunct of extent.